"every dark cloud has silver lining", bottom fish in 3Q09

By Dr. Steve Sjuggerud
in Daily Wealth

“I feel like an oversexed man in a harem… Now is the time to invest and get rich.”That’s what Warren Buffett told Forbes Magazine in late 1974. Before Forbes could even get the issue to print, the Dow had soared 15%.In December 1974, the Dow sat in the 500s. Then it zoomed in 1975. By early 1976… less than 18 months later… the Dow topped 1,000.In my opinion, the next 12 months could be like 1975. I believe we’re in for an exceptional year.“Today on Wall Street they say, ‘Yes, it’s cheap, but it’s not going to go up.’ That’s silly.” That’s another 1974 quote from Buffett.Buffett was exactly right. Stocks peaked in the 1960s. They finally bottomed after a particularly nasty crash in 1973 and ‘74. The Dow started January 1973 in the 1,000s, before falling into the 500s by December 1974. Then came the bull market of 1975… right on Buffett’s cue.Earlier this month, Warren Buffett made his most bullish call since that late 1974 Forbes article. This time around, it was in the New York Times:A simple rule dictates my buying. Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors.So I’ve been buying American stocks… Bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price. Over the long term, the stock market news will be good.Today is similar to back in 1974, the last time Buffett said it’s time to get rich in stocks… This time, stocks have fallen as much from 2000 to 2008 as they did from 1966 to 1974, adjusted for inflation.The feeling among investors back then was the same as it is today… After a great bull market in the 1960s, they experienced eight years of nothing. The last two years of “nothing” (’73 and ‘74) were particularly terrible.Times feel terrible today, too. And the feeling is the same today as it was in the 1970s… The economy is not going to get better tomorrow.But both history… and Warren Buffett… tell us that now is exactly when you need to be bold and buy stocks.While I can’t say I feel like an oversexed man in a harem, I do believe now is the time to invest and get rich…

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