Why Isn’t Warren Buffett Saying This Now?

by OptionPundit on July 9, 2014

Image source – Biography.com

Ever since I met with Mr Warren Buffett in 2004, my respect for him has been growing by leaps and bound, year after year. Even though I have read many major books written about him, there is nothing quite like meeting in person. I consider him my mentor, someone, who has always inspired me from investing perspective ever since I was kid.

A very famous quote Mr Buffett is the following-

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” – Warren Buffett

Wise words indeed!!

And the worth of those words was again proven right in late 2008 when Mr Buffett announced  “BUY AMERICAN. I AM“  via an Op-Ed in NY Time in Oct 16 2008. I read it too with lot of enthusiasm. In Fact, as long time OPN members may recall, we started preparing for bull market on Oct 14, 2008, just two days before that OP-ED (just a pure coincidence). I shared a list of stocks, with target valuations and purchase prices with Margin of Safety built in. The sheet is still there, if you are an OPN Member, find it here.

Just like what Mr Buffet said-

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.

There was further weakness in the markets (which means one could have purchased stocks even cheaper than his purchase price), but since then S&P has more than doubled. That was an advice that must have produced fortunes for many.

That was then in 2008. How about now and going forward when Dow is at 17,000 and S&P almost 2,000?

Based on the same famous quote, we have two choices now..

  1. Are people still FEARFUL >>> So should we continue to be GREEDY ? or
  2. Are people GREEDY now >>> So should we be FEARFUL?

Buying cheap was a good idea, in fact a fortune making, once in a decade opportunity. SELLING is different. You will have to decide it for yourself because I don’t think we are ever going to see an Op-Ed that will say SELL AMERICAN. I AM; Markets moves in CYCLES and in between there are TRENDS. You will have to decide for yourself when is your entry or exit. No one has better interest in it but you.

So while thinking about Buying/Selling/Timing etc, I tried to recall other wise words, here is what I remember >>

  1. Know what’s the security is worth AND
  2. Know when is it worth buying

By “when”>> he was not referring to technical charts but more so from a long term investor’s perspective who understand the business, numbers and the concept of margin of safety. So if you are struggling with decision to buy or sell, go find hard facts, revisit your assumptions, your calculations behind what the security is worth and then decide for yourself if it is time that you should sell or buy more. It’s your hard earned money and you don’t want to leave it for “chance” or “speculation”..

Profitable Trading, OP

What is your opinion about current state of markets? Kindly leave your questions/thoughts/comments in the comments section. I will respond within 24-48hrs!!

(Disclaimer- The words I quote here are my interpretation of his teachings and is by no means endorsed by Mr Buffett. I might have understood it right or wrong, but whatever it is, that’s my interpretation. I have very high regard from Mr Buffett. You should not buy or sell based on above. Consult your financial adviser and do your own due diligence before making any investment decision).

{ 4 comments }

Crude Oil Testing Resistance

June 11, 2014

Crude oil futures are finding sellers at a significant resistance level  at 105, a level that has been acting as resistance since September last year. Such levels are key defining point i.e. it can break-out or turn down from this. Confirmation is the key. Right now, a pin bar is taking shape but we have [...]

Read the full article →

OP Income Newsletter Mar +19%, April +9% (Open)

April 4, 2014

At OP Income newsletter, the out-performance vs. broader markets continues. For Mar 2014, based on the invested capital (56% of the portfolio), it delivered +19.4% returns. That’s > +10% on the overall portfolio capital. This performance doesn’t include results from OPNExtra! (High risk/ High reward trades) which had a solid run during the month of [...]

Read the full article →

How High is High for S&P500?

March 5, 2014

It’s been 5 years since markets bottomed in Mar’09; S&P500 touched 200days moving average during Nov’12 and since then it has been almost 15months for this uninterrupted move. Markets have withered all kind of storms be it weather, taper-on/taper-off tantrums, government shut down, debt ceiling and all sorts of macro-economic data good or bad. Good [...]

Read the full article →

How The Economic Machine Works

February 12, 2014

What if you had the opportunity to learn from a Billionaire man to teach you HOW THE ECONOMIC MACHINE WORKS? How much would you willing to pay for his 30minutes time so you could learn it in the comforts of your home? The fact is that Mr Ray Dalio, Founder of the largest and arguably [...]

Read the full article →