Warren Buffett isn’t too worried about the recent market mayhem or the big bad S&P downgrade. And as you watch your own portfolio gyrate around wildly, it’s worth remembering seven simple words from the Oracle of Omaha: “It’s never paid to bet against America.”
Yet, if you turn on the TV you will find plenty of fund managers in $5,000 suits who argue the exact opposite. Buy gold, short Treasury bonds or the dollar, prepare for the worst! So, who is right?
Well, the answer lies in your point of view. Many Wall Streeters view the market day to day, minute to minute. And there’s a very good chance we will see things stay rocky for a while. But the good news is that things will turn around — and they might do so faster than you think based on the words of Buffett and other investment experts.
Take author, investor and entrepreneur James Altucher, who made a bold call on June 2 that predicted Dow at 20,000 — eventually. Has the recent mayhem caused him to rethink that position?
No way. Altucher recently blogged this yesterday on MarketWatch.com: “Every piece of government data shows expansion. You can’t find one piece of government data that suggests recession. All the Roubinis of the world are feeding off fear but can’t find one piece of actual data to support their cause.” He goes on to write, “You’re going to let some rogue ratings agency like the S&P scare you out of buying AAPL at 10x earnings, MSFT at 10x earnings, INTC at 8x forward earnings when tech is booming more than ever? Or how about the banks: They can borrow at 0% and lend at 3%. You think that’s a bad business? Maybe you should sell it?”
Then you have Charles Sizemore, editor of the Sizemore Investment Letter, telling investors to forget about gold and Treasuries — along with all the mind-numbing headlines of the last week or so. Yes, the economy isn’t rosy right now, but there’s no reason to panic and give up on Western civilization as we know it. Buy oversold bluechips, Sizemore says, and wait for the storm clouds to break up.
And if you like charts, check out InvestorPlace.com’s chief technical analyst Sam Collins, who predicted Wednesday that we have found a “meaningful bottom” after an overly emotional sell-off. Directionally, the long-term trend seems to be looking up.
The list of folks urging calm — or urging investors to dive into the market — is too long to list in full. And these include some of the sharpest minds on Wall Street, including Warren Buffett and Laszlo Birinyi, one of the first investors to recommend buying when the bull market began in 2009.
Will the market turn around tomorrow and surge for months or years without a hiccup? Probably not. There are just too many boogeymen out there right now for investors to feel completely safe. But America is not a nation of cowards — our economy will recover, just like it always has.
Most folks planning for retirement need to remember their nest egg is built over decades, not a few weeks in the summertime. Let the short-term market gyrations give ulcers to the short-term traders. Take a deep breath, and remember that many people still are optimistic about the future.
If you can separate yourself from this frenetic pace for a moment, you’ll see the real question is not whether things will turn around — but when.
Jeff Reeves is the editor of InvestorPlace.com. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.
