Why I won’t sell despite the carnageOctober 6, 2008
When economies collapse, the people don’t spontaneously combust and neither do their stuff. When trillions of dollars worth of paper fantasy money has evaporated, only the farms, mines, oil wells and factories that produce consumer staples will remain. Those are the places you want to keep your money and those are the things you want to buy when the price is right. We are approaching that point today, commodities can not drop below their cost of production for very long and that floor should also extend to stock prices. When you go to buy some shoes, are you upset when the price drops? Of course not, when you are a buyer you want the price as low as possible. I am not looking to retire in the next 6 months so I couldn’t care less what the market thinks these things are worth today, all I care is that the companies in which I invest and their industries survive. What I care about is profit — will these companies generate positive cash flow in an inflationary environment. The ones that make it through this mess will grow in market share and prosper. Let me make this clear, I won’t sell BECAUSE there is carnage. Update: Many people in my office who don’t invest are today discussing the crash. That’s a very bullish sign.
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