Fearful and Greedy

June 19, 2018

“And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful” 

 

World renowned investor, Warren Buffet made the above statement in his 2004 letter to shareholders.  I mention it here as a follow up to an earlier post about the tendency of the market to go up over time - but not without volatility.

 

And, in the interest of providing some context for that sentiment, I'm reinserting a smaller section of that focused on the crash of 2008 below:

 

 

 At the peak that precedes the lowest point (point 112, July 2007) on the chart, the DIJA was at 14,000.  At the low point on the chart (March 2009) it was at 6547.  Today it is over 24,000, almost 4 times the 2009 low.  If you'd have put 10,000 in when everybody was fearful in March of 2009, you'd have about $40,000 today.  That's not to say that the value of  your $40,000 wouldn't fluctuate going forward, but maybe there's something to Buffet's contrarian advice.

 

 

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