Explanation on Warren Buffett's famous quote
In the short term the market is a popularity contest In the short run which in value investing time can extend even to many years, an equity is subject to the vicissitudes of the whims by every scale of panic and elation. This can be seen by examining the daily chart of any large cap equity in the US.  Even such large holdings can be affected by any set of fear and greed in the market and in the subset of traders trading the equity. Quantitatively, this statement means that equities experience high variance in the short rurn. in the long term [the stock market] is a weighing machine In the long run which in value investing time can extend to even multiple decades, an equity is more or less subject only to the variance of the underlying value. This can be seen by examining the annual chart of even the smallest cap equities over decades.  An equity over such time periods is almost exclusively affected by its changes in value. Quantitatively, this statement means that equities experience low variance in the long run. I think he was trying to say that in the long term the company's fundamental intrinsic value will drive the price of a company's stock, but in the short term stocks move on emotion and publicity that are not necessarily a reflection of their true underlying value.
Crisis and volatility benefit financiers and the wealthy, even more now than they did then. Back then, anybody left standing could buy at the bottom of a depression--while it was those who needed wages to eat who really suffered. Nowadays, arbitrage and derivatives (not to mention federal policy) make volatility itself a profitable proposition for people with lots of money to invest.  That said, I don't think it's a necessary conclusion from Garfield's statement that he thought those at the top *intentionally* caused inflation and depression--merely that their actions brought it about. Maybe he was complaining that the economy would be healthier and more stable if it were truly a free market, or maybe he was arguing that greed at the top led to imprudent policy. Ya and they popped because he did, now they're slumping again and he's out with his quick buck. Berkshire is a positive feedback loop these days, anything they choose to invest in will get loads of interest and appreciate in value, making them look like brilliant investors in the process. Not that buffet isn't brilliant, he's clearly proven that over the years, but the Buffet fandom has gone off the rails I think it's because there are people who build entire wealth-gain strategies around certain conditions.  When those conditions change, their mechanism of gaining wealth is threatened and they may take a short term loss as they transform their holdings to a new strategy. George Carlin pointed out that economic theory says that if you give the poor money they will stop working, but that if you don't give the rich enough money they will stop working.  Which is it?  To little money makes you stop working or too much money makes you stop working?  It can't be one rule for the poor and one rule for the rich. &gt; “The economy, as measured by gross domestic product, can be expected to grow at an annual rate of about 3 percent over the long term, and inflation of 2 percent would push nominal GDP growth to 5 percent, Buffett said. Stocks will probably rise at about that rate and dividend payments will boost total returns to 6 percent to 7 percent, he said.”  [Warren Buffett](https://www.csmonitor.com/Business/The-Simple-Dollar/2013/0506/What-Warren-Buffett-s-stock-market-math-means-for-your-retirement)  This isn't the whole picture, but it's a start. "I think this is a bit too simplistic, because you need to keep in mind that Buffet was managing the money as his career. Had he paid the 1% fee he could have ""made more money"" doing something else.    People who hire money managers usually do so because it A. saves them time managing their own portfolios and B. because they don't believe they would do a better job managing it themselves." To understand his comments about bear-market performance it's important to take them in context. (My research method was Crtl+F: bear; read around the highlights. This is not a complete survey of 60+ years of letters.)  In his earlier letters, statements about bull market performance are always made in reference to Buffet's belief that many of BH's current holdings are in undervalued securities. Ex:  To the extent possible, therefore, I am attempting to create my own work-outs by acquiring large positions in several undervalued securities. Such a policy should lead to the fulfillment of my earlier forecast – an above average performance in a bear market. It is on this basis that I hope to be judged (p 6; emphasis mine). Similar statements are made throughout the earlier letters, along with this interesting note:  In a year when the general market had a substantial advance I would be well   satisfied to match the advance of the Averages (p 6). So to your question of why BH fund performance is likely to be better in a bear market than in a bull market, I believe the implicit assertion is that undervalued securities are more resilient in a bear market (presumably because they don't have as far to fall, and are also less likely to be subject to a bubble). Buffet is also explicitly asserting that when facing a choice to either (a) position BH to weather a possible downturn or (b) position BH to enjoy a bullish stock that is outpacing the market, he would choose the former over the later. As to your assertion that he always says this, I can find no reference to bear market's in the letters past 1960. &gt; The demand for fiat currencies comes from the fact they are necessary to pay taxes  Only because the collective population has decided that the fiat currency has value. Taxes are not handed down by some benevolent leader, it is you and I deciding that we can do better things if we pool a portion of our wealth together.  Let's say we want to build a road between our homes to improve the act of visiting each other. We decide to share the cost of building the road. I throw in 10 chicken, and you toss in 100 seashells. We work our way over to our road-building friend's place. We give him our offering in exchange for building the road.   He doesn't like seashells, but he is willing to take 20 chickens in exchange for building the road. But now we are 10 chickens short from reaching our goal of having a new road between our homes. We decide to implement a strict agreement that all future pooling of wealth needs to be done with chickens. Seashells are not acceptable.  And now we have a tax paid by a mutually agreed upon exchange medium. It works because everyone agrees that chickens have value. If everyone suddenly became vegetarian and saw chickens as having no value, our tax pool would become worthless. The fact that our tax is paid for in chickens does not mean that chickens will forever have value. "Consultant, I commend you for thinking about your financial future at such an early age. Warren Buffet, arguably the most successful investor ever lived, and the best known student of Ben Graham has a very simple advice for non-professional investors:  ""Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.)"" This quote is from his 2013 letter to shareholders. Source: http://www.berkshirehathaway.com/letters/2013ltr.pdf Buffet's annual letters to shareholders are the wealth of useful and practical wisdom for building one's financial future. The logic behind his advice is that most investors cannot consistently pick stock ""winners"", additionally, they are not able to predict timing of the market; hence, one has to simply stay in the market, and win over in the long run." While Warren Buffett is an amazing investor, he does have the benefit of having his working career start around mid-WW2 and ride the baby boomer phenomena afterward.  While there were bear blips in the past decades, there never really was much of a bear market outside the 70s energy crisis and inflation of the early 80s that nevertheless still could be leveraged for gains unlike the Great Depression.  The question really is, will the next generation be so lucky?  Idk, could be but I'm a doubter.  He's right in his criticism (I wouldn't bet my retirment on Bitcoin) but the same critique could apply to the US dollar in parts (which admittedly has the fundamental strength as being accepted for US taxes, but as a consequence also severe drawback in being tied to the economic welfare and trust in the US Government).  In the end, bitcoin and Warren Buffett are at fundamental odds.  Bitcoins is for, among other niches, Currency and Market pessimists (around the world btw and not just US-centric) and Warren Buffet is a product of his time and generally an US-centered optimist. He owns some giants. I'd bet Coca-Cola is his biggest cash cow.   This is a non-story. The revenue naturally follows actual value provided, as opposed to buying and selling shares with the swings of the stock market.   Buffet buys and holds, and builds and collects the revenue from his companies, that's been his core philosophy since the beginning. Warren Buffet also isn't the CEO of a major company - or at least one that matters in this context. He is the CEO of Berkshire Hathaway. That is a holding company that owns a handful of other companies.  It doesn't have customers, it doesn't sell a product. It owns companies that do those things, some of which directly rely on technology and need their CEO to have a strong understanding of technology.  The things is though, that each of those companies? They have their own CEO - not Warren Buffett. Your autograph analogy seems relevant to me. But it is not just speculation. In the long run, investing in stocks is like investing in the economy. In the long run, the economy is expected to grow , hence stock prices are expected to go up. Now in theory: the price of any financial instrument is equal to the net present value today of all the future cash flows from the instrument. So if company's earnings improve, shareholders hope that the earnings will trickle down to them either in form of dividends or in form of capital gain. So they buy the stock, creating demand for it. I can try to explain more if this did not make any sense. :) &gt; but most recognize that money can't buy happiness.  The acquisition of money is quite exhilarating though. People don't easily part with it, so it feels like you're doing something pretty awesome every time new money flows your way.  Money is like a drug. That feeling quickly fades, leaving you wanting more. I imagine that's why people who have all the money they could ever possibly spend still seek more. I'm not sure I'd say the assets they had were worthless. One of the big controversies was whether it was a solvency crisis (bad assets) or a liquidity crisis (fine assets, but if everyone sells illiquid assets there's a fire sale problem).   The US and Buffett bet it was a liquidity crisis, and they were proven right.