9

CHAPTER

Invest Significantly at the

Maximum Point of Pessimism

THE SIXTH ELEMENT

Investors should remember that excitement and expenses are their

enemies. And if they insist on trying to time their participation in

equities, they should try to be fearful when others are greedy and

greedy when others are fearful.

— Warren Buffett, Berkshire Hathaway

2004 Annual Report

Bull markets are born on pessimism, grow on skepticism, mature on

optimism, and die on euphoria. The time of maximum pessimism is

the best time to buy, and the time of maximum optimism is the best

time to sell.

— Sir John Templeton, 1994

To succeed in investing over the long run, you must be prepared to

look stupid in the short run.

— Mason Hawkins

We now come to arguably one of the most defi ning charac-

teristics of a successful investment philosophy. As to be expected,

buying during periods of pessimism is also one of the most diffi cult

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