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October 1, 2008
The Sky Is Falling, Buy Sky.
The third quarter was a disaster by any measure. The S&P 500 (-11%), the NYSE Composite (-13%), and international stocks (-22%) were all down significantly. Commodities had their worst quarter since the 1970s; and bonds returned less than 1.0%. Household names like Bear Stearns and Lehman Brothers are gone. Global behemoths like AIG and Merrill Lynch were brought to their knees before being stabilized with outside capital.
There's a natural tendency to want to dump everything and move to cash or gold. But our natural tendencies when it comes to money matters are often wrong. We buy high and sell low. At I-Pension, we don't try to time the market. We have strategic models and, while we will tweak them, we don't stray to far from the fundamentals. Nonetheless, we do like to see what the "smart money" is doing; and the smartest money around is managed by Warren Buffett, head of Berkshire Hathaway. Last week, Buffett invested $5 billion in Goldman Sachs and today he invested $3 billion in General Electric. He is also on record that he would be interested in buying a substantial chunk of the subprime mortgages that started this whole mess.
Is Warren Buffett always right? No. But he understands that fortunes are made during times like these. You want to buy when everyone else is selling. But like Buffett, you need to pick your spots; and you need to keep your money working as hard as you do to earn it.
There's a natural tendency to want to dump everything and move to cash or gold. But our natural tendencies when it comes to money matters are often wrong. We buy high and sell low. At I-Pension, we don't try to time the market. We have strategic models and, while we will tweak them, we don't stray to far from the fundamentals. Nonetheless, we do like to see what the "smart money" is doing; and the smartest money around is managed by Warren Buffett, head of Berkshire Hathaway. Last week, Buffett invested $5 billion in Goldman Sachs and today he invested $3 billion in General Electric. He is also on record that he would be interested in buying a substantial chunk of the subprime mortgages that started this whole mess.
Is Warren Buffett always right? No. But he understands that fortunes are made during times like these. You want to buy when everyone else is selling. But like Buffett, you need to pick your spots; and you need to keep your money working as hard as you do to earn it.
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