Buy America. I Am.

This is an extract from the text of an opinion piece written by Warren Buffett and published in the New York Times on Friday, October 17, 2008:

In his opening remarks this is what he said.

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 some of the points, in summary of his reasons why.

1. A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful.

2. 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.

3. 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.

4. Bad news is an investor’s best friend.

5. Equities will almost certainly outperform cash over the next decade, probably by a substantial degree.

So there we have it, Mr Buffett's strategy. He's buying America. Question ... who are you buying?

You can read the full article at New York Times.

If you want further elaboration, you can also see what our team member, Mr Techno Lim has to say. Just click here to go to his blog.