I think Gordon Gecko was on to something, greed is good. In fact, the combination of greed and fear are even better, or at least they are telltale signs, it seems – for when to enter or exit the market.
Amidst the financial turmoil, Charlie Rose recently interviewed Warren Buffett regarding his thoughts regarding the financial crisis we’re facing as well as to discuss his $3 Billion investment in GE.
A Conversation with Warren Buffet courtesy of Charlie Rose
I happen to like Warren Buffett a great deal. He’s smart yet humble. Sometimes it is difficult to believe that this folksy cornhusker is a billionaire. When Warren pulls the trigger on an investment – and they are generally not small in size – people stand up and take notice. Clearly, you don’t become the wealthiest American by shooting from the hip.
Headlines today indicated that Warren is telling everyone to buy US stocks. Perhaps you’ve heard his quote – I’ll paraphrase:
When people get greedy he gets fearful, when people get fearful, he gets greedy.
I was left with a certain level of confidence despite the current financial and housing crisis – Warren is investing – again, not alittle – but alot. He’s not waiting on the sidelines, he’s investing now. Our stock and housing markets are ripe with opportunity.
Granted we’re all not blessed with billions – but interestingly enough, those who do have the resources should be investing – not in the future – but now. There is and will continue to be turmoil, however, as Warren stated, it is best to be approximately right rather than precisely wrong.
My take and my advice to my investor clients as well as those who are holding out for “the deal of a lifetime”. I think we’re approximately there.
Could prices fall further? Yep, I think they might – but would you rather buy with an approximate risk or some further loss or miss the opportunity all together?
Perhaps this is the most simple example of exactly how the rich get rich. When the majority sit on the sidelines in fear seeing doom and gloom, few see nothing but opportunity.
Orlando Refinance says:
I love that line,
“When people get greedy he gets fearful, when people get fearful, he gets greedy.”
Makes you think back to the 100%, NO DOC, 580 score investor purchase, doesnt it? Huh who saw that being the end….
LOL
Chris the implementer
October 18, 2008 — 10:30 am
Liz says:
So hard to know what to do, but boy, you have to listen when Warren Buffet recommends a course of action! He’s certainly shown he knows money.
Jose Roncal and Jose Abbo have written a great book, “The Big Gamble: Are you Investing or Speculation?” about the world financial market and investing. The book gives an entertaining view of some of the greatest “speculators” (AKA “investors”) of our times who achieved their dreams for the benefit of mankind. THe authors make the point that all investing is really speculating. So do your homework.
October 18, 2008 — 10:46 am
Jeff Brown says:
We’re at the point in the cycle when the gestation period for the newest generation of woulda coulda shoulda whiners is beginning. They’ll mature sometime around 2010-12 or so.
October 18, 2008 — 11:37 am
Guerilla Billionaire™ says:
I thought that you might enjoy these:
I look for a business that’s predictable like Wrigley’s Gum. The Internet isn’t going to change how people chew gum. – Warren Buffet
It’s far better to buy something wonderful at just a decent price than to just buy something just decent at a wonderful price. – Warren Buffet
October 18, 2008 — 11:50 am
Orlando Refinance says:
@Guerilla
Two very good quotes indeed. W.B. would be the whole package if he were a conservative. Oops… got political there… sorry.
Chris the implementer
October 18, 2008 — 12:18 pm
Thomas Hall says:
Thanks all for your comments!
@Jeff – amen
@GB – love the additional quotes – can’t help but think here is a man who seems to be able to boil down the essence of a problem. We all too often make simple decisions rather complex.
October 18, 2008 — 4:02 pm
Joe Hayden says:
Tom…
I’m fighting this very issue with buyers. I just don’t know were the bottom will be, but so many buyers have trouble understanding the long-term nature of real estate and forget the cycle tends to go back up. So what if you don’t buy at the exact bottom. By then, the market may be so flooded with buyers you are locked out…
Now, I certainly am conservative with other people’s money, but all signs point to a stabilization of pricing, at least in my area…
October 18, 2008 — 5:59 pm
Thomas Hall says:
Joe – thanks for the comment. I am with you completely. Chicago has remained stagnant. I am encouraging my investor clients to make offers. They want to see movement from the sellers – I suggest that a written offer may provide some motivation.
The key is finding the good properties NOW. The longer the people sit on the sidelines, the good stuff will be gone.
October 18, 2008 — 6:04 pm
Ned Carey says:
Coincidentally I just wrote a post about Warren Buffet myself. His brilliance seems to be distilling the complexities of investing down to rules that are so simple they seem obvious.
My focus has been real estate investing but I am sorry now that I haven’t learned m ore about the stock market.
October 19, 2008 — 11:20 pm
Glenn says:
There is another saying that maybe applicable – “When everyone talks about how great something is, it has peaked and ready for a down swing. When everyone talks about how bad it is, it is generally starting to turn positive.”
October 20, 2008 — 4:10 pm
Orlando Refinance says:
that is so true, there is no greater indicator of a change in direction that heightened enthusiasm one way or the other…
chris the implementer
October 20, 2008 — 6:20 pm