I just came upon a great article by Warren Buffet in the NY Times entitled, “Buy American, I Am”. Besides that fact that he is more or less a hero and icon in the financial world, he is also one of the world’s greatest modern philanthropists. He is certainly my hero.
His article talks about the current economy and why he says it might be a wise idea to buy American stocks right now because they are a bargain.
“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.”
Buffet has always been a rather simple investor always looking at the fundamentals and investing for the long run. While every other investor seems to be running around trying to get the quick buck, Buffet keeps his cool and realizes big gains over a longer time frame.
There is really two take away points here. 1. Don’t be afraid to go against the grain. The best opportunities are many times the ones people are too fearful or lazy to pursue. Be the minority. 2. Keep a long term perspective. Even though things are bad right now they will recover. It may be months, it may be years, but they are guaranteed to recover. Everything comes in cycles.
I think although there are some bargains about at the moment you should, as you rightly said look at the fundamentals. Don’t buy any old rubbish just because its cheap
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It sure would appear that there would be less competition in working with a mindset that differs from the mindset of the majority at that time. While other businesses might be in “save the company” mode, you could be thinking about how to begin a company or new product. It takes a bit of separation from the pack to go about this procedure.
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Across the pond, Money Week (A weekly and quite simply the most pragmatic and honest publication on current financial matters) on the leading story stated its still too early to “go American”. Long and the short of it was that despite the rather eventful week in politics stateside (Obama for those in a coma) there is still too much bad news flying around in the US, the fed has little room left to play with, defaults are still scary etc etc, to warrant getting back in to US stocks…yet.
It even cited old Buffet in the article.
I would say (again agreeing with the magazine) that long term there is going to be some good picks (and WB is a long term investor) but getting in now is still way too early. I think our press is a little more impartial on things foreign than a man who has so much to gain from rising US markets.