From the New York Times entitled “Buy America. I Am”, here are the oracle’s wise words in full!

THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So … I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.

Why?

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.

Let me now spell out how the new paradigm differs from the old one……. Instead of being always right, financial markets are always wrong. They have the ability, however, both to correct themselves and occasionally to make their mistakes come true…….George Soros: The New Paradigm For Financial Markets

In New York, the Dow Jones Industrial Average lost 35 points to 11,807.43 points on thin trading due to anxiety around the Federal Reserve’s interest rate meeting tonight. Inflation concerns underscore the Fed’s decision with recent oil price records adding pressure. General concerns about the economy abound and a report showed that consumer confidence was at a 16-year low. Financial stocks rallied on speculation that HSBC will takeover UBS. UBS shares gained 7% and Lehman Brothers gained 6.8% with the US Financials Index (XLE) gaining 1.2%.

If you’d ever played the stock market, these comments by PAUL B. FARRELL of MarketWatch may ring true to some extent … I don’t fully agree with his views but it makes interesting 5-minute read.

1. You know you’re (almost) never wrong

“Big Mistakes” calls it “confirmation bias,” another name for cognitive dissonance, the unconscious need your brain has to stick with what you already know as “The Truth” (even when it’s secretly “planted” there by Wall Street’s clever ad campaigns).

2. Your ‘mental accountant’ is an embezzler

Your brain loves “mental accounting.” A dollar looks different “depending on where it comes from, where it’s kept, or how it’s spent.” You spend tax refunds fast. But hang onto stock inherited from grandma. Wall Street’s ad gurus know the way into your pocket is through that unconscious 98% that’s manipulating your brain’s “accounting” system.

3. You hate to lose more than love to win

Psychologists call it “prospect theory:” Investors hate to lose so much we often sell winners to “lock in profits.” And we hang onto losers, praying for a miracle.

4. You throw good money after bad

The “sunk cost fallacy” is a favorite brain glitch. Here’s a familiar example: First blunder, pay too much for a house. Second, fail to get out at the top. Third, turn down a bid because it’s less than you paid. You’re stuck paying down a big bad mortgage.

5. Decision paralysis, so you do nothing

How your brain labels options changes the outcome: Whether it’s “one of rejection or one of selection, or whether you view it as protecting a gain or avoiding a loss.” Labeling confusion leads to “decision paralysis,” your brain locks up, does nothing, loses again.

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