Warren Buffet’s letter to shareholders: an ode to the U.S. economy
It’s fashionable to be positive about the U.S. economy at the moment. The S&P 500 is hitting new heights; talk of financial deregulation and job creation is coming out of the White House; the Federal Reserve is finally managing to raise rates again. But one man – arguably the most famous investor in the world – has been preaching positivity over the country’s economy for time immemorial. That man is Warren Buffet and, in his latest letter to shareholders, he has not held back on his optimism.
Praising America’s economic history, Buffet writes:
“One word sums up our country’s achievements: miraculous. From a standing start 240 years ago–a span of time less than triple my days on earth–Americans have combined human ingenuity, a market system, a tide of talented and ambitious immigrants, and the rule of law to deliver abundance beyond any dreams of our forefathers.”
You need not have a degree in economics to understand this success, Buffet says, pointing to “the 75 million owner-occupied homes, the bountiful farmland, the 260 million vehicles, the hyper-productive factories, the great medical centers, the talent-filled universities, you name it” as evidence of the realization of the American dream. Over its short life, the U.S. has amassed a wealth of $90 trillion.
Most importantly, though, for investors, is Buffet’s prediction for the country’s future. Leaving no doubt in his readers’ minds, Buffet sees the following scenario play out:
“This economic creation will deliver increasing wealth to our progeny far into the future. Yes, the build-up of wealth will be interrupted for short periods from time to time. It will not, however, be stopped. I’ll repeat what I’ve both said in the past and expect to say in future years: Babies born in America today are the luckiest crop in history.”
“American business–and consequently a basket of stocks–is virtually certain to be worth far more in the years ahead. Innovation, productivity gains, entrepreneurial spirit and an abundance of capital will see to that. Ever-present naysayers may prosper by marketing their gloomy forecasts. But heaven help them if they act on the nonsense they peddle.”
Investors will no doubt be hoping that Mr. Buffett’s words hold true. They can reassure themselves of the chances by looking at this track record.
The opinions in this article do not reflect those of Dominion Fund Management Limited, and in the instance of any forward-looking statements, these should not be construed as advice.
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