Warren Buffett sees brighter future

Published: Wednesday October 22, 2008

Warren Buffett has been moving his personal investments from safe Treasuries into US stocks, he wrote in an opinion piece in last Friday's New York Times.

"If prices keep looking attractive, my non-Berkshire net worth will soon be 100 per cent in United States equities," he wrote.

The piece, titled "Buy American. I am," reiterated one of the legendary investor's favorite maxims: Be fearful when others are greedy; be greedy when others are fearful.

"To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions," he wrote. "But fears regarding the long-term prosperity of the nation's 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."

Since stocks began to tumble in September, Buffett, and his investment company, Berkshire Hathaway Inc, have made large bets on US companies, exacting rich dividend payments in the process. Berkshire Hathaway agreed on Oct 1 to invest US$3 billion in General Electric Co's preferred shares, which carry a hefty 10-per cent dividend. In late September, Berkshire Hathaway also bought US$5 billion in preferred shares of Goldman Sachs Group Inc, which also pay a 10 per cent dividend. He also bought warrants to purchase another US$5 billion common shares at about $115 each.

"Let me be clear on one point: I can't predict the short-term movements of the stock market," he wrote. "I haven't the faintest idea as to whether stocks will be higher or lower a month - or a year - 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."


Source: Trinidad Express Newspapers
http://www.trinidadexpress.com/index.pl/article_business_mag?id=161390869