Sunday, October 19, 2008

Good advice and a vote of confidence

Warren Buffet, one of the most successful investors ever, and currently, according to Forbes magazine, the richest man in the world, submitted a fantastic letter to the editor of the New York Times.  If you are an investor and have not yet read this letter, you owe it to yourself to do so.

Buffet explains that while he cannot predict the direction of the market in the short term, "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."  Buffet also says that if prices continue to look this attractive, his personal investments will soon consist entirely of stocks of American companies.

The advice that Buffet offers - to be greedy when others are fearful, and fearful when others are greedy - is great advice but often tough to put into practice.  It can be difficult to put money into stocks and stock funds in these conditions.  But this is exactly what prudent investors like Warren Buffet are doing.  You should be doing it too.  As I mentioned earlier, stocks are on sale now.  Buy as many as you can before the prices go back up!

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