Warren Buffett provides financial, investment and retirement advice


Invest in gold

Gold is a big favorite with investors who fear almost all other assets, especially paper money. But what motivates most gold buyers is their belief that the ranks of the fearful will grow.

The world’s gold stock is 170,000 metric tons. If all the gold were mixed together, it would form a 68-foot cube and fit into a baseball infield. At $ 1,750 an ounce – the price of gold as of this writing [in 2012] – its value would be $ 9.6 trillion. Call this cubic pile A. Now create pile B. For $ 96 trillion, we could buy all of the cropland in the United States (400 million acres producing $ 200 billion a year), plus 16 ExxonMobils (l most profitable company in the world, earning over $ 40 billion per year). And we would still have a trillion dollars left. Can you imagine an investor selecting stack A over stack B? [Gold has since plunged more than 20 percent.]

On investing in America

Investors should avoid the negative effects of fad buying, shabby companies and market timing. … [For most investors] buying an index fund over a long period makes the most sense. Just make sure you own an American business.

Whether money a century from now is based on gold, shark teeth, or a piece of paper, businesses in our country will continue to provide goods and services. These commercial “cows” will live for centuries, and the proceeds from the sale of their “milk” will increase for cow owners – just as they did in the 20th century when the Dow Jones fell from 66 to 11. 497 (and paid dividend charges as well).

Retired

I will continue to work until about five years after my death. I gave my board a Ouija board so they could keep in touch. I also have a letter that will go out and say what the plans for the business are. It starts with “Yesterday, I died”. I just hope the stock doesn’t increase too much on this day.

Adapted from Tap Dancing to Work: Warren Buffett on Virtually Everything, 1966-2012: A FORTUNE Magazine Book, edited by Carol J. Loomis


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