Warren Buffet wrote an article for the New York Times yesterday where he explains where he is putting his money right now and his philosophy on when to be greedy. In short, Buffett says;
“Be fearful when others are greedy, and be greedy when others are fearful.”
It makes sense. The best time to buy is when the prices are low and the best time to sell is when prices are high. Or as Buffett says,
“…if you wait for the robins, spring will be over.
A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.
Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.
You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.”
This is true in financial and in real estate markets. The best time to buy is when prices are low. Let me say that again- The best time to buy is when prices are low. Currently, prices are low….