The Cody Word
  • September 24, 2008 12:09 PM EDT by Cody Willard

    Don't Buy Stocks Yet, Warren Buffett Isn't

    Long-time reader (from even back in my TheStreet.com days actually) emailed me the following this morning:

    Number 3 from yesterday's post:
    3. I think you’re going to have to be more like Warren Buffett than Peter Lynch in your approach to investing for the foreseeable future – that is, wait until they are truly giving stocks away with the odds stacked in your favor before committing capital to this market. Patience is a virtue.
    Now that Buffet's 'invested' $5 billion in Goldman (GS), now what? Is it time to buy?
    -

    My answer is pretty straightforward. If you can get in on the greatest brand in all of finance at a guaranteed 10% annual return with warrants that give you full upside exposure to the common stock with essentially no downside exposure to the common stock...then, yes, by all means, get to work buying some preferred shares from Goldman.

    But unless you're actually Warren Buffett and you actually have the ability to negotiate terms like the above...then I'd suggest not buying the broader market or many individual stocks. Heck, I even happened to have put my toe in the water in some Goldman Sachs common myself last week...and while I'm happy Warren's got warrants that align his profit-seeking self-interest with mine in many ways, I'm sure not going to delude myself into pretending he's stepped in and is buying the market.

    He's not. And he's the best.

    If you keep your capital dry -- whether you've got the tens of billions that Buffett does or if you've got tens of thousands like most Americans do -- you're going to get the opportunity to poach as the vicious cycles now gripping our economy force prices lower.

    Don't buy common stocks yet. Warren isn't.

    P.S. Click here to receive the latest edition of our monthly stock market newsletter, The Cody Report, and get exclusive access to this month’s four stock picks.

J. M.

My fellow tax payers, if this bailout happens, I recommend voting out all incumbents in the House and Senate (regardless of party). This is a bail out of the greedy at the expense of the needy with absolutely no gaurantee it will help the situation. It does not make sense to me. Perhaps it's not a bad thing to experience some pain so that we (voters) will wise up and start paying attention at how our elected officials are voting on issues. Washington needs major reform and while most people have picked one candidate over the other, I don't see either of these two doing much of anything for this country. I for one no longer trust anything Bush has to say about anything, especially him trying to promote this bailout plan.

September 24, 2008 at 10:00 pm

Steven Allen

This whole things stinks to high heaven. An army of wall street sharks through Henry Paulson and Ben Bernanke are strong arming our Congress and Senate to accept a deal on THEIR terms. What kind of chance do our Reps have against these seasoned negotiators? Smells like, looks like, is...you know what. Whatever the outcome we (the taxpayers) are going to get raked over the coals on this.

September 24, 2008 at 7:15 pm

Steve

If you don't buy, the market will go down. Futures of Ambac Financial Group Inc. out of sight on Moody Rating. Possibly will be okay.

September 24, 2008 at 2:48 pm

CatGut

You can bet your britches Buffet's GS deal is contingent on the the "awarding of the thieves" poker game now underway. Buffet only shows himself to be none better than the rest of his fellow thieves. This is not honest capitalism.

September 24, 2008 at 2:32 pm

about this blog

  • Cody Willard is an anchor on the FOX Business Network. Willard is also the principal of an investment management company. He was a long-time featured columnist for the Financial Times and TheStreet.com as well as a regular featured economist and stock picker on CNBC's ''Kudlow & Company."

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