Billionaire Warren Buffett, the greatest investor of our age, today gave free advice to people worried about the economy: buy stocks. Not only is he adding equities to his personal account but they are -- get this -- American stocks. In this day and age when people are diversifying their holdings between the mattress and a safe buried in their backyard, this is a shocking view.Writing in today's New York Times, the Oracle of Omaha, pointed out quite accurately that stocks are a good long-term investment and that people who are hording cash have reason to worry since the policies of the next president will probably prove inflationary and accelerate declines in the real value of cash accounts. Equities will outperform cash over the next decade, according to Buffett, the head of Berskhire Hathaway Inc. (NYSE:BRK.A)
"Today people who hold cash equivalents feel comfortable," he said. "They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value."
He pointed out that he was getting greedy in a fearful market. That's sensible, practical advice and investors are listening to it -- at least for now. Buffett is not offering easy answers or quick fixes. He does not try to call a "bottom" in the market. In fact, the investor explains that he has "no idea" what the market will do in the short-term. Neither does any one else, and that's the problem.
Closing Bell: When We All Love the PIIGS (NBG, SQNM, PG, ERTS, KO)
Serious Money: Cheapest Stocks List Shrinks from 26 to 21
Chasing Value: Hasbro Earnings Makes My Point
Reader Comments (Page 1 of 1)
10-17-2008 @ 12:31PM
beachpaul said...
He's a little old to be playing the long term, isn't he? Oh, I get it! Another old, rich,white, guy who thinks he's going to live forever or die in the attempt.
10-17-2008 @ 12:42PM
Iridium said...
When the long term prospect for many large corporations is bankrupcy I do not think it is time to buy stock.
Since the government seems to think that it is better to bail out companies rather than let them go belly up. It may be good to buy stock but only if you have enough money to influence stock price, like Buffet. Normal people should stay clear.
Buffet wants people to buy stock so there will be more outstanding shares to buy right before the government takes over. Then Buffet will swoop in and make billions on the deal.
I would always do the opposite of what Buffet says. He is not in the game to make you money. He is in the game to make Berkshire money. The man is a arrogant ass and represents nearly everything wrong with America. He made billions buying out undervalued corporations then hyping thier stock. He manipulates the market to make money, plain and simple. He is the Al Capone of the stock market and just like Joe Kennedy he knows that one man with a lot of money can make the market behave any way he wants.
Hopefully the days of stocks trading at values hundreds of times earnings is over. If not we will go through this cycle all over again.
10-17-2008 @ 4:01PM
JL said...
Iridium...my god man
The long term prospect for many firms is not bankruptcy. Since he didn't mention what he's buying I can't make an argument about it and neither can you.
You don't become the richest person in the world by making the wrong bets and although I'm not much of a seer as he is even I can see that years from now the market is headed up. Just look at the freaking long term chart of anything.
You're also disregarding the fact he's giving away 85% of his fortune to charity...what an Al Capone he is!
10-18-2008 @ 10:31AM
Buffett Fan said...
As my name implies I am a Buffett fan, although I have no privileged knowledge of what Warren Buffett is doing, so I would reiterate what has been said by JL - Warren Buffett says it's a good time to buy, but he didn't say what he has been buying. He is very careful about what he invests in and I would be extremely surprised if he was investing in companies that had even the remotest possibility of going bust.
In addition, he invests for the long-term, he says himself he has no idea what stock markets will do over the next year, his time horizon is 5 years and beyond.
He also stopped buying on Thursday when the DOW started heading back up, he was buying when the DOW was around 8200. Personally I suspect the DOW will fall a bit further but Warren Buffett is not particularly interested in timing things exactly right.
One thing I would say however is that he is a wily old fox and having bought equities for the first time in years it is quite possible that he would like to encourage more people to join him, thus possibly giving support to his own buying- just a thought. http://www.theoracleofomaha.com
10-21-2008 @ 3:15PM
Patty said...
Had you taken his advice after the crash in 1939, you would have not lost 55%, you would have lost 80%. He's literally begging people to invest because he made the same mistake by investing too early and in companies which cannot do otherwise than declare bankruptcy in the next year or so. Don't buy the snake oil!
10-20-2008 @ 6:24PM
Patty said...
Oops, meant to say crash of 1929.
10-20-2008 @ 11:13PM
www.slycapital.com said...
Every investment adviser has been saying "follow Buffett, stay in the market!" for a year and a half now.
Small problem: Buffett has been out as he just admitted to.
If you have a 15-20 year time frame by all means gamble this is the bottom (it aint).
Buffetts advice to simply "Buy American" is very odd. A lot of companies are going to fail. The last thing Buffett is doing is buying companies just because they are American.