28 December 2020 10:40
The Motley Fool Canada » Dividend Stocks » Warren Buffett Doesn't Like Gold: Should You Buy Anyway? Warren Buffett, like any investing pro, has many opinions. Warren Buffett's net worth has grown big time because of this. Warren Buffett also clearly draws upon his intelligence. So, when Warren Buffett has an opinion, we should pay attention.
Warren Buffett still doesn't like gold Gold has been the safe haven that investors have flocked to since the beginning of markets. But Warren Buffett has a lot to say about gold. Warren Buffett calls gold "a big cube of metal." It's useless. Let's assume that Mr. Buffett is right about gold. Don't you think that maybe a global pandemic situation might have different rules?
And even though this is not obvious if we look at the TSX and NYSE stock markets, it's still true. Gold, for all its uselessness, is a good store of value. Gold is the defensive safe haven TSX trade that allows us to do this. Buy this gold stock for gold exposure but also for its operationally sound business So, once we've decided we would like exposure to gold, what do we do? Should we buy a block of gold bullion? I would agree with Warren Buffett on his view that this is just a useless cube of metal. He loves a financially sound, cash flow rich, dividend-paying company. Warren Buffett and his Berkshire Hathaway colleagues love a company that will grow his net worth. Agnico-Eagle Mines (TSX:AEM)(NYSE:AEM) is a gold company that operates in politically safe areas. It's a gold company that has proven its worth. In closing, I would like to point out that gold stocks still have their place in investors' portfolios. I mean, the price of gold has increased almost 600% in the last 20 years. So, at this time of crisis, buying gold stocks is a smart move. Even Warren Buffett's Berkshire Hathaway recently bought Barrick Gold, which trades on the TSX and the NYSE. Gold is still a safe haven as it is a reliable store of value. Bitcoin has posted some fantastic investment returns this year. However, when it comes to investing for the long term to build wealth, I'd much rather follow billionaire investor Warren Buffett's advice than buy the cryptocurrency. Warren Buffett vs Bitcoin The price of the cryptocurrency has gyrated widely this year, and it's challenging to predict how much one coin will be worth from one day to the next. As such, Bitcoin is only really worth as much as two parties are willing to pay at any one point in time, and that's a big issue for investors, particularly long-term investors. Buffett's investment strategy has always been based on the idea of buying and holding profitable businesses. What's more, buying productive, cash generative businesses gives investors a backup. There will always be a fundamental business behind the stock price. So, even if the price falls 50%, that doesn't necessarily mean the company is worth 50% less. The same cannot be said for Bitcoin as the price of the cryptocurrency is determined by supply and demand. Investing for the long term Warren Buffett's strategy makes it easier to invest for the long term. Buying high-quality businesses is a sensible strategy, no matter what. It's also easier to hold on to these stocks through periods of economic uncertainty. For example, earlier this year, in the March stock market crash, shares in some high-quality FTSE 100 businesses fell 50%. It's much easier to stick with companies with strong underlying fundamental businesses than volatile financial assets like Bitcoin in the long run. That's why I'd rather follow Warren Buffett's advice and buy high-quality businesses than own Bitcoin to get rich. That's not to say an investor should avoid Bitcoin entirely. I think that's a much more sustainable investment strategy that can stand the test of time. It has certainly worked incredibly well for Warren Buffett in the past. I'm following Warren Buffett's advice to get rich appeared first on The Motley Fool UK. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. NEW YORK, Dec 24 (Reuters) - Worries over a resurgent coronavirus pandemic and upcoming U.S. Senate runoffs in Georgia are clouding the outlook for what has historically been a seasonally strong period for equities. Stocks have tended to perform well in the last five trading days of December, and the first two of January, a phenomenon known as the Santa Claus rally which has lifted equities in 55 out of 74 years since 1945, according to CFRA Research. But despite the S&P's rally in the quarter and its year-to-date gain of around 14%, a Santa Claus rally this year is far from a given, investors said. Concerns over a new variant of the coronavirus and weak economic readings have weighed on stocks in recent days, with the S&P 500 down 0.7% since hitting record highs on Dec. 17 as some investors lock in gains. Just further ahead are a pair of U.S. Senate races on Jan. 5 that could tip control of the chamber to Democrats, potentially opening the way for lawmakers to move ahead on some of President-elect Joe Biden's proposals that investors have viewed as market-unfriendly, including raising taxes and rolling back Trump-era deregulation. "The market is on autopilot right now as we head toward the year-end, but in the near-term we are vulnerable as we get closer to Georgia election runoffs," said Sam Stovall, chief investment strategist at CFRA Research. "We believe these catalysts have largely been discounted into the market's record-high rally," he said. Those backstops have left the market priced for perfection, giving it little more room to run without another catalyst, said Randy Frederick, vice president of trading and derivatives with the Schwab Center for Financial Research. "We're a bit overdone for a pullback in the short term and investors are looking ahead to a couple of races that could mean a significant change in personal and corporate tax rates," he said. If it appears that the Democratic candidates are set to win both of Georgia's Senate seats, "things could turn really sour even though the long-term outlook looks pretty good," Frederick added.