Warren Buffett Gold Stock Picks
Categorized: Warren Buffett stock picks | No comments
If you’re looking for Warren Buffett’s stock picks on gold, there isn’t any. Isn’t that surprising that in a recession where most investors are flocking to buy gold stocks, the greatest investor who has ever lived isn’t picking up any gold companies? Buffett’s opinion on gold differs very differently from everyone else. He thinks there’s no useful function for it. He gave a very funny quip that if martians were to land on earth today it would make little sense to them that we would dig gold out of the ground only to bury it again with guards surrounding it. When you put it like that, it does seem rather silly. This is because Buffett believes firmly in the principle of intrinsic value. There really is no reason why we should value it so highly.
You might argue that lots of people have made money on the run up of gold especially during the recession. That would be true but also look at the tech bubble – and then there was the housing bubble. At some point, people are going to realize and say this yellow, shiny metal is not worth it. Buffett was right about the tech bubble and he also side stepped the credit crunch miraculously. Can he be right about gold as well? Remember that the way to make money is to have the guts to do the opposite of what everyone else is doing. If everyone else is buying gold, maybe that’s fool’s gold and it is not the best play available.
So if Buffett is not buying gold in the recession, what is Warren Buffett buying? Buffett is a follower of Benjamin Graham and likes to buy companies on the cheap – actually, who doesn’t when the point of playing the stock market is buying low and selling high. But judging by Berkshire Hathaway’s immense cash position, you can see that he doesn’t buy companies on a whim. There are few companies that pass his tests for having good intrinsic value. However, according to a recent interview with Buffett, likes Burlington Northern Santa Fe very much. This is his hedge against a weak dollar and inflation – by buying a railway company that he predicts will perform better than the trucking industry due to the high cost of fuel in the years ahead. Now that’s an interesting view on things but then again, that’s why he’s Warren Buffett and you can about his long term stock picks.
Tagged with: Burlington Sante Fe, cheap stocks, gold stocks, intrinsic value, long term stock picks
No comments yet.