Nine business days ago Warren Buffett talked about the greatness of America and the durability of long-term investing. He talked about how stocks were the best assets and how it even worked out to own and buy them during 2008, a most inopportune moment. "Be fearful when others are greedy and be greedy when others are fearful," which is certainly the case right now.
"And most certainly fear is now widespread, gripping even seasoned investors," he wrote in a now legendary New York Times editorial entitled "Buy American, I Am."
The time was October of 2008, in the thick of the Great Recession. It was about as ugly as it can get. "Let me be clear about on one point, " he intoned. "I can't predict the short-term movements of the stock market. I haven't the faintest idea as to whether stocks will be higher or lower a month or a year from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over."
We now think of that moment, that piece as incredibly prescient. When you hit up a chart of the Dow from a year before that piece appeared, it looked like Buffett caught almost the exact bottom. When he wrote "people who hold cash equivalents feel comfortable. They shouldn't," it seems so logical.
Until you consider one thing: Buffett wrote that piece on Oct. 16, 2008, when the Dow Jones average was at 8979. It then fell to Dow 6547 on March 9 of the next year.
You could argue that Buffett was early. But go back over those words. He didn't even attempt to pick a short-term bottom. He disparaged the whole concept, instead relating that moment to times like the bottoms of the market ahead of when the Depression troughed in 1933 or when the U.S. looked like it could lose World War II in April of 1942. He even had the prescience among talking about other bottoms ahead of the end of recessions or military conflicts or the resignation of a disgraced president, to mention "a flu epidemic."
That's a good jumping off point to today's market, because we are at the beginning of a flu epidemic that, sadly, many of the experts say cannot be controlled.
I don't know if it can be controlled. I have my own views about what needs to be done. Thoughts on schools closing. Foreign travel. Immigration. Cruise ships. Needless travel.
I don't want to blame people. Hold politicians accountable. What good does that do coming from me.
But I do want to think about what Warren Buffett wrote on days likes today, because back then the issues were the solvency of the banks. Back then, prominent wise men were talking about the need to nationalize these financial institutions to save them. The government wasn't just slow to act. It was negligent, the policy makers paralyzed, busy saying that it was illegal to take strong action or the moral hazard was way too great to allow the system to be saved.
Until it almost wasn't. And the Fed Chief took some bold action that he should have taken long before that, but at least he did it and we now salute him.
This time the issue is two-fold: The first is, Will the travel and leisure companies survive? Judging by today's trading, the market is saying no. It's also saying no to companies that thrive on people gathering and going. The second issue is a lot more esoteric: Will you survive? Will you survive better if you stay at home? If everyone stays at home, will it makes things better or worse if the darned thing is so easy to catch that you assure nothing staying in your house as much as you can.
For this we only have statistics and the statistics for survival as we all know now are quite good except for the older people, particularly the older people who are not that well to begin with.
It's a difficult, Stephen King-like moment. As I walk through downtown from the exchange to my office, I see carefree people on a beautiful day, walking around smiling and laughing and I think don't they know what is coming? Haven't they read about the state of Washington, which now sounds like there are parts of it that are positively Wuhan-like.
Don't they know about the 10-year treasury hitting record lows?
Haven't they heard about the transports, the transports, for heaven's sakes. Will they ever be foolish to take a cruise again?
And here's where I come out.
One, there may, indeed, be no way to contain this scourge.
Two, some of us will indeed get sick, some very sick and yes, some will pay an ultimate price for doing nothing but shaking hands with the wrong person.
But, three, the idea that there is no hope for a cure, that there's nothing to arrest the most serious cases, is to make a bet against the wrong people, the smartest people in the world, the whizzes we went to school with, the ones who chose not to do social media and coding, didn't go into computer science but went into science itself. That feels like a sucker's bet to me. Even as I worry myself for my family and friends, I am not willing to take the other side of the trade.
Which brings me back to Buffett's words. Where are we in the market right now? We're down 10% from the high.
That's not as much as we were when Buffett penned his piece. If you want to sell some stock on the next bounce-and we had a big bounce yesterday off an oversold position -- and wait until we are down more because Buffett was early, then that's fine with me. I like cash. Cash is king for this moment.
I recognize the fragility of the moment. I am recommending for those who pick stocks that this is a time to own some gold, some good staples, mainly food, but definitely drug and some utilities like American Electric Power (AEP) which is on tonight on "Mad Money."
But I also think that it's an awfully hard to time call a bottom and even as I don't think we may be near one and I want a lot of cash still to be ready, I also don't want to be the one who waits for the robin. I never want to conflate life and money, but even as you may be worried about your personal safety, the system is stronger than it was back then, which means that if you want to blow out of everything, I don't know when you can get back in. Maybe the pain is too hard to take.
I will say this. If you are worried about yourself, you should not worry about your money. Certainly, if it at all makes you more uneasy about real life, you can take money out. I know of nothing that is working to stem the tide, although I am heartened by what the smartest people are doing to try to save lives.
But in the end, I am going with Warren Buffett. He was too right then. I think he will be too right now. We don't know the time, we don't know the level. The disarray is palpable, but as the Oracle says, "be greedy when others are fearful" -- words worth repeating as fear engulfs us more and more until no one's left to be fearful and that will be the moment.
