Warren Buffett's Buying Stocks

Posted by: Ben Steverman on October 17, 2008

Warren Buffett is buying U.S. stocks. As he wrote in the New York Times today:

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.

And he warned investors against keeping holdings in cash:

…a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

But what is Buffett buying?

Jon C. Ogg of 24/7 Wall St. has some theories, including Buffett favorites Wells Fargo (WFC), General Electric (GE) and of course his very own Berkshire Hathaway (BRKA).

And how much does the stock market care?

Not much, I think. Yes, Buffett’s op-ed might brighten the market’s psychological state a bit. But I didn’t see a significant bump this morning for most of the stocks Ogg identifies.

Buffett has never claimed to have great timing. And the stock market in the past month has been pulled down (and occasionally pushed up) by investors with an extremely short-term outlook. Unlike Buffett — and me and probably you if you’re saving for retirement — they don’t care where stocks will be in five or ten years. They care where the market will be in a month, a day or even an hour.

Reader Comments

Andee Sellman, One Sherpa

October 17, 2008 4:56 PM

Great thoughts Ben,
I've always admired Warren Buffet because he isn't phased by what other people think and he has had a long term defined strategy which he rarely moves from.
Being in the market over the long term while not trying to determine where the market is going has always been his hallmark.
I reckon he personifies 'sticking to your knitting' as well which has proved to be highly successful

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About

Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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