You may have read that quote by Bernard Baruch, the renowned twentieth century government adviser and stock investor. Baruch was a contrarian and self-proclaimed stock speculator who accumulated $1 million by the time he was 30 (1) and $15 million when World War l started.(2) Yet he did not always make money. In 1929 he reached the conclusion that the market had fallen prey to lunacy, but nevertheless lost part of his fortune when the market crashed (3).
Baruch recovered from the market fall and continued to believe that investors should buy when times look the worse. But why don’t more people do this? It comes down to fear. It’s tough to invest when the news is bad, although that’s how people like Baruch made their fortunes. Those rich investors were unaffected by the adversities in the world. And this century’s successful stockholders could do the same. They will not let the ongoing media coverage of Osama bin Laden, Saddam Hussein, or domestic snipers prevent them from making plans to achieve financial victory.
Where would Baruch invest his money now? He’d probably look closely at areas that look the worse, for example, technology stocks, Asia , and Latin America . If that scares you, think about where you would put some money five years ago if you had the chance to do it again. Would you purchase shares in mutual funds that own precious metals or commercial real estate? Both of those sectors were out of favor a few years back and are now popular with the masses.
Don’t rule out depressed opportunities. Consider using a small portion of your portfolio for such investments that you may want to set aside for your children or grandchildren’s future.
We can’t bring back Bernard Baruch to help safeguard your capital, but we can use his philosophy to help you select which areas have the greatest profit potential that can meet your long-term needs.
To learn more about investing in our out-of-favor sectors and the “buy low, sell high” philosophy, check the enclosed coupon.
Note that all sectors of the stock market entail risk including the loss of principal, and funds with international exposure carry additional risk of government and currency instability and currency fluctuation. Funds with precious metal exposure can be particularly volatile.
(1) American Banker, Feb 29, 1984 v149 p40(2)
(2) Fortune, Feb 20, 1984 v109 p161(2)
(3) Financial World, Sept 16, 1986 v155 p34(5)