The stock market has been very volatile for the past few weeks. Markets have been down close to 40% year to date. People are worried and scared. Fear is in the air. Fundamentals are thrown out and people are all speculating on the short-term movements of the market.
Many have sold and others are afraid to look at their 401k or brokerage statements. But now is a great time to buy. I think Warren Buffet’s famous line applies now. “Be fearful when others are greedy and greedy when others are fearful”. This recent article by Buffet called “Buy American. I am is a great read.
Here is an excerpt:
“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.”
Buffet is honest. He knows he cannot predict the market. No one can. There are too many variables to account That’s why it’s usually not a good idea to give out stock advice. It’s a lose-lose situation. People like taking advice from others so that they can pin the blame on others if it does not work out. Or they buy based on articles they read. Admitting a mistake has been made is difficult. It’s hard work doing your own due diligence. Hours of reading and research is the idea of fun for many people.
I know I have made a mistake. I was leveraged too much and at the wrong time. It’s easy to say that I could have avoided it now, but I guess I was too greedy at the wrong time. I’ll survive this downturn, but it has affect my performance more than I would have liked. I will eventually recover, but at least I have learned something while my net worth is still low.
