Warren Buffett reveals his investment strategy

American financial heavyweight Warren Buffett has revealed his investment tips to the New York Times, and says his net worth will soon be entirely located in equities.

American financial heavyweight Warren Buffett has revealed his investment tips to the New York Times, and says his net worth will soon be entirely located in equities.

Buffett says while buyers must be wise during economic turmoil, “fears regarding the long-term prosperity of the nation’s many sound companies make no sense”.

SmartCompany revealed yesterday how Buffett is making the most of the downturn, buying up stocks and awaiting an eventual sharemarket rally.

“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,” Buffett wrote.

He says he’s banking on the fact major companies will be setting profit records years from now, not in the short-term.

But while he argues predictions about the market’s near-future cannot be speculated upon, he argues it is likely “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.

“Over the long term, the stock market news will be good,” he says.

Buffett is relying on precedent, arguing the Dow rose from 66 to 11,497 points during the 20th century, enduring “two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president.”

But confidence is the key, Buffett says, no matter how gloomy the outlook.

“I emphasise that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: ‘Put your mouth where your money was.’ Today my money and my mouth both say equities.”

Related story:

• Following Buffett’s bargains