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.
– Warren Buffett, “Buy American. I Am.”, The New York Times, Friday October 17
In today’s New York Times, Warren Buffett wrote that now is the time to buy US equities. This appears to have done wonders for investor sentiment.
CNBC highlighted previous articles Buffett has written for the public recommending buying or selling stocks:
How about that for timing!
For the first time today, I’m starting to feel a real shift in sentiment from the commentators on CNBC as many come out and say now is the time to buy. Last Wednesday I wrote:
A few weeks from now things are going to look very different. The stock market will have put in a significant bottom and exploded higher. All those investors who sold stocks in the last couple of weeks will start to think about getting back in. The pundits will be on TV saying this was capitulation, the bottom is in, stocks are a bargain, the bear market is over (“Get Ready For The Mother Of All Bear Market Rallies”, Top Gun FP, October 8th).
This could mark an important turning point.