FREENVESTING
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In this video, the greatest investor of all time himself destroys popular asset allocation models that Wall Street people sell retail investors and says they’re “pure nonsense”. Buffett provides a better and a much easier way of allocating capital that he utilizes himself. The question goes: “You’ve touched on the issue of asset allocation — capital allocation — in response to previous questions. But I wonder if you could elaborate from a risk management perspective. Wall Street and financial planning firms charge a lot of money for their asset allocation models, say, 50 percent stocks, 40 percent bonds, et cetera. I know you take a more opportunistic approach to building your portfolio and managing risk, as you mentioned by — as you illustrated — by your junk bond example. And so I just want you to hammer out how you use price and value as a tool of risk management and asset allocation as opposed to coming at it with a preconceived idea of how much should be allocated to each asset class.” From Berkshire Hathaway Annual Shareholders Meeting. (2004) Warren E. Buffett is an American long-term investor, philanthropist, business tycoon, and the chairman and CEO of Berkshire Hathaway. He is considered one of the most successful investors in the world and has a net worth over 100 billion dollars. Buffett was born in Omaha, Nebraska. He developed an interest in business and investing in his youth and made truly incredible stock market returns over his career.
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No wonder Warren did so well. He rows his own boat. No one charges him for managing his risk. He takes risks.
