Warren Buffet is investing…

I did not know it would be so difficult to sound simple and uncomplicated. Many people have been mailing me, smsing me, calling me with questions is “What should I do, NOW ?

The operative word is NOW. If you have been a long term investor you have seen the resilience of the equity markets over long periods of time. Similarly you would surely have seen the fluctuations in the short run.

So here is another story on what to do now. Perhaps to save myself the trouble of writing, I may also make the whole piece look disconnected, but let me assure you it is a simple article.

First of all, remember your time horizon – if your daughter is 7 years old and you are hoping she will study at Harvard or Yale- you need to stay put. If you are 30 years old and are saving for your retirement you need to stay put. However if your needs are more immediate – from say 12 to 18 months you may need to sell your shares – at least partially on a monthly basis. Most importantly look at the long term expected return in equity funds.

Also look at the history of equity markets. You will see how the market has shuddered, quivered, crashed, over the past 100 years – but has come back. The coming back has been strong, good, and has showed its resilience. Equity markets have been wavy and nothing has changed. Of course as John Templeton has said that the most dangerous words in investing is “This time it is different”. Commentators pretend that markets can be predicted on the basis of its immediate past performance. This is wrong, frustrating and laughable.

Also please appreciate using media headlines to gauge market’s future behaviour is foolish / idiotic / and laughable if it was not creating so much of panic and heart burn. Immediate past performance is but a poor predictor of future performance.

Look at media hype regarding any event and see how much impact it has had on your life at a later date – like a kid falling into the pit. The media deals with finance markets in more or less a similar way.

If you want to read about “how to invest” read the classics – read Buffet, Bogle, even Lynch – but not the newspapers and magazines when you are not sure about the antecedents of the paper.

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4 Responses to “Warren Buffet is investing…”

  1. nice post! but cannot have it up, thanks to the media bashing 😀

  2. Too many desperate headlines and warnings on financial crisis by the media is making it even more difficult!! 🙁

  3. media likes to sensationalise everything. One good thing for anchors to do is to watch their own programs every six months. They will know how well they say the same nothings….

  4. Thanks for this post. I am aware its a very late reply. But this Blog is a very important one for me. I invested a decently good amount after reading this blog(in November 2008). Quite rite time when market was at 8500. I dont have to tell more about what it looks like now 🙂

    Thank you very much love this site.


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