With the stock market nearing all-time highs, some investors are getting nervous that the best gains are behind them. But the greatest investor of our time doesn't see it that way. In fact, a few years ago Warren Buffett told the Financial Crisis Inquiry Commission: "When I buy a stock, I don't care whether they close the stock market tomorrow for a couple of years."
Would you invest any differently if you kept that same credo? Put another way: How would you invest today if you had no fears about tomorrow?
Investors' dilemma
The Dow Jones Industrial Average and the S&P 500 are each up nearly 100% since the market doldrums of March 2009. But taking money out of the market based solely on fear, in the hopes of getting back in at a "better" time, is a losing proposition.
Case in point. I read the following statement last week on the front page of The Wall Street Journal: "Small investors are jumping back into the stock market after abandoning it during the financial crisis." So, investors who took money out in March 2009 when the Dow was around 7,000 are putting it back in today when the Dow is nearing 14,000. Seriously?
So, what's the bottom line in all this? Well, for starters, three colossal reasons to stay invested.
- Investors have horrific timing. The sooner one realizes this, the better off they'll be.
- Markets bounce back. History has shown us this time and time again.
- As the overused (but very true) saying goes: It's not timing the market, it's time in the market.
Of course, if you're sending your kid to Stanford next year and need funds to do so, don't put that money in the market. But for the patient, long-term investor with a 10-plus-year time horizon, there are great buys in today's stock market. Please, just get invested already.
Simple solution
For starters, consider companies built to last for decades, regardless of market takeoffs or cool-offs. Look for companies that boast iconic brands, consistent revenues, and competitive positions.
With its sensational brand, Coca-Cola (KO 1.39%) enjoys exceptional margins and increasing sales growth in the face of a challenging macroeconomic environment. Despite concerns about obesity and declines in U.S. per capita soda consumption, the company's drinks are displaying vigorous growth internationally, where Coca-Cola sells nearly 80% of its case volume. The company's newly introduced noncarbonated beverages, like its recent purchase of Zico coconut water, touted for its hydration and nutrition, are also growing robustly. And every major soda company is attempting to formulate the holy grail of soft drinks -- a zero-calorie naturally sweetened soda that better resembles the taste of full-calorie sodas.
Apple (AAPL -1.18%) is attractive for a long list of reasons, notably its ability to anticipate, manufacture, and market wildly sought-after products. With $40 billion in balance sheet cash and short-term investments, the company possesses some of the strongest financials of any company on the planet. Apple's recent share price tumble suggests a more guarded outlook for the company, but doesn't fully appreciate the exceptional demand for Apple's current and anticipated iDevices.
Even take a cue from the greatest investor of our time and look at Warren Buffett's Berkshire Hathaway (BRK.A 0.68%) (BRK.B 0.91%), a holding company of many diverse businesses including insurance, railroads, manufacturing, and retail. Berkshire recently bought back $1.2 billion of its own shares from the estate of a long-time investor and upped its share-repurchase guidelines to allow further purchases at 1.2 times book value, signaling Buffett thinks Berkshire trades at a reasonably cheap valuation. Fool senior banking analyst Matt Koppenheffer outlines even more reasons the stock appears a great value in today's market.
Get invested, stay invested
Yes, the market will go up, and it'll go down. But wise investors continue to buy great companies with long track records of success through all market cycles. Even with the Dow nearing all-time highs, there are still fantastic buys in today's market. And there's no better time than now to invest the dollars you don't need until a decade down the road.
