Listening to the National Bank of Dad

In my family the lender of last resort is known as the National Bank of Dad. It’s been twenty years since I could turn to my father for sound advice, if not a little credit or commercial paper. I miss him. The buck stops and starts here now, and I feel a twinge of bittersweet pride as I try to fill his shoes.

These days America needs a National Bank of Dad. It isn’t Henry Paulson, and it sure as hell isn’t George W. Bush. If anyone has the deep pockets, it’s Warren Buffet, who proffers some free advice today in the NYT:

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 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.

Let me be clear on one point: 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 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.

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 investor’s best friend. It lets you buy a slice of America’s future at a marked-down price. Read more

This entry was posted in memoir and tagged , , . Bookmark the permalink.

2 Responses to Listening to the National Bank of Dad

  1. tomrobertstennessee says:

    I agree. As an investor, I tend to be like a restless, undisciplined child either imagining grandiose scenarios or fearing the coming dark ages. I rely on Warren Buffett who almost never strays from his sober, disciplined approach. If Berkshire Hathaway collapses, so will modern capitalism. There’s no safer place to invest than in brk.b or the companies that Warren Buffett invests in.

  2. Mark Willis says:

    The coming dark ages… talk on TechCrunch yesterday was all about Silicon Valley layoffs and hunkering down for Nuclear Winter.

Comments are closed.