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Warren Buffett’s 10 Lessons for Investors (Part 3 of 11) (Continued from Part 2) Bonds are considered safe
The majority of investors believe bonds are safer than stocks. The main reason is that bonds pay regular interest. Bonds issued by the government have the added allure of being guaranteed by the government. But, is stable also safe?
Buffett emphatically declares stocks to be safer
Buffett had this to say in his 2014 Berkshire Hathaway (BRK-B) letter to shareholders—“The unconventional, but inescapable, conclusion to be drawn from the past fifty years is that it has been far safer to invest in a diversified collection of American businesses than to invest in securities – Treasuries, for example – whose values have been tied to American currency. That was also true in the preceding half-century, a period including the Great Depression and two world wars. Investors should heed this history. To one degree or another it is almost certain to be repeated during the next century.”
Now, you can’t be more emphatic than that.
Stocks add to purchasing power over the long run
One of the main reasons that stocks are safer is that their returns beat inflation over the long term. High-grade bonds, on the other hand, at best match inflation. So, bonds aren’t able to keep your purchasing power intact in the long run. Stocks, on the other hand, add to your purchasing power.
The performance of stocks against bonds or the debt of the same companies is also a good indicator. Here as well, stocks beat the bonds of companies such as Wells Fargo & Co. (WFC), IBM (IBM), and Coca-Cola (KO). These three stocks account for 3.08% of the iShares Core S&P 500 ETF (IVV).
Continue to Part 4 Browse this series on Market Realist:
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Wells Fargo est une société d’exploration minière basée aux Etats-Unis D'Amerique. Wells Fargo est cotée aux Etats-Unis D'Amerique. Sa capitalisation boursière aujourd'hui est 302,9 milliards US$ (283,0 milliards €). La valeur de son action a atteint son plus bas niveau récent le 03 juillet 1997 à 10,01 US$, et son plus haut niveau récent le 24 avril 2024 à 60,62 US$. Wells Fargo possède 4 997 319 680 actions en circulation. |