Friday, October 17, 2008

Words of Wisdom

My Dad often says: "Fear and greed are the two most important factors in the stock market."

Warren Buffett reiterated his long-standing philosophy: "Be fearful when others are greedy, and be greedy when others are fearful."

I firmly believe these are the tenets of successful investing in the stock market (most applicable in the current economy). Buffett became the richest man in the world by investing while others were fearful, which in turn has allowed him to be one the greatest philanthropists of his time. He said, "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."

Read the advice/opinion in NYT Editorial by Warren Buffett.

Today, confidence among U.S. consumers fell by the most on record and single-family housing starts hit a 26- year low, posing an increasing threat to household spending that accounts for more than two-thirds of the economy. Even the stock market is super-volatile right now, consider just this week for starters. The Dow Jones gained 976 points on Monday; fell 76 points on Tuesday; dropped 733 points on Wednesday; gained 401 points Thursday and then again dropped 127 points today. Yet, the net gain for the week is about 400 points!! Is this a good time to invest?

Ohh, yeah! Yet, it's imminent that there in no quick recovery for the economy and it should ideally be back on track by the end of next year. I'm not sure if we're at a bottom in equities, but valuations sure do look good from a historical perspective.
I would advise everyone to be a more pro-active investor than the buy-hold-forget and then expect profits strategy! You should be more involved and actively aware of economic trends and make necessary adjustments to your portfolio/assets.

Take it for what it's worth...

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