The Don Eilers Team

Omaha -- THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have

been leaking into the general economy, and the leaks are now turning into a gusher. In the near term,

unemployment will rise, business activity will falter and headlines will continue to be scary.

So ... I've been buying American stocks. This is my personal account I'm talking about, in which I previously

owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway

holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net

worth will soon be 100 percent in United States equities.

Why?

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful.

And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are

right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding

the long-term prosperity of the nation's many sound companies make no sense. These businesses will

indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit

records 5, 10 and 20 years from now.

Let me be clear on one point: I can't predict the short-term movements of the stock market. I haven't the

faintest idea as to whether stocks will be higher or lower a month -- or a year -- from now. What is likely,

however, is that the market will move higher, perhaps substantially so, well before either sentiment or the

economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions,

though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had

already advanced 30 percent. Or think back to the early days of World War II, when things were going badly

for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied

fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy

was in the tank. In short, bad news is an investor's best friend. It lets you buy a slice of America's future at a

marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two

world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions

and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow

rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century marked by

such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt

comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible

long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that

government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore

accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those

investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting

for the comfort of good news, they are ignoring Wayne Gretzky's advice: ''I skate to where the puck is going

to be, not to where it has been.''

I don't like to opine on the stock market, and again I emphasize that I have no idea what the market will do in

the short term. Nevertheless, I'll follow the lead of a restaurant that opened in an empty bank building and

then advertised: ''Put your mouth where your money was.'' Today my money and my mouth both say

equities.

DRAWING (DRAWING BY BRAD HOLLAND)

Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.

2008 Factiva, Inc. All rights reserved.

Document NYTF000020081017e4ah00072