Warren Buffett has blew the trumpet to buy stocks now and don’t keep cash. So if you’re a die-hard fan of this Oracle of Omaha, then you should just follow him. After all nobody knows when the bottom is to fish for stocks so you might as well take his advice. Furthermore how could the greatest investor be wrong when his fortune was built based on the simple concept of “be fearful when others are greedy and be greedy when others are fearful”. It’s true that fear is now widespread but the multi-billion-dollar question is will we ever see the desperation, panic or capitulation along the way from now onwards? Bad news is indeed our best friend and I wish there would be more of such friends coming to town *cruel me*.
When the chief executive of Berkshire Hathaway’s (NYSE: BRK.A, stock) screamed “Cash is Trash” you better think twice before you unload all those money stacked under the mattress ready to buy any stocks tomorrow. What he really meant was if your only intention was to keep your money inside piggy bank or stash it under the pillow, then you’re fighting a losing game against the inflation. But if you believe “Cash is King” and the reason why you keep so much of it was to wait for the right time to pounce on dirt-cheap stocks, then you don’t really have to come visit FinanceTwitter *grin*.
However you’ve to take note that Warren Buffett’s strategy is always a long-term investment simply because he’s a novice when come to short-term prediction. Also he’s not always right so you got to do your homework as well. Make no mistake about the current U.S. stock market. Don’t ever dream that it will make a V-recovery because you would be lucky to have a U-recovery and the last thing we want is a L-recovery. One of my buddies was right when he said we shouldn’t rush into stocks now because you’ll have at least six-months to do your window shopping. Even at this moment investors are buying stocks to average their holding.
So, the Malaysian Government tries to copy Warren Buffett’s philosophy to buy local cheap stocks with the RM10 billion hot money allocation huh? Apparently the plan was to inject RM5 billion to Valuecap Sdn Bhd to invest in undervalued companies and the rest of the money on other assets. But the lack of transparency is haunting the EPF shareholders (that’s you and me) because it seems the de-facto PM Najib has instructed EPF (Employee Provident Fund) to loan the government RM5 billion for his plan. If the EPF can provide periodical report on how the RM5 billion of EPF account holders’ monies are to be used and the returns of such investment, I’m sure people won’t mind such noble plan to help the local stocks. But if everything is done in secrecy with no trace of where the RM5 billion goes to, then EPF account holders have the right to bark.
It is believed Valuecap has about RM4.9 billion worth of investment in 70 listed companies and the company which has assets of well over RM7.5 billion had paid out a total of RM135 million in dividends since Sept 2007. Nevertheless the returns of such borrowing to EPF from Valuecap is still unknown, not to mention the EPF account holders were being paid pathetic dividends every year. Just like Bush administration’s request for $700 billion rescue plan that requires Congress approval, the Malaysian Government cannot simply give a call to EPF and the RM5 billion is ready to be transported. The Malaysian Government should seek the approval from the “Congress” since the money belongs to the shareholders – the peoples’ monies.
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