Why? Because I am going to plain talk sense here. There is so much noise out there that it is hard to remain rational. Please read on for some good old common sense perspective on what is happening with your money today.
We just returned from a 3 day investment conference. We listened to several portfolio managers, some with 30+ years experience. They have seen it all. Here are some of the random notes I took:
• Business fundamentals are strong but it’s the noise that is the problem.
• US Business owners say we are frustrated with Washington, there is no clarity or leadership but our sales are strong.
• The US raised the debt ceiling 78 times in the past. The issue this time was political. Nothing more.
• The World is changing: the Richest Man is in Mexico, The Tallest building is in Dubai, the Biggest Factory is in China, the Biggest Casino is in Macau and the biggest box office ticket sales are in India. The world is a bigger place now and does not revolve around the US or Greece.
• We ask ourselves daily, from the information that we have, where can we make money from it.
• We get really excited when we look at the valuations that we see today after the correction we had these past few weeks. Stocks are cheap, pay high dividend yields and have high earnings growth.
• The best companies do business globally.
• Confidence is key. It is not a Greece problem, it is a banking problem. We need a clear mandate from Europe to fix the banking system.
• Expect markets to rally when confidence is restored, when markets recognize how strong the business fundamentals are.
• Where will your money be when that happens? Staying the course is the only safe way.
“It’s an extraordinary opportunity now; this is one of those magic points in investing, once in a life time/generation opportunity.” Larry Sarbit September 29th 2011
“You’re dealing with a lot of silly people in the marketplace; it’s like a great big casino and everyone else is boozing.'” Warren Buffett Chairman, Berkshire
Now is the time to invest and get rich.” That’s what Warren Buffett told Forbes Magazine in late 1974 and again in 2008. Look below at how right he was.
“I prefer to be approximately right than exactly wrong” ~ Warren Buffett about investing when nobody does and staying invested. (Warren Buffett has invested $4 Billion cash in the past quarter)
If you are in your savings years: Be celebrating! You are buying cheap equity. This is precisely what you should be doing. Try to add to the portfolio now and even consider a small investment loan.
If you are retired and drawing an income: Keep on enjoying your retirement! There is no need to worry. Your portfolio is earning a lot of income and the fund you take your cash flow withdrawals from has been selected to protect against high volatility.
Recent Time Magazine covers? Look again. No it is NOT different this time and we will get through this, just as we did time and time again always bringing markets to higher levels than before the drop. See the 50 year historical chart below. Notice the 70s. It was called then the “Lost decade” just like the 2000s are now called. Now, look at what happened in the 80s & 90s, the biggest bull market ever seen, rewarded the patient and rational.