Friday, October 17, 2008

Warren Buffett gives us a lecture in courage under fire


Warren E. Buffett has a hard-hitting column, “Buy American: I Am” on the opinion page of the Oct. 17 New York Times, today. The link is here.

With words that remind me of Barry Goldwater (“extremism in the defense of liberty is no vice” and “you don’t have to be straight to shoot straight”) Buffett writes:

“Be fearful when others are greedy, and be greedy when others are fearful.”

He gives examples from history, where the Dow hit its low (in 1932) some months before the economy bottomed during the Great Depression Even during early World War II, the Dow bottomed before Midway and the improvement of Allied actions.

He says people who sell to hold cash assets to feel comfortable shouldn’t. Of course, the problem is that some people are caught in squeezes, and have no choice (except at the end of life) but to start over.

Note, however, that today CNN is reporting an unprecedented (compared to other recessions and bear markets) outflow from equity mutual funds ($57 billion for the first half of October). My Blackrock funds seem to have deteriorated since the big drop a week ago Thursday much more than justified by the market, whereas before it had been relatively stable. Is this because of the Lehman settlement and the credit default swaps? See my posting Sunday Oct. 12.

The New York Times site has a lot of blog material ("high and low finance") by financial columnist Floyd Norris every day. A typical entry is "Banks Fail, and So Can Bailouts." It seems that so far, banks are holding on to the money that Unclde Sugar has injected. It's a bit like promycin on "The 4400."

Picture: some "strip mining" in the New Jersey Meadowlands, from an Amtrak train, Oct. 2004.

2 comments:

Roman said...

Warren is not investing for the short term, hes going the long(he expects to hit 200) The market will go back up. So at this point he is buying low in hopes of selling high.Its not courage just business.

Anonymous said...

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Recently an insurance company nearly wind up....
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A bank is nearly bankrupt......filing chapter 11 protection.
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How it affect you? Did you buy insurance? Did you buy mini note or bonds?
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Who fault?
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They bailout trouble finance company, but they will not bail out your credit card bills…….Should they have use the bail out $$ to pump into all different industries instead ……You got no choice, and no point pointing finger but you can prevent similar things from happen again……
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Are you a partisan?
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Since the bailout already done, the question now is besides letting the economic back on track, what regulation should be done to prevent similar things from happen again…..

Eg.
The top management of the Public listed company ( belong to "public" ) monthly salary should be tied a portion of it to the shares price ( IPO or ave 5 years ).... so when the shares price drop, it don't just penalise the investors, but those who don't take well care of the company.....If this rule is pass on, without any need of further regulation, all industries ( as long as it is public listed ) will be self regulated......because the top management will be concern about their own pay check…… Instead of spending big money on hotel stay and luxury function……..Top management get monthly salary and director fee, while shareholders & investor get dividends….So those shareholder cum management get…..
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Whenever anywhere, anytime, there is election campaign.....We can use this to question your candidate there….. if you agree on my point, please share with many people as possible.... Finance and Media are the two only industries can shaken politics ( Maybe Hackers can ), please help to highlight also...

Also recently some comments say that Respectable Mr Buffet had start buying, yes, he started buying with guarantee return of 10% annually….. Do we individual investor had the same offer…. If yes, I will definitely join in and buy……and the institution will definitely wouldn't short of money if they offer the same terms to the individual investors..... When ever in the history previously did Mr Buffet claimed that he bought shares.....

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Blog
http://remindmyselfinstock.blogspot.com/
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Facebook, come and join as a friend and share with your friends…..
Remind.myself@yahoo.com

Eg:
Just image, Institution lent out the shares already, in their hand, they don't have any stock or shares already, but Institution know that in the market, there are those individual investor who borrow the share going to sell the stock, so Institution naked short also, because there is no restriction on those Institution that those stock or shares that lend out, cannot be trade by the institution at that moment.