Tuesday, 5 August 2014

Stay in the Stock Market, says Warren Buffet

Stay in the Stock Market, says Warren Buffet

Many investors will feel jittery if they read the news especially as the Ukraine crisis drags on and diplomats scramble to find a peaceful solution to the crisis that has pitted Russia against the U.S. and the rest of the G7 countries. The most recent development in the crisis was that the Russian envoy to the UN has told the international body that Russia “does not want” a Ukraine war all while clashes broke out in parts of the country according to the BBC.

The crisis in Ukraine is already having an effect on the markets. The Wall Street Journal reported that Asian stock markets are lower due to the crisis while the Associated Press has also reported that the U.S. stock market has dipped due to the crisis.

Investors are naturally unnerved by news of the possibility of another war. The rational person would try to hold on to their cash in times of uncertainty. The risk triggers a fight or flight response and some investors choose to sell their stocks and hold on to their cash.

What Warren Buffet Thinks About the Ukraine Crisis and Investing in Stocks

In an interview with CNBC’s Squawk Box, Berkshire Hathaway Chairman and CEO Warren Buffett said the crisis in Ukraine had actually had a positive effect on his business. A stock that Buffett had been looking to acquire soon had actually fallen in price in London. Buffett said he “felt good” that the stock that they we’re buying was cheaper. When asked whether he will buy more, he said “absolutely.”

Buffett’s remarks about buying stocks during a time of uncertainty speak of his view about holding onto cash or investing in stocks even in a time of war. He told CNBC that you can be sure the value of money will go down if there was a very major war. The Oracle of Omaha said holding cash is the last thing (that investors will) want to do in a war and that (investors) will want to own a farm or an apartment house instead.

The famed investor advised investors to own securities instead of cash during a war. He said the stock market actually advanced during the Second World War
. Buffet even added that he bought his first stock just after the attack on Pearl Harbor in 1942.

An index fund that mirrors the overall market’s performance can be a great way for even non experts to invest in the stock market advised Buffett. Buffett recommends the Vanguard S&P 500 stock index fund for these types of investors.

- See more at: http://www.comparehero.my/blog/stay-stock-market-says-warren-buffet/#sthash.tDIM3gBy.dpuf

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