Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF...
Transcript of Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF...
![Page 1: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/1.jpg)
The Warren Buffett ETF Portfolio
Oliver Ludwig, Moderator
Managing Editor, IndexUniverse.com, IndexUniverse
Larry Swedroe, Panelist
Managing Principal & Director of Research, Buckingham Family of Financial Services & the BAM Alliance
![Page 2: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/2.jpg)
Larry SwedroeManaging Principal & Director of Research Buckingham Family of Financial Services & the BAM Alliance
Oliver LudwigModerator Managing Editor
ETF.com
![Page 3: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/3.jpg)
Invest like BuffetLarry SwedroeManaging Principal & Director of Research Buckingham Family of Financial Services & the BAM Alliance
![Page 4: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/4.jpg)
Warren Buffet’s Advice
Should you use active or passive mutual funds?
Should you pay attention to market forecasts?
Should you try to engage in market timing?
![Page 5: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/5.jpg)
Active vs. Passive Investing
“Over the 35 years, American business has delivered terrific results. It should therefore have been easy for investors to earn juicy returns: All they had to do was piggyback Corporate America in a diversified, low-expense way. An index fund that they never touched would have done the job. Instead many investors have had experiences ranging from mediocre to disastrous.”
~ 2004 Berkshire Hathaway Chairman’s Letter
![Page 6: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/6.jpg)
Three Primary Causes
High costsDecisions based on
tips and fadsA start-and-stop
approach
![Page 7: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/7.jpg)
Value of Forecasts
“We’ve long felt that the only value of stock forecasters is to make fortune tellers look good. Even now, Charlie (Munger) and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.”
~1992 Berkshire Hathaway Chairman’s Letter
![Page 8: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/8.jpg)
Before You Act on a Forecast
Is Warren Buffett acting on this expert’s opinion?
If he isn’t, should I be doing so?
What do I know that Buffett doesn’t?
If I make this change and I am right, what impact will it have on my life?
What impact will it have if I am wrong?
Have I been wrong before?
![Page 9: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/9.jpg)
Buffet on Market Timing
“Our stay-put behavior reflects our view that the stock market serves as a relocation center at which money is moved from the active to the patient.”
~ 1991 Berkshire Hathaway Chairman’s Letter
![Page 10: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/10.jpg)
![Page 11: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/11.jpg)
![Page 12: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/12.jpg)
Investors Idolize Buffest But don’t follow his advice
![Page 13: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/13.jpg)
Buffest Against Market Timing Buy when other are fearful, sell when they are greedy
Don’t sell when valuations are low
Buffest buys because expected returns are high
“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”
~2008 Berkshire Hathaway Chairman’s Letter
![Page 14: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/14.jpg)
You Can Invest Like Buffett Have an Asset Allocation Plan and Rebalance
Have discipline
Adhere to your investment plan
Ignore your emotions
Rebalance regularly
![Page 15: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/15.jpg)
The Loser’s Game
The Winner’s Game
Buy high
Buy low
Sell low
Sell high
![Page 16: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/16.jpg)
You Can Invest Like Buffett Understand How to Think About Bad News
![Page 17: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/17.jpg)
You Can Invest Like Buffett
How to think about bad news
Markets should continue to fall only if future news is worse than expected
If the news is no worse than expected, you should expect to earn high returns because valuations had been low
If the news is not as bad as expected, the perception of risk will fall, prices should rise and you should expect to earn high returns
![Page 18: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/18.jpg)
You Can Invest Like Buffett
Surprises
What matters are surprises
If something is a surprise, by definition is cannot be forecasted
Happy surprised are as likely as unhappy surprises
![Page 19: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/19.jpg)
Avoid Stage-One Thinking
![Page 20: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/20.jpg)
Avoid Stage-One Thinking Will governments/central banks stand idly by, allowing the crisis
to worsen?
Do I really know something that the market doesn’t know?
Doesn’t the market’s current price already reflect the news I am reacting to?
Do I want to sell when valuation are low and expected returns are high?
When I reacted in the past to such events, how did it turn out?
If I sell during a crisis, how will I know when it is safe to buy again?
![Page 21: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/21.jpg)
Buffest on Temperament
“Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.”
~Businessweek
![Page 22: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/22.jpg)
Have a Plan and Stick to It
![Page 23: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/23.jpg)
Have a Plan and Stick to It
Resist acting on forecasts
Resist trying to time the market
Give up the hope of outperforming by investing with the latest hot fund manager
Hit the mute button if you cannot resist watching financial media
Be a “passive” investor
![Page 24: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/24.jpg)
Invest in Highly Profitable Companies
![Page 25: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/25.jpg)
Buffett’s Alpha
Buffett’s returns were boosted through leverage and cheap financing provided by his companies
He buys cheap, “high quality” companies
He stuck with his strategy
![Page 26: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/26.jpg)
Want to Invest Like Buffett?
Use a passive, evidence-based investment strategy
Tune out all the economic and market forecasts
Don’t try to time the movements of markets
Develop a written IPS based on your need, ability and willingness to take risk
Control your emotions in order to maintain discipline
Review your plan whenever the underlying assumptions change
![Page 27: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/27.jpg)
![Page 28: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/28.jpg)
![Page 29: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/29.jpg)
Thank You.
Questions?
![Page 30: Oliver Ludwig, The Warren Buffett Managing Editor ... · PDF fileThe Warren Buffett ETF Portfolio Oliver Ludwig, Moderator Managing Editor, IndexUniverse.com, IndexUniverse Larry Swedroe,](https://reader034.fdocuments.net/reader034/viewer/2022042708/5a9dcaec7f8b9aee528c6fe5/html5/thumbnails/30.jpg)
Larry SwedroeManaging Principal & Director of Research Buckingham Family of Financial Services & the BAM Alliance
Oliver LudwigModerator Managing Editor
ETF.com