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How to Let the World's Greatest Investors Make You Rich

By Dan Ferris, editor, Extreme Value
Saturday, November 1, 2008

Warren Buffett says to be greedy when others are fearful.

Peter Lynch says the secret to getting rich in stocks is not getting scared out of them.

More poetically still are the words of Nathan Rothschild, who told us nearly 200 years ago that the time to buy is when blood runs in the streets.
Great investors know it's not skill or intellect that keeps most people from making money. It's emotion, primarily the emotion of fear. And fear is everywhere right now...

Right now, most investors are too terrified to buy stocks. The so-called "Fear Index" recently hit a new all-time high. The Fear Index is the Chicago Board Options Exchange's Volatility Index, the famous "VIX," which recently surged to just over 89. It's normally between 20 and 35.

Persistent fear makes stock prices cheap enough to attract great investors. That's why Warren Buffett is telling everyone it's time to buy U.S. stocks.

If you don't have time to pick stocks yourself or if you're sick of mutual funds (and you should be), I suggest you buy what I call "Professional Help Stocks." These are publicly traded holding companies run by world-class investors. Take a look...

Professional Help Stock

Ticker

Lead Investor(s)

Berkshire Hathaway

BRK

Warren Buffett

W.R. Berkley

BER

William R. Berkley

Icahn Enterprises

IEP

Carl Icahn

Brookfield Asset Management

BAM

Bruce Flatt

Winthrop Realty Trust

FUR

Michael Ashner

Fairfax Financial Holdings

FFH

Prem Watsa

Leucadia National

LUK

Ian Cumming, Joe Steinberg

Kimco Realty Trust

KIM

Milton Cooper, Marty Kimmel

White Mountains

WTM

Ray Barrette

Vornado Realty Trust

VNO

Steve Roth

Sears Holdings

SHLD

Eddie Lampert

Many of these Professional Help Stocks amount to collections of businesses that throw off lots of cash, including Warren Buffett's Berkshire Hathaway.

Buffett is great at avoiding big risks, which is exactly what you need right now. He has put together a portfolio of world-dominating businesses like Coca-Cola, Johnson & Johnson, Kraft, and Wells Fargo. He'll keep your money safe, and you'll earn a lot more on it over the next several years than you will on most of the other stocks you'll buy. Best of all, you can buy his services at a steep discount right now.

Berkshire Hathaway A shares trade for about $110,000 each, the B shares for less than $4,000 each. If you have a small amount of money to invest, buy yourself a B share or two... and you'll have Warren Buffett investing your money for you. The A shares' intrinsic value is around $160,000 each. That makes the B shares' intrinsic value about $5,300 each, about 33% higher than what you can buy them for today.

Buffett isn't the only great investor who can give you professional help. There's also William R. Berkley, founder and chairman of W.R. Berkley Corp.

W.R. Berkley Corp is one of the greatest insurance underwriters in the world. And William Berkley has been investing and underwriting insurance since 1967. He has compounded investors' money at 17% per year for 25 years. The stock is easily worth $40, and yet it's now trading at $26. It's one of the greatest compounding machines in the market, yet it's priced as if it hardly has a future.

In fact, almost all of the Professional Help Stocks I listed above are great buys right now. Most of them are trading at substantial discounts to book value. The stock market is saying the greatest investors in the world have suddenly forgotten all they've learned.

The stock market has it exactly backward. These investors have the knowledge and experience to easily outperform the vast majority of investors. They'll avoid the big risks that will prevent most investors from making money. They'll do everything with investment capital that most people find extraordinarily difficult to do.


 

These guys are the best in the business. They know more about investing than anyone. It's a slam-dunk, no-brainer, easy-as-pie decision to get them working for you, especially when the market is punishing them for their expertise, not rewarding them as it should.

Don't be afraid. Now's the time buy stocks. If it doesn't feel comfortable to do that, simply turn your money over to the greatest investors in the world and let them do the buying for you. By this time next year, you'll be glad you did.

Good investing,

Dan Ferris





Market Notes


HISTORY AGREES WITH DAN FERRIS

The latest "consumer confidence" numbers came out this week... and they're terrible. Folks haven't been this gloomy toward "consuming" in 40 years. Time to sell stocks? No way!

It's counterintuitive... but our chart of the week shows that extremely low consumer confidence levels are terrific buying opportunities for stocks.

Extraordinary levels of pessimism marked major market bottoms in 1982, 1991, and 2003.

It sounds crazy to most investors... but the stock market is a "discounting" machine. It looks forward, not backward. History agrees with Dan Ferris. It's time to buy.

– Brian Hunt
 


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