Surprise! Warren Buffett turns out to be more prescient about stocks than politics

Recently reminded millions of people, Warren Buffett, Chief Executive Officer Berkshire HathawayIt doesn’t always call them right. He predicted two years ago that Hillary Clinton will both begin for the presidency and won, and she has never lost faith in that future.

Two weeks later, however, it’s time to look at the widely stated stock exchange forecast, which Buffett was 17 years ago, in 1999, and it just reaches the point of his terminal. Here Buffett was definitely on the right side of the bet.

Buffett’s forecast refers to which size of the shares of the total return, plus re-expelled dividends and US investors will reap in the 17 years that began in 1999. Buffett outlined in July of that year in July of that year, which he gave Allen & Co. At the conference. repeated it in the next few months with several speeches. and worked with this writer to turn the speeches into a Fortune Article: “Mr. Buffett stock market” It ran in the November 22, 1999 issue. You will notice that today is located 17 years later.

Why is this strange ball 17 years old? It has received the attention of Buffett, as in 1999 the US stock exchange has just completed two wild periods, which the buffet realizes, can be the scope of the speech. He wanted to build a circle, adding a forecast for 17 years, which began in 1999, entered close.

The first 17-year term, which Buffett was within the framework of its reference, in 1964 – 1981, when the return of the stock exchange was harmful. The Defame Jones Industrial amerije ended in 1964, 874 and 1981 in 875. “Now I am known as a long-term investor and a patient’s boy,” said Buffet Fortune Article. “But that’s not a great step.”

The simplified explanation for this unpleasant investment disaster during the period was a sharp increase in interest rates. The long-term bonds of the year end of the year 1984 were over 15% in 1984 FortuneThe increase in interest rates will pull up on equality prices. During this particular 17-year period, weight was strong enough to overestimate the almost quinting of the nation’s GDP, the economic index, which will usually be accompanied by the roar of the stock market.

Then the second 17-year period arrived, starting in late 1981 and was extended until 1998. During those years, the Federal Reserve President Paul Volker assaulted both the interest rate and the rates of inflation. In response, the shares were strong. And so, “not stable” – not stable, “Buffett said.” But, however, with real force. “

At that time, surprisingly, most investors did not think about external areas. Instead, they are undoubtedly in doubt that they both were brilliant for taking in stock and bearing wealth. The study of Pau Webbe issued in July 1999, when Dow added 2000, found that the least experienced investors who had invested an annual income expected in more than five years – 22.6%. Those who have invested more than 20 years are expected to be 12.9%.

Well, Buffett said, because he summed up his opinion in the second half of 1999, the return of that greatness would simply would not happen. Instead, he predicts (without using these words).

And here he saw the mediator’s result. Investors purely the expenses of trade and management expenditures, he said that these costs could invade the percentage of percentage points.

What is the answer in the past 17 years?

First of all, remind you that the stock exchange, as it is presented with Dow and the standard and poor indicators, for example, “net” returns. What you control your computer screens are gross income before trading and managing expenses are removed.

But the post indicates that the gross income of the period is quite an animal to confirm the total accuracy of the buffet. From mid-November 1999 to investors from Dow Industrial, the annual return to investment from Dow Industrial was 5.9%.

Proving that this writer Buffett has asked for his ability to conduct bartage balls. He who can think that he may seem to be what you need to be what you need to say that you have to be what you need to be There must be that you must be that you have to be that you have to be that you have to be that you have to be what you need to be.

Buffett did, however, bring three thoughts before the next 17 years.

First of all, he thinks that the investor in the low cost of all dividends will do better. Very likely to be significantly better than the investor presented and restarts all his coupons in the same tool.

Second, he doubts that an amateur, “nothing” investors with the will of the Foundation’s strategy of the foundation of the same indicator In general Complete the results exceeding investors who choose specialists to charge high rents.

Third, he predicts that many specialists who fail to invest their investors, underperforming the means of index, will be very rich in that process.

The retired senior editor-large carol Loomis is Warren Buffett’s old friend. He has been a shareholder for Berkshire Hatava for many years.

This story was originally shown Fortune.com