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Buffett Worries About Fed's 'Huge Experiment'

Sunday, May 5, 2013 - 9:17 AM
From FORTUNE via CNNMoney.com
Warren Buffett has a piece of advice for Ben Bernanke: It's easier to buy than it is to sell.

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4
Ken TuminKen Tumin5,471 posts since
Nov 29, 2009
Rep Points: 125,634
1. Sunday, May 5, 2013 - 10:20 AM
.

Dear KenBDG,

 
Article:    Buffett says he has enormous respect for Bernanke.

Wow ... That's nice to know ... Especially when on this blog there is a post about trying the Chairman for treason!  :-)

 
Article:   And he says the economy, and Berkshire, have "benefited significantly" from quantitative easing.

Great ... That's high praise for the policies of the FOMC ... Especially when posts after posts on this blog keep trashing the FOMC for its supposed failed policies! :-)

...

Other material from the article gives take of Mr Buffet about the future.  Mr Buffet seems to be careful enough to use the words that make it sufficiently clear that he does not know how the future will unfold. Just like Ms George, he too is quite careful not to make alarmist predictions like "destruction of US dollar",  "collapse of American society", and "triple digit inflation".


Some have warned that when the Fed decides to sell its trove of bonds, or even just stops adding to it, stock markets could tank.

What happens to the stock market should not be a cause of concern for the (so called) savers ... Right? ... :-)

Yours Truly,
- Anon
3
ytytytytytytytyt158 posts since
Jan 28, 2013
Rep Points: 623
2. Sunday, May 5, 2013 - 6:26 PM
Good article. Thanks Ken.
3
ShorebreakShorebreak2,675 posts since
Apr 6, 2010
Rep Points: 14,527
3. Sunday, May 5, 2013 - 7:05 PM
"QE is like watching a good movie, because I don't know how it will end," says Buffett. "Anyone who owns stocks will re-evaluate his hand when it happens and that will happen very quickly."

Buffett was obviously more polite and mild about his genuine concerns.  I, as a pessimist to U.S. economy, think QE is a horror movie (with multple series) that is beginning to unfold.  And unlike Buffett, I know exactly how it will end -- not a very good ending I am afraid.

Make no mistake about it and mark my word.:D 
4
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427
4. Sunday, May 5, 2013 - 8:23 PM
.

Dear 51hh,

Assuming for a moment that stock market were to collepse, then question is who will be affected - positively and/or negatively and/or not-at-all?

Let me try to categorize the US Citizens and state my accessment:


1) Savers (so called):
  • Assuming 100% of their assets are protected by the NCUA insurance and the FDIC insurance, it is far-fetched to imagine they have anything to worry about if the stock market collapses like what happened in the last few months of President Bush's final term
2) Investors (buy-n-hold types):
  • They are sort of "married" to their "holding" in a death-grip. Surely it will take their death to do them apart. :-)  If they have been doing this "buy-n-hold" thing for more than 10 years, then they already have seen the financial collapse.  I suspect they will merely conclude that ... sure they've seen this movie before ... shrug ... and go about their "holding" (the bag).
3) Traders:
  • Another collapse will present yet another opportunity to profit, so I guess they will (also) conclude that they too have seen this movie before ... And they will go about their business of trading fast-n-furious II.
4) Non-market participants:
  • Another collapse will mean nothing to them just like before.  They have never seen this movie, and have no immediate plans to buy ticket for a sequel.
Please do add more categories if you have any in mind, and how they will get affected.

....

Oh ... BTW ... Here we are strictly limiting the discussion to "stock market".  Not its "butterfly-effect" on "bond market", "job market", "real estate market", "currency market", "commodity market" etc.  ... Sure .. all of these are interlinked, some tightly, some loosely. Therefore it is preferable if we stay focused on the article, and words used in there.  If we were to divert to "other" markets then the discussion (and hence the speculation) will run rather wild. 

Therfore, how about we limit the the topic merely to the hypothetical "stock market" collapse.

....

 
And unlike Buffett, I know exactly how it will end

... Of course you do!  ... but don't tell us the ending ... no spoilers please ... some of us have not watched this particular season, and will like find out for ourselves at the pace of one episode per trading-day, and enjoy every second!  :-)

Yours Truly,
- Anon
3
ytytytytytytytyt158 posts since
Jan 28, 2013
Rep Points: 623
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