It’s time to go back into equity markets
- Warren Buffett bought in October
- John Bogle said in this month that equity markets are too low; and
- Bill Miller recently said that he sees great value in equities.
Has the market reached a bottom?
- We have passed it. October could have been the bottom.
- We are very near it. A lot of the bad news has been priced in. Given the very low valuations now, there’s not much downside, which makes the upside over the next two years very interesting.
Make sure you invest with money you can set aside for at least three years. This is because you don’t want to be caught having to sell at the wrong time and you need time for the markets to realise its full recovery potential.
The world's most renowned investor Warren Buffett had in his recent article titled "Buy American. I Am" published on 16 October 2008 in the New York Times, quoted the following in explaining why he began to invest heavily in stocks: -
"I can't predict the short-term movements of the stock market. I haven't the faintest idea as to whether stocks will be higher or lower in 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. "
The time to get interested is when no one else is.
You can't buy what is popular and do well." Warren Buffett
- Make sure you have the holding power ie money that you could set aside for medium term
- Do not be greedy. We can never buy at the lowest and sell at the highest
- Do not put all your eggs in one basket. Spread your risk.