My broker forwarded an article that Warren Buffet wrote in the New York Times today. He is long on stocks and urges buyers to view the current market decline as a buying opportunity. I agree. Yesterday I bought GE, which is selling at less than 10 times earning because of its financial risk, and the S&P 500. Buffett's most interesting statement is toward the end of the Op Ed:
"Today people who hold cash equivalents feel comfortable. They shouldn't. 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 Gretzky's advice: "I skate to where the puck is going to be, not to where it has been."
Given his prognosis of inflation, and the socially unacceptable characteristic of gold and other commodities, they may be at least as good as stocks over the next five years.
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