Gold on a Tear While Buffett Takes a Break
If gold prices and Warren Buffett’s investing activities are any indication, the near-term could prove difficult for investors.
Warren Buffett was selling more stocks than he was buying earlier this summer, and Berkshire Hathaway’s stock purchases fell to the lowest level in five years.
Buffett biographer Alice Schroeder thinks that Buffett is actually starting to worry.
Meanwhile, gold recently reached an 18 month high—exceeding $1,000 per ounce.
In light of these indicators, here are some considerations for investors and existing or would-be annuity owners:
- Further capital market volatility could be around the corner. Sequence of returns risk should be a consideration for anyone approaching or in retirement.
- Inflation is a very real possibility. Inflation risk and protection should be front and center for anyone considering an annuity—particularly fixed annuities.
- As discussed in a recent post, all forms of fixed receipts or income are at risk in an inflationary environment.
- The U.S. dollar is in a precarious position. Non dollar-denominated investments are important, and it might be a good time to take that European vacation.
Anonymous (not verified) wrote on Thu, 09/10/2009 - 12:55:
Wouldn't Buffett be selling in anticipation of asset deflation rather than inflation?
tom wrote on Thu, 09/10/2009 - 15:31:
Good point--certainly possible.
That said, there are obviously a number of reasons why he might be selling.
Also, inflation is not necessarily terrible for equities. Certain businesses with pricing power and few fixed assets/capital expenditure requirements can thrive in an inflationary environment.