First, in the fall of 2008, investors were clearly panicking. Warren Buffett even wrote a letter to the New York Times explaining why it was time to buy stocks hand over fist – and was criticized on CNBC for doing so! If there has ever been a better contrarian indicator, I’ve never seen it. Meanwhile, you could have bought shares of iconic beer maker Anheuser-Busch (BUD) – a stock I first recommended in 2006 – for around $50 for several weeks in October and November 2008. At the time, global brewer InBev had an all-cash deal in place to buy the stock for $70 per share. I told investors the situation was so safe, they should put 25% of their assets into the shares. It was the easiest and safest way to make a lot of money I’d ever seen. Even if the deal fell through (and it couldn’t; it was an all-cash deal at a reasonable price)... the stock was worth far more than $50 a share. In my view, there was zero downside and an almost certain $15-$20-per- share profit in just a few days. A few months later – in February 2009 – shares of renowned jeweler Tiffany were trading for less than $25. The company has large inventories of gold and precious stones. Subtracting the value of its inventory from its debt load and dividing by the shares outstanding gave you liquidation value of around $24 per share. In short, you could buy Tiffany – one of the premier luxury brands in the world – for the value of its current inventory. That means, you could have gotten the real estate, the brand, and all the future profits for free. Again, I remember the specifics of the trade because I wrote about this situation to subscribers. It’s times like these when you must be willing to make large commitments. Fine, you might say. But what should I do, just hold cash for years or decades, waiting for a perfect situation? Stocks were only as cheap as they were in 2009 three or four times over the last 100 years. No, I don’t argue that you should stay 100% in cash until stocks crash. That is probably the biggest misunderstanding most investors have about our advice. We never advocate selling everything.
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