Despite recent market volatility most KiwiSavers should be happy with their investment. Now is not the time to be cutting and running or you will miss the benefits of long term investing. Even default funds are doing better

It is exceedingly difficult to accurately time a crash and recovery. Even the CEO of the NZ Super Fund acknowledges this - http://www.youtube.com/watch?v=h1SdW8KmJrk&t=7m59s

You have to take a long term view. Someone that invests in an aggressive fund and leaves it there untouched for 40 years will almost certainly come out the other end better off than someone that chops and changes, attempting to time the market. I’ll stay the course and leave it to my fund manager to adjust their ratios as they see fit - perhaps a bit more liquidity when trouble looks to be on the near term horizon. My KiwiSaver is 73k today, and I won’t bat en eyelid if it is 33k tomorrow. Yes, aggressive funds will take more of a short term hit in the event of a global financial crisis, but it is the long term outcome that counts.

Most of the people that happen to accurately predict a crash are people that are constantly saying that a crash is just around the corner for years on end. And when one finally comes along they say “I told you so”. But the reality is that even a blind squirrel will find a nut every now and again, and even a broken clock is right twice a day.

Yes, but the underlying message is stay in shares i.e. they will recover and continue to increase.

I am merely pointing out the hypocrisy of many of the posters on this site.

But have made no significant purchases recently.. They're just letting the cash build up.

Remember that Berkshire Hathaway is in the insurance business and owns operating subsidiaries. It is very different to an investment fund holding minority stakes in listed securities.

To look at the percentage of assets in cash as an indication of its investment positioning and view of listed markets as one would look at an investment fund wholly invested in listed securities would lead to a misleading conclusion.

Buffett has stated that Berkshire would maintain a minimum of US$20bn for liquidity purposes to be available for insurance payouts.

1) 15% of total assets are in cash (Treasury Bills are counted here as they can be easily sold at or near face value, whilst cash at the utilities and finance businesses are excluded as they are assumed to be for their own working capital needs) - excluding the US$20bn for insurance payouts, then this leaves 11.7% (US$83bn) of total assets which can be invested in either minority stakes of listed companies, control stakes of unlisted companies, other investment opportunities (such as the preference shares with attached warrants on Goldman Sachs, loans to Harley Davidson, financing for Mars to purchase Wrigley, LBO financing for Kraft Heinz, etc)

2) 24% in minority stakes in listed securities

3) 61% are in assets of wholly owned / controlled subsidiaries which are operating businesses. There is no way that these assets are going to get sold and the proceeds reallocated to other investment opportunities.

Buffet does have a history of using cash equivalent fiscal products in lieu of actual cash to avoid the taxation associated with the “profit” from the “sale”

As a reminder, over 99% of Warren Buffett's wealth is in the shares of only one company that he manages - Berkshire Hathaway. He has donated shares in Berkshire Hathaway for philanthropy, and not sold any shares in Berkshire Hathaway for his own personal needs.

Warren Buffett, as Chief Investment Officer has sold shares in the investment portfolio owned by Berkshire Hathaway. For example, Berkshire Hathaway has sold shares in Wells Fargo, and IBM in recent years.

For non professional investors in the stock market, Warren Buffett recommends using low cost index funds. Here is the relevant excerpt from one of his annual letters.

Most investors, of course, have not made the study of business prospects a priority in their lives. If wise, they will conclude that they do not know enough about specific businesses to predict their future earning power.

I have good news for these non-professionals: The typical investor doesn’t need this skill. In aggregate, American business has done wonderfully over time and will continue to do so (though, most assuredly, in unpredictable fits and starts). In the 20th Century, the Dow Jones Industrials index advanced from 66 to 11,497, paying a rising stream of dividends to boot. The 21st Century will witness further gains, almost certain to be substantial. The goal of the non-professional should not be to pick winners – neither he nor his “helpers” can do that – but should rather be to own a cross-section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal.

That’s the “what” of investing for the non-professional. The “when” is also important. The main danger is that the timid or beginning investor will enter the market at a time of extreme exuberance and then become disillusioned when paper losses occur. (Remember the late Barton Biggs’ observation: “A bull market is like sex. It feels best just before it ends.”) The antidote to that kind of mistiming is for an investor to accumulate shares over a long period and never to sell when the news is bad and stocks are well off their highs. Following those rules, the “know-nothing” investor who both diversifies and keeps his costs minimal is virtually certain to get satisfactory results. Indeed, the unsophisticated investor who is realistic about his shortcomings is likely to obtain better long-term results than the knowledgeable professional who is blind to even a single weakness.

If “investors” frenetically bought and sold farmland to each other, neither the yields nor prices of their crops would be increased. The only consequence of such behavior would be decreases in the overall earnings realized by the farm-owning population because of the substantial costs it would incur as it sought advice andswitched properties.

Nevertheless, both individuals and institutions will constantly be urged to be active by those who profit from giving advice or effecting transactions. The resulting frictional costs can be huge and, for investors in aggregate, devoid of benefit. So ignore the chatter, keep your costs minimal, and invest in stocks as you would in a farm.

My money, I should add, is where my mouth is: What I advise here is essentially identical to certain instructions I’ve laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife’s benefit. (I have to use cash for individual bequests, because all of my Berkshire shares will be fully distributed to certain philanthropic organizations over the ten years following the closing of my estate.) My advice to the trustee could not be more simple: 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.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers."