Warren Says It’s Time To Buy, Right or Wrong?

What a whirlwind roller coaster the last couple of weeks have been in our economy.  We’ve basically seen a free fall of our stock market, a complete lack of confidence within the banking system, and our government playing janitor cleaning up the mess.  Home prices continue to fall, consumer and business credit is frozen, and the malls are starting to look like ghost towns.  At what point do we say enough is enough and the worst is now behind us?  America’s icon and financial guru Warren Buffet came out today and said it’s a great time to start buying stocks;  is his crystal ball much clearer then the economic outlook or is it simply a call to boost confidence.

I have no idea if this is the bottom of our economic struggles, if I could predict the future I’d own an island down in the Caribbean and spend my days milking the stock market for millions, however I do know that there has been a tremendous pull back in stock prices and some companies look very attractive compared to where they were 6 months ago.  One major disadvantage that an average investor such as myself has compared to a guy like Warren Buffet, is the lack of billions of dollars in cold hard cash.  I’m willing to bet that if I had 45 billion in cash sitting on the sidelines here, I would feel pretty comfortable putting 10 billion back into play via some of these beaten down companies.  As difficult as it might be, I think I could still live off of the 35 billion left in my checking account if my investment went to zero.  It would be a lot easier to say that this looks like a great time to buy when you don’t have to worry about making the mortgage payment, car payment, insurance, and food bill!

Bottom line is that if you have extra cash lying around, and don’t need to access it for the next 10 years,  this might be a great time to pick up some great companies at relatively low prices, however if you plan to buy just for the sake of buying because of the large pullback we’ve had I’d give it a second thought.  Is Warren Buffet spot on when he says this is a great time to buy or is he simply in a position to risk a lose if there is more pullback?