Warren Buffett says.... Buy stocks, buy now, buy soon!

NY Times www.nytimes.com/2008/10/17/opinion/17buffett.html October 17, 2008 Op-Ed Contributor Buy American. I Am. By WARREN E. BUFFETT Omaha 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. This is my personal account I\'m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities. Why? 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. Let me be clear on one point: I can\'t predict the short-term movements of the stock market. I haven\'t the faintest idea as to whether stocks will be higher or lower a month - or a year - from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over. 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. 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. You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy. Today people who hold cash equivalents feel comfortable. They shouldn\'t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts. Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky\'s advice: \"I skate to where the puck is going to be, not to where it has been.\" I don\'t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I\'ll follow the lead of a restaurant that opened in an empty bank building and then advertised: \"Put your mouth where your money was.\" Today my money and my mouth both say equities. Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.

It is amazing to see history repeats itself. Warren Buffett gave a similar advice in 1979 per The Snowball (UK version), page 470: ...By mid-1979, the stock market was sunk in gloom, and orders for stocks, Buffett said, were placed \"with an eyedropper\"... ...Business Week declared \"The Death of Equities\", as if no one would ever buy stocks again. A mood of deep pessimism settled on the country. Investors piled into gold, diamonds, platinum, art, real estate, rare coins, mining stocks, feedlot cattle, and oil... ...In Forbes, Buffett wrote the opposite: It was time for investors to buy stocks. \"The future is never clear, you pay a very high price in the stock market for a cheery consensus. Uncertainty actually is the friend of the buyer of long-term values\"

it is true that history always repeats itself. i was just thinking of the 2001 terrorist attack, and how the market sank. at that time, the spectre of terrorism became so dominant, people thought this was something that would keep the market down for a long time. hahaha.... the market did recover & gloriously. thing is what businesses are the most resilient and immune in these days?

i agreed that history always repeats itself. unfortunately, i think the scenario of 2001 terrorist attack, followed by quick fall and rise market is different from current one. this one involved the collapses of several financial institutions. based on statistics, i think this down trend may last from 1.5 to 2.5 years. since it peaked in approx Oct 2007, thus, next year may be a good year to start accumulating by buying over one year duration. i do not know when and which level is the bottom of market.

the chart shows a sharp rebound after a sharp plunge during the Asian financial crisis.

Buffett says: \"Occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics is equally unpredictable, both as to duration and degree. Therefore, we never try to anticipate the arrival or departure of either. We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”