Buffett Says Buy Index Funds

Posted by Bull Bear Trader | 5/04/2008 06:53:00 PM | , , | 0 comments »

Jason Zweig of Money (as reported at IndexUniverse.com) was asked a question about what a young individual in their 30s should invest in. What is the single best investment idea? Buffett quickly suggested investing all they had to invest in a very low cost index fund from a reputable firm, a suggestion he has made on numerous other occasions. Buffett mentioned Vanguard in particular, the John Bogel founded company with a number of index funds to choose from. Of course, Buffett could have suggested another - Berkshire Hathaway. While technically not an index fund, or even close for that matter, it does have some of the diversification effects that an index fund would delivery, albeit Berkshire is exposed more than average to the insurance industry. Barron's also recently declared it fairly priced, after not long ago mentioning that it was a little expensive (before it pulled back). But touting his own stock would not be Buffett's style. Furthermore, Buffett is correct that an index fund would certainly track the indexes better, something that rarely seem to occur with Berkshire anymore, although I would have to run the numbers to be sure. Rather than touting his stock, Buffett is more comfortable touting the individual companies within Berkshire, along with their products - and sampling them with the freedom and joy of a school boy. Then again, I imagine $60+ billion would make you feel a little giddy at times, but how would I, or just about anybody really know.

Tickers: BRK.A, BRK.B