Attention all bearish analysts – we have now left the orbit of your knowledge of the markets!
That sinking feeling you have in your virtual portfolio is a perfectly normal reaction to the stock market slipping away from the pull of all earthly concerns as we head out into deep space. I urge my passengers to remain seated though, as it is very easy to get disoriented or giddy until the captain is able to turn on our VIX drive once we have firmly set our market direction.
Captain Buffet and his crew of the world’s top investors is aligning the ship for a jump into hyperspace and we can keep an eye on the screens here:
Berkshire Hathaway has always outperformed the Dow but it has also always been a great leading indicator of direction but, not only has it outperformed the Dow by over 10% in the past 3 months, but our man Warren just told us we were undervaluing his company!
Does that mean we are also undervaluing the rest of the market? Do you really think the answer could be no? Berkshire Hathaway is the market – Acme Bricks, Benjamin Moore Paint, Borsheim’s Jewelry, Business Wire, Clayton Homes, Dairy Queen, Fruit of the Loom, Geico Car Insurance, General Re, HH Brown Shoe, Iscar Metal, Jordan’s Funiture, Mid-America Energy, Net Jets… They are a diversified basket of what Mr. Buffett considers the best quality (not always the biggest or the fastest growing) companies in each sector and they generate almost $100Bn in sales with a 10% net income.
Additionally Berkshire holds significant amounts of stock in major companies like AXP, BUD, KO, COP, GE, HD, LOW, NKE, TYC, UPS, WMT, WPO and WFC (to name a few I agree with) and all year long he has been buying more. So do we relax and have faith in our captain (who has returned 1,400% to investors since just 1993) or do we jump ship because the bears are screaming? Just remember that you’d be screaming too if you were bearish this year!
Over in Asia we need to get ready to put on our Hang Seng 20,000 caps!