Tags: Tuchman | Buffett | stock | declines

Investment Adviser Tuchman: 'Buffett Is Laughing at You for Selling'

By Dan Weil   |   Thursday, 13 Feb 2014 12:04 PM

While the temptation for investors with holdings in U.S. and emerging market stocks is to sell in the wake of recent price decreases, that's not the best strategy, says Mitchell Tuchman, CEO of MarketRiders, an online portfolio management system.

Investors would do better to follow the wisdom of investment icon Warren Buffett, who buys when prices are falling, Tuchman writes in an article for MarketWatch.

He cites a story Buffett told Fortune magazine about hamburgers in 2001 to explain why you shouldn't sell now.

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Buffett, who loves burgers, said he cheers when they go down in price and cries when they go up. "For most people, it's the same with everything in life they will be buying — except stocks," Buffett said. "When stocks go down and you can get more for your money, people don't like them anymore."

But they should, Tuchman argues.

"A serious, long-term retirement portfolio holds a mix of asset classes regardless of the headlines and, in fact, buys on declines precisely because prices are falling," he writes.

"To do otherwise is to put off buying your hamburger until prices are high again. Buffett would just laugh and then buy."

Meanwhile, two weak U.S. economic reports released Thursday have stock investors feeling uncertain. Retail sales fell 0.4 percent in January and jobless claims increased by 8,000 to 339,000 last week.

"The markets are looking at softer data and thinking it's weather-related," Krishna Memani, chief investment officer of OppenheimerFunds, tells Bloomberg.

"It's a continuation of the soft data that we have been receiving. Whether that is weather-related or a fundamental problem with the economy itself is up for debate."

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