Why is Cramer saying to stay away from the markets?

danoXP · Oct 17, 2008

Quote from 1flyfisher:

WRONG.
Buffet has NOT been buying like crazy. Buffet has not bought any shares of common stock of GS or GE. He got warrants and a sweet heart deal of 10% income. That IS NOT the same as buying stock. Not even close.
You obviously have never read any of his books.
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Well, I asked Warren to weigh in on our disagreement here. He was nice enough to clear it up by writing an editorial in today's NYTimes. I think he sides with me.

I get the impression you might be the sort of fellow that likes to quickly skip through material without reading it's entire content. So, i have tried to be helpful by bolding the only paragraph you need read.

Op-Ed Contributor

Buy American. I Am.
By WARREN E. BUFFETT

Published: October 16, 2008

Omaha

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Brad Holland

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Times Topics: Warren E. Buffett
THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So ... Iâve been buying American stocks. This is my personal account Iâm talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.

Why?

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nationâs many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I canât predict the short-term movements of the stock market. I havenât the faintest idea as to whether stocks will be higher or lower a month â or a year â from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So 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 investorâs best friend. It lets you buy a slice of Americaâs 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.

Today people who hold cash equivalents feel comfortable. They shouldnât. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzkyâs advice: âI skate to where the puck is going to be, not to where it has been.â

I donât like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, Iâll follow the lead of a restaurant that opened in an empty bank building and then advertised: âPut your mouth where your money was.â Today my money and my mouth both say equities.

Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.
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danoXP · Oct 17, 2008

It just occurred to me. You might not trust my post.

Here is the link to today's NY Times article.

http://www.nytimes.com/2008/10/17/opinion/17buffett.html?_r=1&oref=slogin

GermanTrader · Oct 17, 2008

>>Why is Cramer saying to stay away from the markets? >>

Maybe he realizes what a shitty trader he is, and thinks nobody else has a chance.

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Why is Cramer saying to stay away from the markets?

danoXP

danoXP

GermanTrader