Warren Buffet offers this advice - "Be fearful when others are greedy, and
be greedy when others are fearful.


The New York Times
October 17, 2008
Op-Ed Contributor

Buy American. I Am.


THE financial world is a mess, both in the United States and abroad. Its
problems, moreover, have been leaking into the general economy, and the
leaks are now turning into a gusher. In the near term, unemployment will
rise, business activity will falter and headlines will continue to be scary.

So ... I've been buying American stocks. This is my personal account I'm
talking about, in which I previously owned nothing but United States
government bonds. (This description leaves aside my Berkshire Hathaway
holdings, which are all committed to philanthropy.) If prices keep looking
attractive, my non-Berkshire net worth will soon be 100 percent in United
States equities.


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. These businesses will indeed suffer earnings
hiccups, as they always have. But most major companies will be setting new
profit records 5, 10 and 20 years from now.

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 - 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.

A little history here: During the Depression, the Dow hit its low, 41, on
July 8, 1932. Economic conditions, though, kept deteriorating until Franklin
D. Roosevelt took office in March 1933. By that time, the market had already
advanced 30 percent. Or think back to the early days of World War II, when
things were going badly for the United States in Europe and the Pacific. The
market hit bottom in April 1942, well before Allied fortunes turned. Again,
in the early 1980s, the time to buy stocks was when inflation raged and the
economy was in the tank. In short, bad news is an investor's best friend. It
lets you buy a slice of America's future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century,
the United States endured two world wars and other traumatic and expensive
military conflicts; the Depression; a dozen or so recessions and financial
panics; oil shocks; a flu epidemic; and the resignation of a disgraced
president. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money
during a century marked by such an extraordinary gain. But some investors
did. 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."

I don't like to opine on the stock market, and again I emphasize that I have
no idea what the market will do in the short term. Nevertheless, I'll follow
the lead of a restaurant that opened in an empty bank building and then
advertised: "Put your mouth where your money was." Today my money and my
mouth both say equities.

Warren E. Buffett is the chief executive of Berkshire Hathaway, a
diversified holding company.