Friday, October 17, 2008

Warren Buffett speaking to a group of students...Image via WikipediaShall we start buying?

In today's New York Times Op-Ed my hero Warren Buffett said he was buying stocks and advised us to buy American stocks. Let me be clear he does say clearly that he has no idea if we have hit the bottom yet and that he is looking at a minimum horizon of ten years, preferably more. My two cents would be as follows
  • Buy good companies with strong economic moats i.e. virtual monopolies or companies that can extract a toll from customers regardless of the economy
  • When you buy, don't go all in buy gradually that way you dollar cost your way if the market goes down further
So what can we buy?
Johnson & Johnson (JNJ) : Tylenol, Band Aids, Heart stents are not going away, if anything we may need more of these during such challenging times
Diageo (DEO): Johnny Walker, Smirnoff brands command loyalty and stickiness, this is the worlds largest alcohol seller with a world wide distribution and brand
The DOW 30 - thru the exchanges traded fund ticker "DIA" own the top 30 american companies in one swoop, lower risk.

A more risky play if the market comes down a lot is Visa (V) its a risky one, but the key point is that Visa is a toll booth, credit defaults dont harm them its the banks that issue the cards that bear the responsibility. I would buy this puppy if it fell below its IPO price of $44.

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