For Those with Perspective, a Time to Invest

Each day as I pick up my New York Times Digest (the only English option) for perusing while I enjoy breakfast the headlines are more and more alarming. A sample of what greets me as I am getting ready to face my day:

“Global Fears of a Recession Grow Stronger” Oct 7, 2008
“Economic Struggles Dominate Debate” Oct 8, 2008
“Stocks Fall Again Despite Fed Moves to Reduce Turmoil” Oct 8, 2008
“Sell-off Continues as Investors See a Deep Recession” Oct 10, 2008
“Keeping an Eye on Crime as Economy Sinks” Oct 10, 2008

It is interesting to see the global economic meltdown from the perspective of a small, third world country in a remote corner of the map (from the perspective of a North American). While Americans are worried about not being able to afford a new car, being forced to eat out a few days less per week, or having to retire a few years later, Uruguayans have much more basic concerns.

The last economic slowdown here in 2002 is still referred to as the “Crisis” and I knew about it within days of arriving in this country. For many people here the Crisis result in living in a shack without the basic facilities, they scrounge materials out of dumpsters to sell, and their previous way of live evaporated. Retirement, car ownership, and eating out are luxuries that are out of not only their reach but perhaps also the reach of their children. Many people were pushed out of the economy and work by begging, washing windshields at stoplights, or by crime.

A scavenger looking for materials to recycle outside of my hotel

I do not mean to marginalize the pain being suffered in the first world. It is very real, especially if you lose your job or see your savings vanish. What I mean to point out is that the maxim “The US catches a cold and the world catches a flu” contains much truth and the impact is thunderously felt in places like Uruguay.

I did find some interesting quotes from Warren Buffet that I do think give some good perspective to the current troubles. As Warren Buffet recently detailed a key maxim in his outlook: "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful.

"Most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation's many sound companies make no sense," Buffett said.

Buffet stressed that he could not predict how the market would ride out its roller-coaster days in the short-term. But he said "what is likely, however, is that 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."

As pointed out in the New York Times, “the four most dangerous words for investors are: this time is different”.