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Wednesday, October 22, 2008

Opportunities galore in the US for Warren Buffett

With the blood on the street and most investors running scared these days, Warren Buffett seems to be having a gala times these days picking up the beaten down stocks. While most investors are fleeing the market, Warren Buffett is busy analyzing and making investments.

Last week, the investment guru, Warren Buffett, opined in the New York Times that now is the time to buy quality US stocks for his personal account.

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.

Considering Warren Buffett's record, now may be the good time to buy stocks. Of course, the thing is to do only if you have some free money to invest without having to go into debt, have long investment time horizon (5+ years), and have the tolerance to withstand the extreme volatily. That, however, is easier said than done. In the current environment, investors are fleeing the market and putting their money in cash and other ultra safe alternatives such as Treasureres. Warren Buffett, however, doesn't seem to think that's the right strategy for most investors.

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.”

posted by Ruby @ 8:38 AM

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