Posted by Phù Vân (136..98.176) on July 14, 2022 at 07:53:34:
Warren Buffett (Trades, Portfolio) attempts to bridge this gap by comparing stocks to hamburgers.
Do you prefer your car cheap or expensive?
"A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves".
The answer here of course that lower prices are better for the consumers of these products. Similarly, low prices of stocks are good for the "consumers" of those stocks:
"But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the "hamburgers" they will soon be buying".
Rising prices are not good for those who are about to invest, they are good for those who are already invested, and even then only if they plan to sell in the near future.