(Warren Buffett - image: Time Inc.)
In the darkest days of the 2008 market meltdown I watched as Warren Buffett calmly assured people that the economy would come back. Almost all of them though, companies and individuals, ignored him and continued selling. They sold their stocks and other assets thinking the end of the world was coming.
What they didn't think about is that just in the previous century the economy had endured several wars with millions of casualties, currency crises, panics, and a couple of major depressions among other problems BUT the stock market and most other assets continued their relentless climb higher.
What I realized is that going with the crowd or herd mentality will NEVER result in major gains - ONLY after doing one's research and finding new opportunities can massive profits be realized. This means buying up assets that you have determined are worth more than what the market has determined due to some short-term panic or market downturn. This also means holding on when you believe YOU are right.
The stock market crashed in a big way in 2008 but great companies rebounded and went much higher than even before the great recession.
"The best thing that happens to us is when a great company gets into temporary trouble...We want to buy them when they're on the operating table."
Again, this doesn't mean all assets that are dropping in price are a good investment. To be sure, many of them are dropping because they are struggling to compete with new market forces, they have bad management blindly sailing them into the storm, or are failing to innovate. To win, you have to do your homework and find great companies and assets that are going to DOMINATE their industry and that are undervalued currently due to short-term irrationality.
"Investors should remember that excitement and expenses are their enemies. 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."
In the cryptocurrency space, which has seen some extraordinary gains recently, people are manically buying coins they have done zero research on. There are also people panic selling great, innovative technologies because of temporary bad news. At the end of the day the smart and strong will make great fortunes in this space as well, while the get-rich-quick ones will again get burned.
Care to share your thoughts on how this strategy has benefited you with your investments?
Research before investment is a must. Totally agree with you. On a personal note, my return on investment so far is over 87%. Cheers!
thanks for sharing! what are your thoughts on crypto and what has been happening lately? what is your favourite type of investment?
My advice is, when the mainstream media are fearful, that's the time to buy. When they're optimistic and pumping; sell, sell, sell. Saying that I sold my Bitcoin way too early.
good advice, what made you sell your bitcoin and are you planning to buy any more bitcoin or other crypto soon?
Waiting for BTC to drop to $1k then I'll buy in again. BTC being pumped made me sell. I have money in Litecoin at the moment.
Thanks for yur good posts, I followed you! +UP
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