If Warren Buffett says so… we better listen. After all, the “Oracle of Omaha” didn’t become one the greatest value investors of all time, by making loose predictions.
A $10,000 investment in Buffett’s Berkshire Hathaway in 1965, would grow to be worth nearly 30 Millions by 2005. By comparison, $10,000 in the S&P 500 Index would have grown only to about $500,000 during the same period. I don’t know about you, but I like to listen to people that outperform the markets consistently.
This is what Warren Buffett said at the Berkshire Hathaway’s annual meeting (May 2006):
"What we see in our residential brokerage business [HomeServices of America, the nation's second-largest realtor] is a slowdown everyplace, most dramatically in the formerly hottest markets. [Buffett singled out Dade and Broward counties in Florida as an area that has experienced a rise in unsold inventory and a stagnation in price.] The day traders of the Internet moved into trading condos, and that kind a speculation can produce a market that can move in a big way. You can get real discontinuities. We've had a real bubble to some degree. I would be surprised if there aren't some significant downward adjustments, especially in the higher end of the housing market."
This is not news to Real Estate investors in some previously ‘hot’ markets that are starting to feel the overheating effect. What nobody can predict is the size and duration of this adjustment.
A $10,000 investment in Buffett’s Berkshire Hathaway in 1965, would grow to be worth nearly 30 Millions by 2005. By comparison, $10,000 in the S&P 500 Index would have grown only to about $500,000 during the same period. I don’t know about you, but I like to listen to people that outperform the markets consistently.
This is what Warren Buffett said at the Berkshire Hathaway’s annual meeting (May 2006):
"What we see in our residential brokerage business [HomeServices of America, the nation's second-largest realtor] is a slowdown everyplace, most dramatically in the formerly hottest markets. [Buffett singled out Dade and Broward counties in Florida as an area that has experienced a rise in unsold inventory and a stagnation in price.] The day traders of the Internet moved into trading condos, and that kind a speculation can produce a market that can move in a big way. You can get real discontinuities. We've had a real bubble to some degree. I would be surprised if there aren't some significant downward adjustments, especially in the higher end of the housing market."
This is not news to Real Estate investors in some previously ‘hot’ markets that are starting to feel the overheating effect. What nobody can predict is the size and duration of this adjustment.
Since October 2002, the Real Estate Index has climbed from 136.59 to 293.72, producing a total return of 115% in less than 4 years.
Now, let’s look at what the Dow Jones Index did during the same period:
Now, let’s look at what the Dow Jones Index did during the same period:
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