Friday, 9 October 2009
Monday, 30 March 2009
Monday, 9 March 2009
Friday, 17 October 2008
His explanation is persuasive. It is the timeless contrarian argument:
THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.
So ... I’ve been buying American stocks.
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.So, Buffett shares that his personal wealth is now 100% in US equities, and he warns people who are hunkering down in cash (like me), that we will miss the boat before the signals are clear for a recovery. He gives historical examples from the Great Depression and WWII to show that people brave enough to invest after the crash make out like bandits:
Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.So, given this airtight logic, why would I doubt him? Because he has a conflict of interest. First of all, his beloved BRK-A stock has dropped $30,000 since December. Berkshire Hathaway is basically a giant holding company, and the tide brings down all ships. For the sake of his investors, and his own holdings, he wants it to get back on track. However, this is in everybody's interests, so that's OK, right? So far so good.