Skyone Financial Site: If you wait for the robins, spring will be over

Warren Buffett said he's buying U.S. stocks now and, if prices stay attractive, his personal investments, as distinct from his stake in Berkshire Hathaway Inc., will soon be wholly in American equities.

This is his principle: be fearful when others are greedy, and greedy when others are fearful. While short-term stock-market movements can't be foretold, the likelihood is that the market will recover before the economy or general investor sentiment do so. Referring to the 1930s depression, Buffett pointed out that the Dow reached its record low on July 8, 1932; economic conditions continued to deteriorate until Franklin Roosevelt became president in March, 1933, but by that time the market had climbed 30 percent.

Look at how the market behaved in this credit crisis: the recent market downturn looks brutal

However, looking at that same DJIA data using a log scale, a different picture emerges. It shows that equities appear to have grown above trend since the mid-1990's and may just be reverting back to its long-term average.