Warren Buffett on asset classes, translated into exchange-traded funds

Warren Buffett and Charlie Munger held a five-hour question and answer session at Berkshire Hathaway's annual meeting. Buffett and Munger both discussed their view of various asset classes. Here are the comments (from notes taken by entrepreneur Paul Allen), arranged by asset class with a listing of the relevant ETFs:

U.S. Large Cap Stocks: ETF tickers ISI, IVV, IWB, IWV, IYY, JKD, SPY

Buffett: We aren't buying more, but we are sticking with what we have. Less of our intrinsic value today is represented by common stocks than ever before. We are not unhappy with our major businesses. Would we buy at todays prices? No, we're in a zone because of size and taxes where we are neither a uyer or seller. We don't see many attractive stocks but there is also not as much silliness as five years ago.

Bonds: ETF tickers AGG, IEF, LQD, TLT

Buffett: Long term bonds at 4.5% vs equities over the next 20 years and you can't change, do equities. To expect double digit gains is not realistic, doing it yourself or finding others. Aren't enough bargains. I think you will get a chance in not too many years that is screamingly more intelligent than the options now.

Gold: ETF tickers GLD, IAU

Buffett: Gold is way down on my list, I would rather own assets that produce value. Dow went from 66 to 12000 and paid dividends. If you owned Gold you paid 20 and went to 400 a hundred years later, and you paid insurance and storage costs. It's really not a store of value. Farm, apartment, businesses have utility. I'd rather be able to sell someone candy in 20 years than holding gold. I see no reason why it will work well in the future.

Muffett: Gold was great if you were a well-to-do Jewish [person trying to save the] value [of your assets] in Austria in 1935. But for us, it has none.

Real Estate Investment Trusts: ETF tickers IYR, RWR, VNQ

Munger: Owning real estate is grossly disadvantaged under the tax code. All my rich friends are selling their worst properties and are getting great prices.

Buffett: At about the time the NASDAQ hit its high, I thought REITs were cheap and I put my outside wealth into it. Now REiTs are unattractive. For a corporation or an individual. “It is better to pay attention to something that is being scorned than something that is getting attention.�?

Paul Allen's full notes from the meeting are here.