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Comment by Reedx | Hacker News Reader

To help adopt a sober approach, it's worth watching this interview with Warren Buffett who shares his thinking re: market and Coronavirus.

https://www.youtube.com/watch?v=JvEas_zZ4fM&t=21s

One of the points he makes is that you should think about stocks as businesses. Instead of "I bought a stock" think "I bought a business". That puts you in a better frame of mind and perspective for the long term. i.e., You don't buy or sell a farm based on today's headlines.

The real question is whether things have changed on a 5, 10 or 20 year time frame for the businesses you hold.

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From a retail investor's point of view, both approaches are wrong. The retail investor can neither "play" the game of stocks, nor understand what it means to buy a business. Not because there is anything magical about either, but because the retail investor has a life too, and would rather focus on their own work for their actual income.

The correct way to look at stock investment is to say "I bought a stake in the future of the world's industry". And that makes you realize what a mind-bogglingly large gamble this is with your savings. People simply have faith that human life will keep improving over the long term, and hence the value of the world's industry will also keep going up irrespective of short term rises and falls.

> that makes you realize what a mind-bogglingly large gamble this is with your savings.

Is it a gamble, really? I can't fathom what I could do with my money, should the world economy go to the gutter, big time. Holding cash surely won't help - cash can become worthless, did so many times in the past. Hard assets might help, but it's very tough to know which ones (cans of food maybe, but really? How much can you "invest" in it? And it's really just investing in the apocalypse... you're making a very shitty scenario slightly less shitty for yourself, _maybe_).

The thing is, all we can really do is hope that the future of the world's economy is good; if it isn't, there's really no rock-solid way to isolate yourself from the bad outcomes. Regardless how much you own now.

I'd argue that investing in skills and training is the best preparation for apocalypse scenarios.

I have a younger sister in medical school, and as I say to her about the debt she's taken on for the degree, "Even if there's a nuclear war and the economy and technology evaporate, people will want to keep you alive for your knowledge. They might break your ankles and chain you up to keep access to your knowledge and skills, but you'll be fed even when almost no one else is."

Not that preparing for an apocalypse is necessarily a great use of time - just saying that skills are a better asset for it than physical goods and resources.

Two things make Warren different: (1) he is a professional money manager, which means that he is investing other peoples money. (2) because of (1), he never needed the money he is investing. It is much easier to have long time frames when you're investing money that is not yours.

Actually the thinking still holds: it’s better to have some cash besides your business if you would really need it that soon, or be prepared to take out money from your business when it’s cash strapped (I’m doing the 2nd actually, but I’m OK with it, and am prepared for it emotionally).

Warren Buffet still owns 6% of Berkshire Hathaway. Maybe a more correct statement would be "If you have money you don't immediately need to spend, it is much easier to have a long time frame for investing". Hopefully the money in people's retirement accounts is this type of money.

Most money managers have extremely short time frame investment horizons and are just looking to get their 2 and 20.

Even if that were true, he's still completely right, and this advice is still good! What really makes him different is that he consistently follows the common sense advice the rest of us nod along with and then ignore.

This makes sense if you have huge quantity of cash where leverage is not an issue. With limited cash, you have to think very different from Warren.

I don't disagree. If you are in it for the long term, there's really nothing to worry about. The market eventually will bounce back. It always does.

Well, so far...

And if it doesn't hopefully you stocked up on toilet paper and purell to trade in the new hellscape economy...

Banking on bottlecaps

And ammo and soap.

Toilet paper!

The market not bouncing back doesn't necessarily imply Armageddon. Just look at the Nikkei.

That may make sense if you're thinking about short term cash, but for longer term investments it still holds up.

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