What's the first thing that strikes you as being wrong with it. The first thing that struck me as being wrong is that he doesn't include the mortgage interest deduction from owning a house. He completely ignores that. There are other serious flaws though.
First of all, as the quote above demonstrates using past figures is a road to ruin when it comes to investing. The reason Warren Buffett is an investing legend is because he's renowned for seeing into the future. He has famously said that you can't drive a car by looking into the review mirror.
Secondly, he assumes a home value increase rate of 4%. Which is great, I would that happened for everybody and it also hurts his cause. Why do you think so many people get rich in real estate? One word, leverage! By putting 20% down you are able to capture all of the price increase with only 1/5 of the cost. Let me show you. Let's make the math easy. You buy a $100k house and put $20k down. The house then appreciates 4% next year. That's $4k that you've made if sold (excluding transaction costs, I'll talk about this later). So you made a 20% return on your $20k investment! That's just the first year. Each year after that you'll make more due to compounding effects. Try getting that in the stock market year after year. Now it is true, the transaction costs are higher with real estate, especially with buying, but that's why I'd advocate keeping it for at least 5 years. That helps minimize the cost per year over time.
Thirdly, he is advocating you invest in the stock market. How is that? He said to refinance if you can. What are you going to do with that money that equity that you took out of your home, stick it under a mattress?? No you're probably going to put it in the stock market. I definitely wouldn't put it into bonds.
As far as being short the dollar. Buffett means in terms of inflation since holding your assets in dollars can't allow for you to short itself. Do you know any other way to short inflation other than fixed debt?