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Tuesday, October 28, 2008
"I feel like an oversexed man in a harem... Now is the time to invest and get rich."
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.
Today is similar to back in 1974, the last time Buffett said it's time to get rich in stocks... This time, stocks have fallen as much from 2000 to 2008 as they did from 1966 to 1974, adjusted for inflation.
But both history... and Warren Buffett... tell us that now is exactly when you need to be bold and buy stocks.
GET READY TO READ AWFUL THINGS ABOUT REAL ESTATE
On July 16, 2007, we ran an essay called "Commercial Real Estate is Starting to Crack."
We argued that real estate was expensive... It was offering tiny yields to reward investors... And most importantly, real estate share prices were turning down, so the trend favored a bearish bet. But we didn't think we'd see the collapse shown by today's chart.
Today's chart is the past two years of the iShares Real Estate ETF. This fund consists of America's largest owners of shopping malls, office buildings, warehouses, and apartment buildings. It's down 63% from its 2007 high ... and down 44% in the last month.
The stock market is a giant prediction machine. What happens to stock prices today shows up in earnings releases and headlines six months from now. As you can see, the market is saying, "Get ready to read awful things about commercial real estate. Really awful things"