Here’s the Op-Ed from Warren Buffet in today’s NY Times encouraging investors to buy American stocks and stock stashing your cash under the mattress. If you’re going to listen to anyone during tough economic times, you need to listen to WEALTHY people, not the media and not other poor people in tons of debt. Wealthy people became wealthy for a reason, and many of them become rich by taking advantage of opportunities during tough economic times. I have harped and harped about this over the past few months, but I am not sure if anyone is listening to it. So, don’t take my word for it, take Warren Buffet’s word for it, the second richest man in the country.
Here’s my favorite quote from his op-ed:
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.
You cannot say it any better, and he is dead-on right about this. If you have a 401k or an IRA, then you SHOULD be an investor for the long-term, so all of this economic talk does not matter to you. Continue to buy into the stock market with index funds and mutual funds with good management and low expenses. Be greedy when others are fearful and be fearful when others are greedy — words to live by.
Another good quote from Buffet:
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 Ã¢â‚¬â€ or a year Ã¢â‚¬â€ 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.
So, for all of you wondering if you should cash out your 401k or IRA, do not do it. Continue investing in mutual funds that track the overall market and industries that are not over-leveraged. Be wary of WHO you are investing in, not whether your should invest or not.
Have a great weekend everyone.