WARREN BUFFETT - HOW TO INVEST IN THE STOCK MARKET ?!?
Channel: Value Investing with Sven Carlin, Ph.D.
Date: 09/05/2018

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Modern Value Investing book:
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Buffett recently gave an interview discussing how if he would have invested the first money he had $114.75 in 1942 in the S&P 500 and reinvested the dividends, he would now have $400,000. That is a nice way to sell the stock market to people but I really disagree with Buffett and on what he is selling. Here are my points:

Nobody has a 75 year investment horizon

Buffett’s goal in life was just to accumulate capital and be the best investor in the world, he achieved it but I am sure that isn’t the goal of 99.9% of us. We want our money to work for us so that we can spend the extra money and have a better life or retirement thanks to our investments, 70 years is a bit too much. Therefore, we have to see what are the best risk reward investments for a 20 or even shorter investment horizon. But let’s see how Buffett’s advice to invest in the S&P 500, something he never did, holds over shorter periods of time?

2) Shorter term investing - shorter than 75 years

Let’s look at the distribution of 10 years returns over the last 139 years of S&P 500 available data.