Friday, October 17, 2008

Warren Buffett: Be greedy when others are fearful

When all stockowners, mutual fund managers, and hedge funds are turning to cash instead of equities, Warren Buffett takes the contrarian view and says that such a time is fit for buying oversold stocks .  His view :
Be fearful when others are greedy, and be greedy when others are fearful.

The unemployment rate may be rising, and banks faltering by the dozen, recession hitting us from all angles, but Warren Buffett seems to put it straight:

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. If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.

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The Oracle of Omaha also makes a few points clear :

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...

Towards the end, Warren Buffett paints a good picture for the future:

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.

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  1. Nice post Chirag!!! Though i believe that we will continue to fall for a while until the markets pull back.

  2. Markets might just move up because of the "Warren Buffett effect" . but this time round it hasn't happened so. read this : Buffett's "buy now" call gets lukewarm reception

  3. Chirag if now Warren is greedy so, we should be fearful?

    Anyways Jyotesh said market will drop for a bit till stability comes in.

  4. I agree with Warren Buffet, go against the herd and pocket. There are loads of opportunity in the property market at the moment.