Earlier this month the Oracle of Omaha told the public to buy for the long term much like he was doing. We are down roughly 7% since Warren Buffets call. But is he wrong? Perhaps its how you analyze that. I myself now am a long term investor, a value investor at that. Right now I see values aplenty, and have been a buyer of equities for the better part of the year (dollar cost averaging on high-quality consumer staples mostly). I sacrifice short term pain for long term substantial gain. For clear honesty I have also been a short term trader.
This is what the current market entails for investors. There are long term investors and there are short term traders. Both have the same principle of wanting to make money. Traders can make solid gains in seconds or minutes, and maybe even a few days. Investors however have a long term view of 1-15 years depending on their investment approach.
For more than a year traders have performed a bit better than buy and hold investors, hence all the volatility from minute to minute in the markets. Its a great tug-of-war that shows no signs of letting up. Until the economy and credit markets stabilize we will see this type of activity. For buy and hold investors many of them will dollar cost average in order to gain a lower average price paid per share. The reason behind this is because value and growth investors know that in the future the markets will pick back up and economic activity around the world will one day gain steam leading to substantially higher equity prices.
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