Belly Up To The Buffett
This is one of the most quoted lines in the financial blogosphere. It is also a line that seems to be widely disregarded by most of those who quote it.
Be fearful when others are greedy. Be greedy when others are fearful.
Now, “Bearish Barry” briefly had a post up yesterday with a bunch of stock market quotes, including the above. It so happened that I saw it early enough to be the first commenter, and my comment was to the effect of “so we should all have been buyers on Thursday and Friday?” Later that day, the post was gone! It is, as of this morning, still gone. Coincidence? A “technical glitch?” I dunno. I do know that Barry didn’t put up anything about buying this decline on his free blog for the rubes, but I would not be surprised if he isn’t buying for his “aggressive” managed accounts and telling his paying clients to get long.
Here’s possibly my favorite recent example of a total dipshit misunderstanding this Buffett quote. His foreless fearcast:
The S&P 500 will break below 200DMA and then a back kiss to the 200dDMA…..and you don’t want to hear the rest of it (if you are a bull)…..Fade me if you like…..
Yep, I’m fading this moron. Not specifically him, mind you, because I bought before he made that post. But follow the link, and read his sig line. Just in case this post shames him into changing it, it read:
Our behavior… in financial markets: Be fearful when others are greedy, and be greedy when others are fearful……Warren Buffett.
Now, if there ever was a person who didn’t understand what they were quoting, this guy is that person. I’m singling him out not because I disagree with his foreless fearcast, but because his foreless fearcast disagrees with his own chosen signature line. Irony can be sad as well as funny, so it seems.
Keep in mind, the fall last week in the U.S. stock market was extreme. More than 5% in five sessions? That ranks in the bottom 1% of all five-day sessions for the S&P 500 since 1950. Is it a “tell the grandkids” kinda historic fall? Nah, but it is a rare event, and several other sentiment levels indicated panic. Buyable panic, in my opinion.
My post on adding exposure and pulling stops has gotten several comments trying to gently warn me about that approach, and a few trackback links to blog posts doing the same. I view this as in perfect keeping with the above quote; others are fearful – I should have bought more than I did, apparently. Oh, bother.
July 31st, 2007 at 8:19 am
Good post.
Bill, I appreciate your convictions.
Although I do not follow your strategy or psychology point for point, I do often find myself thinking, WWBD? What Would Bill Do?
July 31st, 2007 at 1:46 pm
On market calls i believe ive only commented when ive had some disagreement with your view. Often times i agree and then i dont say anything so lets not discount the survivorship bias on my particular skepticism. I understand your points. My position is still just that it will take longer for this to work out. We wont go much lower (S&P 1438), but we also wont break 720 on the S&P 100 for a while. I think there is potential for people to become more scared on what could seem like the beginning of another leg down. Currently it seems like people are in 2 camps, 1 is we rebound basically now and go to new highs or we totally collapse and go much lower. Im in camp 3 which will give a little to both sides but end up frustrating both camps 1 & 2. But as always the bull will win in the end.
July 31st, 2007 at 10:27 pm
Gareth, I am in your camp # 3.
August 1st, 2007 at 7:35 am
I think we’re close enough to a bottom so that getting fully long in less-impacted sectors makes sense, if you have an outlook longer than a few days or a couple of weeks.
I also think we might be closer to a bottom price-wise than we are time-wise, but I could be wrong there.
Nothing personal Gareth, and not a comment on your comment specifically, but when I get a LOT of negative feedback for going long after a big drop, it makes me more confident that I’m right. And I have gotten a lot of feedback on this …