Warren Buffet in his most recent annual report for Berkshire Hathaway highlighted over the last 53 years an overall gain in ‘Per Share Market Value’ from 1965 to 2017 a massive 2,404,748% (yes that’s million) compared to the ‘S&P 500 with Dividends Included of 15,508%.

In all that time though there has been 4 periods where a percentage decrease was between 37.1% and 59.1% of Berkshire shares. Table below;

Period High Low Percentage Decrease
March 1973 -January 1975 93 38 (59.1%)
2/10/87 – 27/10/87 4,250 2,675 (37.1%)
19/6/98 – 10/3/2000 80,900 41,300 (48.9%)
19/9/08 – 5/3/09 147,000 72,400 (50.7%)

Warren Buffet states these major dips offer the strongest argument he can muster against ever using borrowed money to own stocks.

“There is no telling how far stocks can fall in a short period. Even if your borrowings are small and your positions aren’t immediately threatened by the plunging market, your mind may we’ll become rattled by scary headlines and breathless commentary. And an unsettled mind will not make good decisions.”

In the next 53 years our shares (and others) will experience declines resembling those mentioned above. No one can tell you when these will happen. The light can at any time go from green to red without passing at yellow Warren Buffet states.

“When major declines occur however they offer extraordinary opportunities to those who are not handicapped by debt. That’s the time to heed these lines from Kipling’s If;

‘If you can keep your head when all about you are loosing theirs…
If you can wait and not be tired by waiting…
If you can think – and not make thoughts your aim…
If you can trust yourself when all men doubt you…
Yours is the Earth and everything that’s in it”

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