From the category archives:
You don’t need to own Berkshire Hathaway stock to benefit from the investing wisdom of the world’s richest man.
His annual letter to Berkshire shareholders explains just how to invest like Warren Buffett. (It also includes more jokes than the average CEO manages in a year!)
Here’s five highlights from Buffett’s latest letter to get you started.
Here’s some useful data on historical asset class returns for the US market.
(I’ve also posted historical asset class returns for the UK).
The graph to the right shows US total asset class returns with income reinvested since 1925, as calculated by Barclays Capital.
As you can see, equities (stocks) have done much better than bonds or cash over the long-term.
Two important caveats:
Let’s now look more closely at historical asset class returns in real terms (that is adjusted for inflation).
US real asset class returns (% per annum)
| 2009 | 10 years | 20 years | 50 years | 84 years | |
| Equities (stocks) | 28.7 | -2.2 | 5.8 | 5.5 | 6.6 |
| Government bonds | -15.5 | 5.0 | 5.3 | 2.9 | 2.3 |
| TIPS | 5.8 | 6.7 | |||
| Corporate bonds | 16.3 | 4.7 | 5.2 | ||
| Cash | -2.6 | 0.2 | 1.0 | 1.2 | 0.6 |
Source: Barclays Capital Equity Gilt Study 2010 (Note: Where data is NOT available, there is a gap).
Cash is king, or cash is trash?
March 8, 2010By watching how investors treat their cash holdings, you can sometimes get a feel for how carried away the market is. Is cash trash?