Financial advice from Warren Budget: Even he lost money in 2008

Even Warren Buffet had a bad 2008

It wasn't only you. Master investor Warren Buffett had a bad 2008 too. However, he has the wherewithal to remain a buyer of shares, and says the economic disarray gives him a tailwind.

Warren’s annual letter

In his eagerly awaited annual letter to investors, Warren Buffett revealed that the value of his company, Berkshire Hathaway, fell by 9.6%, the worst performance in Buffett's 44 years at the helm.

However, everything is relative. Berkshire’s 9.6% fall compares favorably with the 37% fall in the index.

The shambles

It's a shambles, alright. When the 78-year old Buffett says there was "A freefall in business activity…accelerating at a pace that I have never before witnessed" you know things are bad and unprecedented. And things aren't going to get better anytime soon. Buffett says "…the economy will be a shambles throughout 2009 – and for that matter, probably well beyond…"

The optimist

Buffett remains an optimist. He says the U.S. has faced many challenges in the past -  the Great Depression with unemployment as high as 25%, two great wars and virulent inflation that led to a 21% interest rate in 1980.

Unemployment is around 7% and will rise to 10%, base interest rates are effectively zero and a massive government stimulus package is on the way. Buffett says, "America's best days lie ahead."

Buffett makes mistakes too

Buffett admits his failures and lists them in his letter. He also admits to not anticipating the dramatic fall in oil and energy prices that occurred in the last half of the year. He says, "…the terrible timing of my purchases has cost Berkshire several billion dollars." ... click here to read the rest of the article titled "Financial advice from Warren Budget: Even he lost money in 2008"