Here is the article
Subject: "Buy American. I Am." - Warren E. Buffett in NYT
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. < BR>
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.
Why?
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 inflat ion 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 mout h both say equities.
Warren E. Buffett is the chief executive of Berkshire Hathaway, a
diversified holding company.
http://www.nytimes.com/2008/10/17/opinion/17buffett.html
