Friday, October 17, 2008

When Warren Buffet Talks, You Should Listen

Buy American. I Am. - Warren Buffett in the New York Times:
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.
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A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.
He's right. I'm still kicking myself for not doubling down on Charles Schwab after the '87 crash --I'd have made a huge killing by selling off in 1999. Mr. Buffett's logic is a perfect example of contrarian investment, and his track record is pretty good. I'm long in cash right now, and for the short-term that is very good. Buy for the long haul and quit looking at the news. Companies that are fundamentally sound will survive and prosper.

Remember: if no one were buying any stock, the market would be at zero. The market is not at zero, ergo there are people buying stock.

1 comment:

Remind Myself said...

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Recently an insurance company nearly wind up....
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A bank is nearly bankrupt......filing chapter 11 protection.
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How it affect you? Did you buy insurance? Did you buy mini note or bonds?
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Who fault?
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They bailout trouble finance company, but they will not bail out your credit card bills…….Should they have use the bail out $$ to pump into all different industries instead ……You got no choice, and no point pointing finger but you can prevent similar things from happen again……
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Are you a partisan?
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Since the bailout already done, the question now is besides letting the economic back on track, what regulation should be done to prevent similar things from happen again…..

Eg.
The top management of the Public listed company ( belong to "public" ) monthly salary should be tied a portion of it to the shares price ( IPO or ave 5 years ).... so when the shares price drop, it don't just penalise the investors, but those who don't take well care of the company.....If this rule is pass on, without any need of further regulation, all industries ( as long as it is public listed ) will be self regulated......because the top management will be concern about their own pay check…… Instead of spending big money on hotel stay and luxury function……..Top management get monthly salary and director fee, while investor get dividends….
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Whenever anywhere, anytime, there is election campaign.....We can use this to question your candidate there….. if you agree on my point, please share with many people as possible.... Finance and Media are the two only industries can shaken politics ( Maybe Hackers can ), please help to highlight also...

Also recently some comments say that Respectable Mr Buffet had start buying, yes, he started buying with guarantee return of 10% annually….. Do we individual investor had the same offer…. If yes, I will definitely join in and buy……and the institution will definitely wouldn't short of money if they offer the same terms to the individual investors..... When ever in the history previously did Mr Buffet claimed that he bought shares.....

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Blog
http://remindmyselfinstock.blogspot.com/
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Facebook, come and join as a friend and share with your friends…..
Remind.myself@yahoo.com

Eg:
Just image, Institution lent out the shares already, in their hand, they don't have any stock or shares already, but Institution know that in the market, there are those individual investor who borrow the share going to sell the stock, so Institution naked short also, because there is no restriction on those Institution that those stock or shares that lend out, cannot be trade by the institution at that moment.