A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful.
In short, bad news is an investor's best friend.
The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.
The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.
Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.
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.”
Warren E. Buffett. Buy American. I Am. The New York Times, October 17, 2008
