Monday, October 20, 2008

Warren Buffett says "Buy American. I Am."



Warren Buffett is now buying American stocks and in his New York Times editorial, he is urging people to follow his lead.

Would this apply to other bourses as well since the other markets look up to the US market for direction? Advising against holding cash, he said cash is a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.

Buffett says he's been buying stocks in his own personal account, in which he previously owned nothing but United States government bonds. If prices stay attractive, all of his personal holdings will be 100% U.S. equities.

Why is Buffett taking this strategy?

"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."

Buffett emphasizes that he has no idea what the market will do in the short term but equities will almost certainly outperform cash over the next decade, probably by a substantial degree.

There you have it, insight from currently the richest American.

12 comments:

  1. I believe Buffett is right. Personally, this is the right time to buy when price is low. In the long term, it can only mean profit.

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  2. Buffet studies company annual reports. Normal people like us can only follow or refer to ratings by investments firms. But the financial storm shows that even the ratings are unreliable.

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  3. Nothing's really reliable these days...everything's uncertain.

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  4. Foong, I believe Buffett is more daring or perhaps he has more information to back his claim. The sentiment here is less aggressive and to exercise caution. Fund consultants I know are advising against going in right now. However, some of my friends have gone in and I believe are already making some profit.

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  5. KS, company annual reports can be obtained. The key thing is whether we have adequate knowhow to interpret the info contained in them. The same goes for ratings of which there are various sources.

    Bottomline is, no one can predict the future, so dabbling in equities, etc., is a gamble. Unless of course, one has the patience (and funds) to hold on to them over an extended period like Warren Buffett.

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  6. MBL, life really boils down to that, doesn't it? Live for the moment instead? Alas! It is not that simple. Journey on we shall, time-travellers we are.

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  7. they say recession only lasts 8 months. well, if that is so, he'll be rich back soon. actually, buying any stock now will make him rich in the future (maybe longer term).

    but for msia and other asian countries, i think the storm is coming (spore already facing it). so maybe he's right, buy usa now, and maybe a few months later asia.

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  8. 8 months is pretty conservative.

    Warren Buffett can only get richer. Who knows how much more he will make after making that USD8B between Sep to Oct.

    Sgp is now in recession along with Hkg, Taiwan and others. Malaysia is going thru a slowdown. Hopefully it won't get any worse.

    Warren Buffett is advocating not keeping cash right now but stocks because cash decreases in value over time due to inflation.

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  9. Hi,,,, " Fear when others greed, greed when others fear" is one of the sentence which i will remember for the rest of my life!

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  10. it's not working by investing in Malaysian stock market? correct me if i'm wrong.

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  11. Hi there, 4 a better w0r1d - thanks for that reminder. Yeah, that's a good one because most of us let emotions drive our investment decisions much of the time. And we generally end up being greedy when everybody else gets greedy and fearful when there is panic all around.

    There is something in our local context too. It's often said that if the tea-ladies are getting into the market and when you hear even the common folks on the street talking about the share market, it is time to get out.

    Thanks again for stopping by.

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  12. Hi Keong, inflation is universal and cash is the one that gets hit as it decreases in value over time. People then turn to equities - I am talking about equities with decent dividends. The market is so volatile right now that people are worried about getting in but I believe the daring ones would be the ones laughing all the way to the bank when the market recovers. The question is when? I was told to be ready to get in in December. Your guess is as good as mine, eh?

    Thanks for sharing that question. We can all learn together.

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