Tuesday, February 12, 2008

The Rush to Blame

One thing that bugs me about our culture today is our need to quantify everything. If something happens, someone must be blamed for it. This market we're in is no different. If the market is going down, it must be somebody's fault, right? No. Markets need corrections to be healthy. People are always losing sight of the big picture. So the Fed continues to cut rates, and the government gives us a stimulus check. But are they really needed? Yes, there have been problems in the credit and mortgage businesses. Lenders made bad loans, and they should pay the price. People made poor decisions in getting into houses they can't afford. They should not be bailed out for that. And this recent movement by the media encouraging people to walk away from their houses? Yikes.

Look at Buffett for example. He's had enormous success over the years. He's told anyone who asks what the secrets are to being a successful investor. But no one really listens. Investors love to get tied into day to day price movements. So of course he's buying when he can get his hands on assets at significant discounts. As investors, we should try to ignore the noise, and focus on the fundamentals. Look for strong companies with potential to grow earnings that are trading at discounts because of overall weakness in the market. Have a great day.

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