Warren Buffet Obliges The Greek

By Markos N. Kaminis - Economy & Markets

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Did you notice? A little over a week ago we called for a hero, namely Warren Buffet, to rise up and lead us. This past Friday, that hero obliged. As the President and Treasury Secretary spoke nearly daily, and the market tanked right in tune, the problem became clear to us. We then authored the article "We Need a Hero," because of the lack of confidence the nation had (has) in our government representatives. To be specific, "The Greek" asked America's Grandfather, Warren Buffet, to offer some sound advice to worried Americans, and Warren obliged. Important people are reading Wall Street Greek, judging by recent commentary, and that includes the John McCain camp and Warren Buffet.

(Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK)

On Friday, in a New York Times Op Ed piece entitled, "Buy American, I Am," Warren Buffet advised Americans to fear not. Warren said he's been shifting his personal account funds out of treasury bonds and into domestic stocks. Warren reiterated a dictum he calls a simple rule, "Be fearful when others are greedy, and be greedy when others are fearful." Warren says fear is so widespread now that even seasoned investors are gripped by it, and he's right.

Warren offered a cute quote, "If you wait for the robins, spring will be over." Both Alan Abelson and Mike Santoli countered smartly, "The second mouse gets the cheese though." Then, they proceeded to kiss the money-king's butt. Look, there's never been anyone better at investing than Warren Buffet, plain and simple. One might argue that Peter Lynch did a fantastic job, and that some hedge fund managers have done well lately, but Warren is tried and true. He's lasted the ages, and is time tested.

His advice is sound, but you don't need me to tell you that after Warren has. Historically, we have experienced a 10% or greater stock market correction about every four years or so. Moreover, recessions are a normal part of the business cycle. Yet, every time we fall into one, there's a good flock of pigeons chirping about the sky falling. This time around, because things are dramatically worse than average, there's a great many panicked folks. Warren points out that there's good reason for concern, but he says it makes no sense selling the nation's many sound companies that are "sure to set profit records 5, 10 and 20 years from now." He's absolutely right, and we agree here with our hero's long-term outlook for investors who have the same time table. That's most of you!

One important characteristic has to fit between you and the most famous disciple of Benjamin Graham though, if you are going to abide by his advice. Buffet is a long-term investor. He doesn't need $20K in two months to pay for his wedding. If you do, you're better off not risking it. He's willing to bear two months of the bear for the sake of five years from now. Ask yourself if you fit that mold before you go making any euphoric decisions on the deity's words.

In fact, even if you are Warren's age, you probably shouldn't do what he's doing right now. After all, he's set for life, even if some unforeseen event drives markets even lower for longer than expected (read Iran). If you just barely have enough to survive through the estimated rest of your life, it's probably still not wise for you to risk possibly being the first mouse to the cheese. Warren can take a hit and keep on ticking; you could be a rat in a trap if you play around.

"In any event, if you're reading, thank you Grandpa..."

Still, like our great real estate guru here often says, recessions have a beginning and an end, and this one will too. The market gained ground last week, and is trading higher today. Warren might just have offered a catalyst for inflection, and I'm honored if his piece was at all inspired by my article. To be quite honest, I doubt it, though we are widely syndicated. I think we're just in tune with the collective subconscious, or just plain have a tap on common sense. In any event, if you're reading, thank you Grandpa...

Here's a bit of trivia you probably didn't know about "The Greek." After getting my MBA, I offered Warren to help out around his office for free. I figured I could deliver pizzas just as well in Nebraska as I was in Philly while fighting for my dream Wall Street job. Warren didn't know me well enough, or I'm sure he would have invited me up to Omaha. He and I are very similar in that we have a passion for stocks, and a fair amount of common sense and dare I say insight. On December 16, 1997, Warren's secretary Debbie Bosanek sent me a letter that read:

Dear Mr. Kaminis:

Mr. Buffet read your letter (I fainted) and asked me to reply. He appreciates your thinking of us; unfortunately, there just isn't a need for another person at Corporate Headquarters nor are we aware of any positions available elsewhere.

Mr. Buffet appreciates your taking the time to write, and we wish you the best of luck in your future endeavors.

P.S. We have a staff of 12 here and there isn't even room for another person.

I was never bright enough to know my bounds, and thank God for that, or I would have never made it to Wall Street. I thought it was very kind of Mr. Buffet to even take the time to reply, but in retrospect, I should have showed up at his door. If you want something, you have to claw and scratch for it. Everything works out for a reason though, and I wouldn't be the "Wall Street Greek" if Buffet had engaged my offer. I think I'd be okay though don't you...


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