Warren Buffett Answered My Question on CNBC! Here’s My Response.

Back in February, CNBC interviewed Warren Buffett. For several weeks in advance the interview, CNBC asked viewers to submit questions via Twitter under the hashtag #AskWarren. I’m not sure how many questions were submitted, but they ended up choosing mine along with a few others.

This is pretty exciting for someone who knew from the age of 14 they wanted to be in finance and closely followed Warren Buffett, read his books, etc…

I’ve included a link to the video of the exchange below. This link will start the video at the point where my question was asked. You only need to listen for a couple minutes. Take a look. My question probably comes off as a little strange if you don’t know the context so, below the link, I explain the context of my question along with my response to his answer.

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The Second Longest Bull Market Since WWII…When Will It End?


Executive Summary

  • The S&P 500 is currently in its second longest bull market since WWII in terms of both magnitude and duration.
  • Various historically-reliable measures of market valuation are indicating returns in U.S. stocks over the next decade may be less than half their historical averages.
  • It’s reasonable to expect about a 50% decline in U.S. stocks during the “bear” phase of this cycle just to bring valuations back to historical averages.

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Years of Gains Will Be Wiped Out in the Next Downturn

I believe that the next market downturn will wipe out several years’ worth of gains.

The chart below shows the S&P 500 price assuming hypothetical declines ranging from 10% to 60%. I also included the date of the first day the S&P 500 ever closed at or higher than yesterday’s closing price, days since that date, and approximate years since.


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Happy 8th Birthday to the Bull Market

Eight years ago from yesterday the S&P 500 set its closing low of the Great Recession bear market. We couldn’t know it at the time, but that day marked the end to one of the worst bear markets on record. Since that low close of $676, the S&P has risen 250% to $2,365 where it closed yesterday. Here’s the path it took.

Pretty impressive. In fact, this bull market is the second longest and second strongest going all the way back to the Great Depression.

In addition to experiencing the second greatest rise since the Great Depression, this market is now also experiencing the second most stretched valuations of all time… just a few percent behind the Dot-Com Bubble. To be clear, that’s not a good thing.

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