By all accounts, Warren Buffet is an amazing man. Not only did he recently overtake the former long-standing 'richest man,' Bill Gates, as the new richest man extraordinaire, but he's made all of his money by being a marvelously apt picker of great companies in which to invest. That certainly speaks volumes for the guy's know-how when it comes to the markets. And when Warren Buffet makes a move, everyone would be wise to pay very close attention. He knows how to make money.
Of course, no one has the ability to gaze into a crystal ball and foresee the near term, and neither does Warren Buffet. He said in a recent New York Times opinion page article, "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."
That said, he does believe that in the long haul the markets will be substantially higher long before sentiment or the economy improves. Therefore, he says "if you wait for the robins, spring will be over."
Of course he's talking about those investors who are sitting on the sidelines with their cash, waiting for signs that the market is going to get better. He's talking about those guys who are looking for that ever important bottom. But those guys are also only looking at things with the short-term aspect of the economy and stock market in mind. That's bad news, says Buffet, and strongly suggests that the value of cash will depreciate while equities will appreciate, leaving those cash-full investors holding on to less value to throw at the market once that sentiment and economy does improve, essentially doubling their woes by having missed that very important upturn in the market in the first place.
Granted, it's still important to pick fundamentally sound and strong companies. You can't just buy anything here. You have to look for those companies who can weather the storm, and who have simply been beaten down because everyone is taking a beating.
The simple truth is that in five, ten, even twenty years from now, anyone investing in this market today is going to be very happy with the value of their portfolio tomorrow. Warren Buffet sure seems to think this is true, and I think he's absolutely right. Who could possibly argue with the Oracle of Omaha on a point like that?
Historically the best time to invest in the stock market has been when everyone else is running for the door. I wrote about this to some extent in an earlier blog entitled, "Jittery investors give me the cheaps." Stocks are on a blowout clearance the likes of which we have not seen for at least a couple of decades. It's also not going to come around again any time soon. So if you miss it, it's gone.
I firmly believe that history will again repeat itself. And this, the great economic crisis of 2008, will have historically proven to have made the riches of those who dared to proceed contrary to the current sentiment.
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