surprise! Warren Buffett turns out to be more visionary about stocks than politics

As millions of people have recently been reminded of, Berkshire Hathawaywe don’t always call them correctly. He predicted two years ago that Hillary Clinton would run for both the presidency and victory, and never lost faith in the outlook until election night.

Nevertheless, it is appropriate to look at the widely known stock market forecasts that Buffett made 17 years ago in 1999, two weeks later. Here, Buffett was definitely on the right side of the bet.

Buffett’s forecasts are concerned about the magnitude of total revenue, namely workplace valuation and reinvestment dividends. Buffett is Allen & Co. In a speech I gave at the meeting, I made a prediction in July of that year. I repeated it in several speeches over the next few months. And we will work with this author to give a speech. luck article, “Buffett from the stock market” It was carried out in the November 22nd, 1999 issue. You will realize that today will be exactly 17 years from now.

Why is this strange 17-year period? In 1999, the US stock market attracted Buffett’s attention as it had just finished two extraordinary periods of 17 years that Buffett recognized as potential speech frameworks. He also wants to build on the framework, adding forecasts for the 17 years that began in 1999.

The first 17 years Buffett had in his reference framework were when stock market returns were traumatically bad from 1964 to 1981. Dow The Jones Industrial Average ended in 1964 with 874 and 875 in 1981. “Now I’m known as a long-term investor and patient man.” Fortune Article, “But that’s not my big idea of ​​movement.”

A simplified explanation for this extraordinary investment disaster was a dramatic rise in interest rates over the period. Long-term government bond rates went from 4% at the end of the year in 1964 to over 15% in 1981. luckthe rise in interest rates is dragged by the stock price. Over this particular 17 years, the drag was strong enough to overwhelm the country’s GDP almost Quintupling. This is an economic indicator that usually involves stock market profits.

Then came the second 17 years, extended from the end of 1981 to 1998. At the time, Federal Reserve Chairman Paul Volucer hampered both interest rates and inflation. In response, the stocks rose strongly. And Buffett said that, eventually, he made profits for the company, but “it wasn’t steady.” “But nonetheless, they had real power. “In those 17 years, the Dow rose more than ten times, moving from 875 to a spectacular 9,181.”

By then, of course, most investors hadn’t thought of outliers. They instead made it certain that they were both great in stock picking and were entitled to the wealth they are building up. A survey of the Paine Webber and Gallup organization released in July 1999 shows investors with little experience investing in under five years predicting annual revenues over the next 10 years of 22.6% when it was announced when the Dow added another 2,000 points. Those who had invested for over 20 years had expected 12.9%.

Now, when Buffett summed up his opinion in late 1999, he pointed out that no returns of that magnitude had just occurred. Instead, he’s like going back to average (without using these words), and the future world of investment is trapped in the fate of normal suspects, interest rates and corporate profits.

And here he saw the intermediate results. The net trading and management costs incurred by investors predicted that the annual return could be 6% from late 1999 to late 2016 to late 2016, considering that these costs could potentially rob the investors of percentage points upon return.

With 17 years going on today, what is the answer?

First, remember that the stock market does not deal with “net” returns, as presented by, for example, Dow and Standard & Poor’s Index. What you monitor on your computer screen is the total revenue before trading and management costs are deducted.

However, the records show that the total revenue for the period is anemia sufficient to confirm Buffett’s general accuracy. From mid-November 1999 until last Friday trading day, the annual total return from Dow Industrials was 5.9%.

Buffett, 86, who proved his ability to handle crystal ball work, was asked by the writer (his 87-year-old friend) that he might be concerned about predicting a full return over the next 17 years in 2033.

Nevertheless, Buffett provided three thoughts on the people going forward in 2017.

First, he believes that low-cost S&P index fund investors reinvest all their dividends are very likely to be much better than investors who buy 17-year government bonds and reinvest all their coupons in the same equipment.

Second, he suspects that amateurs follow the same index fund strategy and “ignoring” investors have “do-nothing” investors totalling Ultimately, it will be better than what is achieved by investors who choose to hire professionals who charge high fees.

Third, he predicts that many experts who have failed investors by slowing down index fund performance will be extremely rich in the process of doing so.

Carol Loomis, a retired senior editor, is a longtime friend of Warren Buffett. She was also a shareholder of Berkshire Hathaway for many years.

This story was originally introduced Fortune.com