Thursday, October 23, 2008

Was Warren Buffett Wrong?

Last week, while The Famous Author and I were recovering from Bouchercon Noir (see earlier post) on the beach in South Carolina, we saw TV coverage of Warren Buffett, the Oracle of Omaha. Seems Mr. B had written an op-ed piece for The New York Times about how the time to be greedy was when other people were fearful, or, in other words, now was the time to start investing in stocks. Prices might fall farther, Mr. B warned, but in the long run -- five, ten years -- starting to buy now would look smart.

My guess, Mr. B wishes he'd waited a week for the big pronouncement. But what about it? Will stocks really come back? If you buy now, will the American economy be thriving again in 2013?

Warren Buffett says it's a good bet. He's the Number One billionaire (see Forbes listing by clicking headline) in the world, and he got that way by investing in stocks. Okay, so what do we buy?

Here's one idea: SPY is an American Stock Exchange-traded fund that holds all of the S&P 500 Index stocks. Every big name blue chip you can think of. Well, minus a few recent casualties. Spreads the risk of picking a stock. Just a way to play the whole economy. Less than 1% in expenses. You can add or subtract from your holdings all day long, not just once, whenever you want. A great way to save: Each month when you do the bills, write yourself the first check. Buy a few shares of SPY.

The Grain of Salt: TFA and I had our trading account pretty much wiped out trying to pick a bottom in financials. Our investment advice is suspect. But I bet Mr. B would approve of the SPY strategy. Certainly for people who don't have the time to research individual stocks.

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