Buffett: Feel the Fear and Buy Equities Anyway

Last Updated Oct 17, 2008 8:10 AM EDT

The Sage of Omaha holds forth in the NYT on the value of taking calculated investment risks.

His tip? Buy American equities. While it makes sense to be wary of businesses that look weak, there are plenty of sound investments that will survive longer term and will go on to set profits records in five or 10 years' time. History demonstrates time and again the best time to buy stocks is when inflation's high and the economy's shaky.

"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."
Investors lose out by buying stocks "only when they felt comfort in doing so" and selling when headlines started to scare them. This means cash accounts are a bad long-term investment -- inflationary pressures are likely to continue to erode the value of your assets in the longer term.

"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."
So the trick is to dive in when you feel least safe and secure? No wonder we're not all as rich as Buffett.