For value investors of a certain age (e.g. mine), discovering that Warren Buffett has feet of clay is like suddenly not believing in Father Christmas. This twinkly-eyed, raspy-voiced, avuncular old gentleman almost embodies Clint Eastwood crossed with a Care Bear. And nobody can hold a candle to his long-term investment record. And yet.. The rot set in (at least as far as this writer is concerned) when Buffett went from investing in private non-financial businesses to siding with the establishment, using his institutional heft to win sweetheart deals in dubious banking institutions way beyond the reach of regular Joes. In other words, somewhere along the line he went from representing the 99% to representing the 1%. And at the first sign of trouble, he simply wraps himself up in the American flag.
Buffett's latest advertorial (for himself and for Wall Street), 'Why stocks beat gold and bonds', adapted from an upcoming version of one of his legendary shareholder letters and published in Fortune, may be the most irritating thing he's ever written (or had written for him). As an investor he rightly draws attention to the critical requirement to maintain one's purchasing power in the face of rampant state inflationism. He accurately highlights the staggering reduction of real value in the US dollar since 1965 (some 86%) as a result of overmuch dependency on the printing press. He fairly declares a dislike for currency-based investments in a world of rapidly inflating, unbacked fiat money. And he then goes on to rubbish gold, of all things, using the tired and specious argument that purchasers are simply displaying 'greater fool' theory, eagerly awaiting new rises in price that will suck in new purchasers ad infinitum.
David Fuller's view You should not miss the rest of this issue.
Here is my own take on the Buffett article, which I posted on Thursday 9th February.