Wednesday, November 26, 2008

Be Greedy When Others Are Fearful

Excerpts from an article by Warren Buffett titled "Buy America. I Am" published in the New York Times on 16 October 2008 :

"A simple rule dictates my buying. Be fearful when others are greedy and be greedy when others are fearful.

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.

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."

These are the words of the investment guru! And they definitely jive with my article published on 16 Sept titled "Long Term Investment Goals".

Investors should have a disciplined perspective that focuses on achieving medium to long term investment goals. Focus on the long term horizon and refrain from over-reacting to the short term movements of the stock market.


Ahmad Ikmal said...

Bro, tell me where and how to invest. What is the correct balance between cash in hand and investments. what kind of investments would you suggest. I am inclined to direct investments in small set-ups.

CheeWee said...

bro v shld catch up again over teh tarik to talk abt politic n investment! :) Agreed -Cash is King, keep some in the bank for the short term rainy days (3-6mths expenses) and can consider invest the rest. CIMB hv just slashed its FD rate, so it's getting less attractive to put $$$ in bank. Can consider buying good shares which are currently undervalued and many other products like properties, unit trusts etc that beat the inflation rate!