Hat tip to Corner of Berkshire & Fairfax Board for the find. In the face of an uncertain macro economy much like today,look at the advice of the no-namers in the article (hold cash). Then look at the advice from Buffett, Forbes, Abelson, and Zweig (buy cheap stocks). Coincidence?
Warren Buffett, a very successful money manager turned private investor, "has no idea what stock prices will do," but thinks our hypothetical investor should "buy some marketable security that represents a good business that he understands, at far below its value to a private owner." Private-owner value, he says, is where the businesses would trade between two well-informed private businessmen who are under no compulsion to deal. This varies from industry to industry, and tends to be based on multiples of likely future earnings. "There are businesses trading hands rather frequently, like banks, TV stations. . . . Business is done, and the prices in that world of private ownership are enormously different from what little pieces of paper [stock certificates] change hands for. Where it used to be that public companies were selling way above their private-owner values, now just the reverse is true."
Private-owner value gives you a benchmark of reality in the approach to securities, says Buffett, instead of trying to decide whether they're going to go up next month. "It's standard Graham-and-Dodd [the classic text], but all I can say is that if you're not in a hurry, it works."