In the best testament to not overreact to the market panic to US credit rating downgrade, we look to respected investment guru Warren Buffett. He said that not only is America’s debt still sound, it’s probably even stronger than ever. “In fact, if there were a quadruple-A rating, I’d give the U.S. that,” Buffett said.
As if to prove his point, Berkshire’s National Indemnity Co. threw out a $52-per-share cash offer for Transatlantic Holdings, Inc. (NYSE:TRH) to total $3.25 billion over the weekend. This big move to buy even as the market is souring says a lot.
Remember Buffett in 2008, when it seemed crazy to jump into banks headfirst when the market was going haywire in 2008. But it was awfully profitable for Buffett, who dumped $5 billion into preferred stock of Goldman Sachs. As a result, Berkshire Hathaway earned a cool $500 million per year in dividends before Goldman bought back the stock several months ago, and enjoyed a 10% premium to buy back those preferred shares.
Therefore, stay calm, and stay the course during the market panic.
I am now vested in:
S'pore Blue Chips: NOL, SembCorp Ind and F&N. These are a mixture of medium and long term plays on the rebound of worldwide and S'pore stock makets.
HK Oil and Gas play: CNOOC: This is a direct play on oil prices rebounding.
Nikkei Index: I foresee it going to 10,000 again soon. Will be accumulating more if market moves down further.
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