Why I’m buying

Posted by: Amy Feldman on October 6, 2008

The market is in free fall. Friends are calling and emailing in a panic. My response: I’m buying.

Investors today seem as fearful as they’ve been since, perhaps, the Great Depression. And as Warren Buffett once famously said: “Be fearful when others are greedy, and greedy when others are fearful.”

As he always does, Buffett’s put his money where his mouth is, garnering stakes in Goldman Sachs and General Electric on the cheap as the $700 billion bailout plan was under debate. Yet the bailout’s passage has done little to quell the fears. Instead, fear seems to have turned to panic.

Today, the Dow plunged below 10,000 for the first time in four years. The broader S&P 500 index is off 27% since the beginning of the year.

Is the economy going to disappear? Are all businesses going to close their doors due to lack of credit? Is every single investment bad?

Maybe. But I’m willing to bet that’s not the case, at least not long term. So before the market closed, I took a deep gulp against the rising panic that tomorrow could be worse and sent cash to one of my lagging international equity funds.

Reader Comments

William Taylor

October 7, 2008 10:54 AM

brave move, I congratulate you! I am doing the same with my money and many of my clients money. It will be a rough next 12 months, but I am building wealth for a need in 20 years, not 20 minutes

tjb

October 7, 2008 11:16 AM

My husband and I are looking at this as a time of great opportunity. We don't have much money and had to relocate for our jobs. We own a home and business where we left and just bought another home. We can't sell what we left so we chose to rent. Our new home we got for 60 thousand less than it sold for in 2005. We just took very little funds from our savings and bought fannie mae, hoping to make a few bucks. If more people look at the opportunities out there, our economy would rebound sooner than we all think.

mshins

October 7, 2008 12:57 PM

It's hard to use Buffet as a barometer here given the preference he negotiates in both the GS and GE deals - he doesn't go buy common stock like us plebes and he structures a deal that is typically hard to lose on. I'm not ready to buy yet - need to see further capitulation...

Joseph

October 7, 2008 1:59 PM

You wrote: . . . took a deep gulp against the rising panic that tomorrow could be worse and sent cash to one of my lagging international equity funds.

Nice job, Amy. And now your "international equity fund" is down another five percent. Careful how you advise your readers!

Eric

October 7, 2008 3:50 PM

Don't be a baby----think LONG term people...anything else is just speculation, i.e. gambling and even the pros can't time the market!

Get yourself an emergency fund and invest steadily from there. Don't look at the share price today, look at the volume of shares you're getting---Christmas is coming early this year!

Joe

October 7, 2008 5:05 PM

I am not in yet. The market will go down further we haven’t seen the capitulation yet. There is panic in the market but there are buyers also in the current environment. Buffet is in because he is getting a huge deal I bet.

Mark

October 7, 2008 5:31 PM

Define long term. If long term is 15 years then if we look at our 401k it is a loss.

Go 11

October 7, 2008 7:05 PM

It takes a lot of courage to think that way, but I applaud your stamina. The only caveat is that you might be leaving some dollars on the table as we might not have hit bottom yet.

J C

October 7, 2008 7:10 PM

FDR very well said: "There is nothing to fear but fear itself"; and this is again true for this panicky situation. There's nothing to fear, if there's 'value' behind the selection and the purchaser can wait.

babydumplin

October 7, 2008 7:26 PM

Mr. Market has taken a swan dive off a cliff and has reached terminal velocity (300 to 500 point-a-day drops). Stay tuned to see if his chute opens before terminal velocity becomes terminating. My guess is that this is the beginning of the end of the world as we've known it. Nostradomus predicted the end of the world will arrive in the year 2012, preceded by a period of increasing chaos. Cheers!

Joe

October 7, 2008 7:33 PM

From 30,000 feet, this looks like one of the best opportunities to invest long-term dollars that any of us will ever see. We may go lower from here, but not much lower, and in 30 years in the biz, I have learned that market timing is a fool's game. Get in, relax, and don't believe the hype!

choy moy boy

October 7, 2008 7:35 PM

Buffett has extra cash to spare. For common people like us, invest in small portions, dollar average each month or week. This world will not come to an end. However, everyone has forgotten why we are at this point - 'OIL' and 'OUTSOURCING. If jobs are not going to stay in USA, the problems will not go away

Bill Rothschild

October 7, 2008 7:51 PM

I can't support the idea of buying...but I really believe in HOLDING and maybe, selectively buying, QUALITY companies...One of these is GE.. I still believe that GE will not only survive but prosper..however,this is based on the recognition that changes are needed...see my BLOG: GEWATECHER on www.strategyleader.com

Bill Rothschild, author of the most comprehensive and objective assessment of GE'S 126 YEAR history...THE SECRET TO GE's SUCCESS (should include FAILURES AND LESSONS LEARNED FROM BOTH)

Suneva Lightfoot

October 7, 2008 10:49 PM

It's true that investing in companies is a great thing to do, but there needs to be a lot more accountability across the board to establish and maintain the investors trust. It's one thing to lose money in the market because of competition but when the mentality of www.greedypeople.com is the culprit that cause people to lose money that's another story entirely.

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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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