Stock Market looking ill

"S&P has gone from 903 to 1297 since I first posted in this thread telling people to follow Buffett's advice and buy equities. That's 44% up. I hope at least some of you took Buffett's advice..."

As I said even before this thread, I was already in... and it was Shiller's advice more than Buffet's for me... (althought he Oracle helped). Schiller actually called it a few days from the bottom, with trailing PE, in the NY Times. Thanks Bob!

me on this thread...
"I agree with Buffett... which is why I'm in stocks. And not in RE."

And since I recommended SSOs, they're up 150-250% depending on exactly when one bought.

Of course, I already noted I took major profits before the last tank...

Over the past 40 years, the S&P has gone up an average of 6.5% per year. Add 2% in dividends and your total return from equities is 8.5% per year. Hard to find something better for the long haul than this.

I for the most part agree. Its a tough one to beat long term.

"And since I recommended SSOs, they're up 150-250% depending on exactly when one bought."

This just in: you always make money if you buy at the bottom! Who knew? The flip side of that, of course, is that SSO is down OVER 49% from peak. Scary.

"Of course, I already noted I took major profits before the last tank..."

Your market timing is impeccable. You're pretty much infallible at this point - on an anonymous internet message board, no less!

Equities have also outperformed the fable GOLD over the long term. Since 1900...

Gold has gone from $19 per ounce to $1550 per ounce (or 4.1% per year)

The Dow has gone from 66 to 12188 (or 4.9% per year) - add a 2.2% dividend yield [dividends used to be higher than they've been in the last few decades), you get 7.1% per year.

So equities have outperformed gold by 3% per year on average. 3%, when compounded over a long period, adds up to massive gains. For example, 4.1% over 30 years = 3.3X, whereas 7.1% over 30 years = 7.8X - i.e., you would end up with more than twice your money compounding at the higher rate. That's why Buffett is worth $45,000,000,000+ - he's compounded his money at over 20% per year for basically 60 years straight.

From a purely technical point of view, if the Dow can't push through 12,200 this last uptick turns into a huge bear flag, with the expected downtrend = uptrend of 300 points, making the next target down 11,600 (300 points from the last short-term bottom).

11,600 is, in itself, another medium-term bottom - the Japanese earthquake. If 11,600 is broken, 11,000 is the next medium-term resistance. However, the long-term trend line breaks at 11,800, after which, in the longer-term, nothing is there to stop stocks falling back to the low of 6,600.

I'm not saying that this will happen, it's just what a purely technical analysis of these chart patterns shows. However, given that volume on down days is about twice volume on up days, and volume overall is very light, and QE-Stupid is ending and the Fed seems to be aiming at bursting the commodity bubble, I don't see anything that would stop at least a 100% retracement of the QEII effect. Other chartists I've talked to agree - the confluence of Greece (by far not over), shrinking government spending, ever-falling housing prices and high unemployment don't bode well for the medium-term future.

Or Barack Obama.

Too bad that TA works as well as voodoo and snake oil.

Avoid the Mistake That Cost Buffett 8 Years of Better Returns
By Richard Gibbons | More Articles
Comments (3)

There's one investment strategy you won't read much about on Fool.com, even though many have tried it. In fact, Warren Buffett spent eight years working with it before discarding it as worthless.

What investment strategy is that? Technical analysis.

Invest like a lemming
Technical analysis is the practice of predicting where stocks will trade based on charts of historical pricing and volume information. There's a certain logic to it. Stocks trade based on supply and demand, which is greatly influenced by investors' attitudes about the stock. The charts should reflect those attitudes and might predict where the stock will go.

It's an attractive idea. Johnson & Johnson has bounced between $60 and $68 quite a few times in the past four years. Why not buy at the low, and sell at the high? Or look at Rohm & Haas' (NYSE: ROH ) chart. Clearly, investors love the stock. Its rise from $7 to $70 seems unstoppable. Why not jump aboard and profit?

Technical analysis is a simple yet compelling strategy. You can see why Buffett spent years early in his career trying to master it.

An expensive mistake
But Buffett discovered one small problem. Technical analysis didn't work. He explained, "I realized that technical analysis didn't work when I turned the chart upside down and didn't get a different answer."

After eight years of trying, he concluded that it was the wrong way to invest. Then he focused on the teachings of Ben Graham, which stressed business fundamentals, finding a strategy that both made sense and, more importantly, worked.

Three simple rules
The billionaire discussed that strategy at the 2008 Berkshire Hathaway (NYSE: BRK-B ) general meeting. When he was asked how to avoid the crowd mind-set, he said he simply followed Graham's three most important lessons:

Buy stocks with a margin of safety.
A stock is part of a business.
The market is there to serve you, not instruct you.
The first lesson usually makes the headlines. It means that you should buy stocks for less than they're worth. But when Buffett talks about the second and third lessons, he's basically admitting that he wasted eight years of his investing life.

Buying a business
After all, thinking about a stock as part of a business is the opposite of what technical analysis is all about. Technical analysis focuses on trading securities. It doesn't matter whether the security is a share of ExxonMobil (NYSE: XOM ) , with its crude oil, natural gas, petroleum, electric power, and petrochemical divisions; or whether that security is a derivative promising the delivery of three tons of Italian meatballs. It's all the same because technical analysis doesn't care about the business -- or the fundamentals.

In Graham's second lesson, stocks are far more than just pieces of paper or lines on graphs, and to understand them, you need to understand the business. If you're looking at USG (NYSE: USG ) , ignore whether the stock has been up three days in a row, and focus instead on whether the company is in danger of tripping its debt covenants.

Ways to serve man
Similarly, when Buffett says the market isn't there to instruct, he's saying the movements in the market aren't telling you how to invest.

When Advanced Micro Devices (NYSE: AMD ) fell under $2 per share in 1990, the market was saying that Intel (Nasdaq: INTC ) was going to eat the chipmaker's lunch.

When McDonald's hit $13 in 2003, the market was announcing that the Big Mac would end up in the Museum of Neat Ideas Gone Wrong, alongside the tapeworm diet, land wars in Asia, and Paris Hilton's home videos.

But in both cases, the market was wrong.

So, instead of listening to the market, Buffett seeks to take advantage of it. Sometimes, the market will offer to buy a stock for far more than it's actually worth. Other times, it'll offer you the chance to buy shares of a great company for far less than its fair value. An investor who understands the true value of a business will be able to profit when the market offers great companies on sale.

The Foolish bottom line
You can learn from Buffett's error -- don't focus on charts. Instead, understand businesses and seek excellent stocks the market offers at low prices. These days, the market is particularly treacherous. Some stocks that seem cheap will turn out to be very expensive. Others that are simply beaten down by negativity will post amazing returns.

"Too bad that TA works as well as voodoo and snake oil."

Actually, technical analysis is so commonly used that it becomes a self-fulling prophesy. It doesn't always work, and it needs to be confirmed by other results.

You will note that W.B. also didn't invest in gold, one of the greatest investments of the last five years (and I agree with him on that - just saying...). He also bought Saloman Brothers, and says that the worst investment he ever made in his life was buying Berkshire Hathaway, a dying textile company. He lost a fortune in airline stocks, as well.

Technical analysis is just one tool that is sometimes right and sometimes wrong. You will note that what I said above was paired with a more fundamental economic analysis about what is causing the technicals to look the way they do. BUt just go here:

http://www.marketwatch.com/investing/index/DJIA/charts?countryCode=US&submitted=true&intflavor=advanced&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=7&freq=1&comp=Enter%20Symbol%28s%29%3A&compidx=aaaaa~0&compind=aaaaa~0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013

and skim along the 12,200 mark: you will see a considerable amount of stopping and starting at that level, just as there was at 12,400. What brought stocks about the resistance of 12,400 was specifically Bernake's last (not today's) press conference, which caused a huge surge to 12,800.

Like it or not, traders and computer programs are written specifically with technical analysis in mind: something has to trigger high-speed trading, and it's the numbers.

Also to be clear, today's volume was very low, perhaps because a lot of people were waiting to hear what Bernake had to say before pulling the trigger. It will have to be confirmed with higher volume.

>You will note that W.B. also didn't invest in gold, one of the greatest investments of the last five years (and I agree with him on that - just saying...). He also bought Saloman Brothers, and says that the worst investment he ever made in his life was buying Berkshire Hathaway, a dying textile company. He lost a fortune in airline stocks, as well.

That complete idiot. Who the heck would have ever invested alongside Warren Buffett. Morons.

>Also to be clear, today's volume was very low, perhaps because a lot of people were waiting to hear what Bernake had to say before pulling the trigger. It will have to be confirmed with higher volume.

http://www.businessinsider.com/meaningless-phrases-that-sound-smart-on-cnbc-2011-6

"He lost a fortune in airline stocks, as well."

He did? When? If you're referring to his US Air preferred stock purchase in the 1990s, he actually made a tidy profit on that investment in the end.

From the 1997 Berkshire Shareholder Letter:

The resuscitation of US Airways borders on the miraculous. Those who have watched my moves in this investment know that I have compiled a record that is unblemished by success. I was wrong in originally purchasing the stock, and I was wrong later, in repeatedly trying to unload our holdings at 50 cents on the dollar.

Two changes at the company coincided with its remarkable rebound: 1) Charlie and I left the board of directors and 2) Stephen Wolf became CEO. Fortunately for our egos, the second event was the key: Stephen Wolf's accomplishments at the airline have been phenomenal.

There still is much to do at US Airways, but survival is no longer an issue. Consequently, the company made up the dividend arrearages on our preferred during 1997, adding extra payments to compensate us for the delay we suffered. The company's common stock, furthermore, has risen from a low of $4 to a recent high of $73.

Our preferred has been called for redemption on March 15. But the rise in the company's stock has given our conversion rights, which we thought worthless not long ago, great value. It is now almost certain that our US Airways shares will produce a decent profit -- that is, if my cost for Maalox is excluded -- and the gain could even prove indecent.

"Actually, technical analysis is so commonly used that it becomes a self-fulling prophesy. It doesn't always work, and it needs to be confirmed by other results"

That's a pretty funny justification of TA - it works, except when it doesn't work. Uh, OK.

http://community.seattletimes.nwsource.com/archive/?date=20010329&slug=buffettairlines29

And watch those technicals!

You posted an article that doesn't substantiate your claim that Buffett "lost a fortune in airline stocks". He in fact did NOT lose a fortune on airline stocks - he made quite a large amount of money on the US Air investment - the profit on this investment was well into the 9 figures. So, basically, your assertion was 100% wrong. Thanks for playing anyway...

"It is easy to get carried away counting the mistakes, questionable decisions and embarrassing blunders that Warren Buffett has made over the decades. It should be kept in mind, though, that he is a billionaire many times over and that strongly argues that for whatever mistakes he has made, they are tempered by doing a lot of things right."

http://www.msnbc.msn.com/id/43084649/ns/business-personal_finance/t/buffetts-biggest-investing-blunders/

I don't doubt W. Buffett, BSex - that would be dumb. & I definitely like the way he invests, and I think it's the right way to invest. Technical analysis, however, is used for a different purpose:

http://www.marketwatch.com/story/the-200-day-moving-average-holdsagain-2011-06-23?link=MW_home_latest_news

It's used to determine entry and exit points, and that's it. It must be confirmed by other factors. Just like fundamental analysis - what Buffett does - must use not only the balance sheet, but the profit & loss statement and the statement of cash flows & an analysis of current management and the future strategic importance of the company.

Both are valid, though different.

If TA actually worked, I would agree with you. However, I don't believe it works at all (of course, by coincidence a TA prediction may be "confirmed" by subsequent events, however whenever that occurs it is purely b/c chance and not b/c TA actually works).

I believe that short term stock price movements are 100% random and therefore cannot be reliably predicted with TA (or anything else).

The bubble is burst:

http://www.cnbc.com/id/43511000/

Traders irate at the release of oil from the strategic reserves. I've been saying for months now that the government must and will engineer a burst of the commodity and stock bubble that was created with the advent of QE-Stupid. You may soon see limits on leverage in commodities besides silver, as well.

The problem was never that there wasn't enough money in the economy; the problem was always that nobody was spending it. QEII just exacerbated that problem by diverting money into commodities and stocks, causing inflation, and causing people to spend even less.

The government, IMHO, will wait to see what happens after this, and then make the next steps to drive oil down to $60 a barrel, which is where it was before QE-Stupid nearly doubled the price as the economy was actually slowing.

Bursting the QE-II bubble will be painful, but I think the message is clear: if you speculate, you might find yourself on the wrong side of the transaction.

If Obama had permitted oil drilling instead of putting moratoriums everywhere on exploration and production, oil prices would never have reach triple figures and the economy wouldn't have slowed. It's his own fault.

CNBC is the most definitive proof of how dumb "traders" are - OMG, they are OUTRAGED that some oil is being released to make up for lost supply - OUTRAGED!!! What a fucking joke.

"If Obama had permitted oil drilling instead of putting moratoriums everywhere on exploration and production, oil prices would never have reach triple figures"

You better check your facts about how much oil the US actually does have.

The traders were "outraged" because they were caught on the wrong side of the trade - by a lot. One oil analyst is already talking about oil back to $100 a barrel.

Not happening. None of this bubble since September made any sense based on the fundamentals. When QE-Stupid starts to draw down - and sounds of not repurchasing maturing bonds in the Fed's portfolio will start in about a month - the financial markets are going to go into a hissy fit, like a heroin addict with no fix.

Unfortunately, it's the best thing that can happen to the economy: otherwise, the result will be further stagflation.

Tough love.

More evidence:

http://www.nytimes.com/aponline/2011/06/23/business/AP-US-Commodities-Review.html?_r=1&hp

Seems like money is coming out of these markets just in case the government cuts back on leverage, or does something else to end the speculation, but there is still a long way to go to burst the bubble that QE-Stupid created.

Risk is off.

"When QE-Stupid starts to draw down - and sounds of not repurchasing maturing bonds in the Fed's portfolio will start in about a month - the financial markets are going to go into a hissy fit, like a heroin addict with no fix"

It's already priced in, brother. Fed signalled the end of QE2 way in advance.

"You better check your facts about how much oil the US actually does have"

I didn't say we didn't have oil, I said the govt is not permitting the drilling and extraction of what oil we have, ergo oil prices are higher than they would otherwise be.

"It's already priced in, brother. Fed signalled the end of QE2 way in advance."

You might want to reconsider that. Normally the stock market prices 6 months in advance; it didn't happen this time. Look at the technicals: today's lows, which when touched set off short-covering, occurred precisely at the short-term lows from last week. Volume was 207 million on the NYSE, vs. 102 million on the up days. It means the high-speed trading took off at that level and covered the shorts. Tonight all of the programs will be re-parameterized. The next level to test is 11,600, which is the low from the Japanese earthquake.

Today's oil release was an unexpected event, but a hugely strong signal that the government is going to pop the bubble, because the bubble is what is slowing down economic growth. The Fed has NOT yet signaled when it will stop replenishing maturing bonds in its portfolio.

Interest rates won't start to rise until next month, when Treasury yields will go up as the Fed won't be buying them anymore. The next step is to stop topping up expirations. This will be coupled with further problems in the euro zone - if you think Greece is going to stick with these reforms agreed to today, you've get yet another surprise coming. The federal government is going to start to reduce the deficit, exactly the WRONG economic policy now, just like QEII was the wrong economic policy: all these are straight out of the Milton Friedman book on how to destroy an economy.

The next six months are going to be very ugly. Look at the Dow chart from 1929 to 1939. Find the bubble in the middle. Look at the Dow chart from 2000 to 2011. Find the bubble in the middle. Plot it to quantitative easing. Tell us what happens when they take it away.

"The next six months are going to be very ugly. Look at the Dow chart from 1929 to 1939. Find the bubble in the middle. Look at the Dow chart from 2000 to 2011. Find the bubble in the middle."

If you look at how corporate earnings have rebounded, there is no comparison to the 1930s - earnings are back near 2006 peak levels. Earnings rebounded DESPITE QE2, not b/c of it. Low oil prices = massive tax cut for the US consumer. This bodes well, not ill.

Who cares if the charts are similar? Completely irrelevant. Charts don't predict the future, the only tell you what happened in the past.

"Standard Statistics Co., world's biggest figure factory, computed profits of 674 companies for 1932, found that the aggregate earnings were $325,584,000, down 68.7% from 1931. And the bulk of these profits were from utility companies whose total profits dropped only 20.8%. With the conspicuous exception of oils, shoes, drugs, foods, chain stores and tobaccos, industrial earnings practically disappeared, amounted to less than one-thirtieth of 1931 earnings. Rails, of course, showed a staggering deficit." http://www.time.com/time/magazine/article/0,9171,745328,00.html#ixzz1Q8irV7Jl

Different era, different world. I highly doubt earnings for 2nd 1/2 of 2011 will be 68.7% lower than 2nd 1/2 of 2010!

Bottom line - perpetual bears are right 1 year out of every 10 or so, and are wrong the other 9. That's why perpetual bears don't make $$$ - all the while the market is going up, they sit on the sidelines waiting for "the next leg down" - which never arrives (or, when it eventually does arrive, the market is already 80%-150% higher than when they could have gotten in).

UPDATE 1-RESEARCH ALERT-JP Morgan raises S&P 500 2011 EPS view

* Ups 2011 EPS view to $97.50 from $94

* Sees 2012 EPS at $102

Feb 4 (Reuters) - J.P. Morgan Securities raised its 2011 earnings estimate for the S&P 500 .SPX index on sustained U.S. market resilience.

"The strengthening of economic momentum, coupled with consistent equity inflows this year, point to sustained market resilience -- hence, we still see dip buying and remain constructive on equities," analyst Thomas Lee said in his U.S. Equity Strategy note.

Lee raised his 2011 earnings per share view to $97.50 from $94, maintaining his 2012 estimate of $102 per share.

The analyst said the increase primarily reflects strengthened confidence that corporates can sustain the low cost of capital and tax burden while maintaining profitable growth as GDP accelerates, even as higher commodity costs and energy pressure margins for several sectors.

Lee said the technology, energy, and financials sectors helped the increase in earnings estimate for the year.

The index, which is up 4 percent year-to-date, closed at 1,307.1, on Thursday. (Reporting by Isheeta Sanghi in Bangalore; Editing by Joyjeet Das)

"The expectation is for 2012 to have total net income passing the $1 Trillion mark to $1.036 Trillion. That will also put the “EPS” for the S&P 500 over the $100 “per share” level for the first time at $108.79. That is up from $57.13 for 2009, $83.33 for 2010, and $97.04 for 2011. In an environment where the 10-year T-note is yielding 2.92%, a P/E of 15.2x based on 2010 and 13.1x based on 2011 earnings looks attractive. The P/E based on 2012 earnings is 11.7x."

http://www.dailymarkets.com/stock/2011/06/20/soft-data-falling-revisions-ratios/

Follow the earnings...

Yale's Robert Shiller maintains a spreadsheet with more than a century's worth of stock market price and earnings data and he tracks a measure called the cyclically adjusted price-to-earnings ratio (affectionately known as CAPE). This is simply the current S&P 500 price divided by the average earnings over the past decade, and is meant to capture average earnings power of the index over both the ups and downs of economic cycles.

That CAPE figure currently sits at about 21.7 versus a long-term average of 16.4. Furthermore, when we look at the past 20 years, it's pretty obvious that it's been a period of exceptionally high valuations.

Period

Average CAPE
Most recent 20 years 26.3
1980 - 2000 20
1970 - 1990 12.2
1960 - 1980 16.3
1950 - 1970 18
1940 - 1960 13.3
1930 - 1950 12.8
1920 - 1940 13.9
1910 - 1930 12
1900 - 1920 13.7
http://www.msnbc.msn.com/id/43494497/ns/business-motley_fool/

Shiller is yet another permabear who gins up numbers to make it look like the market is overvalued. He uses the average of the past 10 years worth of earnings - but investors don't give a rat's ass what earnings were in 2003, they care what they will be in 2012.

Another example of a not rich professor permabear (Shiller) being incorrect vis-a-vis a super-rich real world investor (Buffett). Throw Roubini in as well - he has been DEAD WRONG about the market for 2 years now. Beware of academics bearing formulas...

Look at Roubini's track record when it comes to calling the market - it's ABYSMAL:

Roubini Says Rally Is A "Dead Cat Bounce"
Joe Weisenthal | Mar. 16, 2009, 7:32 AM | 6,838 | 34

We'll admit to being a bit perplexed at Nouriel Roubini's personal investment strategy and how it compares to the advice he gives on the pages of his RGE Monitor. Last we heard, Dr. Doom was 100% long, and invested in index funds. That was apparently true as recently as February, when it was reported in the Financial Times.

And yet if he really "saw this coming." which everyone in the media accepts, it's hard to understand why he'd sit back and watch his 100% long portfolio whither by some 50%. What's more, the NYU academic is actually giving financial advice, and his advice is to sell.

Here's the conclusion to his latest piece (via Calculated Risk) wordily titled: "Reflections on the latest dead cat bounce or bear market sucker’s rally"

So, in conclusion and caveat emptor for investors: Dear investors, do enjoy this dead cat bounce and bear market sucker’s rally ... don’t wait too long until you jump ship while the financial Titanic hits the next financial iceberg: you may get squeezed and crashed in the rush to the lifeboats.

So he's long but his advice is don't wait too long to sell. He sees the financial system as a Titanic about to hit the iceberg. How could someone 100% long actually believe this? Something doesn't make sense.

We also think it's odd for an academic economist to be predicting stock market movements. Most academics smartly abstain from this. Even Warren Buffett, though he predicts a miserable 2009 for the economy, recognizes that his forecasts tell him nothing about the direction of stocks for the year.

Tyler Cowen suggested recently that Roubini's position on stocks was an extreme case of "mental accounting", basically suggesting that there's some kind of convenient disconnect between theory and practice at work here. Maybe.

Another way to think of it is that Roubini is hedging. The collapse has been great for his personal brand. If stocks went on a long rally, it's doubtful we'd see much Roubini in the media after awhile. In such an event, at least his stocks will be up.

http://www.businessinsider.com/100-long-roubini-says-rally-is-a-dead-cat-bounce-2009-3#ixzz1Q8qDhf7A

The bears focus on value: Shiller, is joined by John Hussman & Jeremy Grantham.
The best the bulls can come up with are arguments such as QE3 or some other technical indicator.

Oh yes, I forgot the other argument. Stocks are over-valued but bonds and cash are uglier.

"The best the bulls can come up with are arguments such as QE3 or some other technical indicator"

I just gave you the reason, bro - EARNINGS. 2012 will see record S&P earnings. Why overcomplicate this? It's not that hard.

Cash is great if there's going to be massive deflation - but there isn't - in fact, there will be appreciable INFLATION - that is why cash=trash and bonds at current low yields also suck (long term)

FWIW, the Euros will choose inflating the Euro and kicking the Greek can down the road as opposed to watching the Eurozone implode. That's also what the US is doing - inflating the debt problem away gradually (sorry dumb bondholders!)

That's just a fact - hear me now and believe me later.

Sorry I don't buy the story.
Unemployment is high
BAC & CITI are insolvent(discount to book value). The financials are not doing well.
Home builders are dead
Inflation is up and companies are not able to pass on their full costs

So with all this being the case how does the S&P post these fantastic earnings?

"So with all this being the case how does the S&P post these fantastic earnings?"

That's the magic of capitalism - companies do more with less. Also, you conveniently choose to ignore companies like Apple that are doing fantastically well.

Earnings are facts - whether you choose to accept them or not. If your arguments are correct, the S&P would still be at 666 - but it's not.

Apple is less than 1.75% of the s&p 500. It's done very well. You're cherry picking.

Buddy, I gave you the earnings figures for 2009, 2010, 2011 (est) and 2012 (est) for the entire S&P 500. The numbers are what they are - I didn't make them up. You can choose to accept or reject them as you like - but they still remain the numbers. So long...

2011 and 2012 are estimates(rosy in fact). So you answered your own question.

"Follow the earnings..."

Indeed: what are the earnings at negative real interest rates and soaring commodity prices? Take a look at whose earnings were up (oil & raw materials suppliers), whose earnings go up as their inventories and reserves of ore are revalued upwards. Take them away, and earnings are suffering.

It is not possible for stocks and commodities to do what they have done when unemployment is rising and growth is slowing. It is a bubble.

"Take them away, and earnings are suffering"

If you "take away" the "bad" earnings, then there's not much left - that's really your argument??? Hmmm.

I guess AAPL's earnings are fabricated, Fedex's earnings are fabricated, Microsoft's earnings, JPMorgan's earnings, Coca-Cola's earnings, IBM's earnings, etc etc etc., all fabricated?

Look, if you think you are smarter than Buffett, go ahead - short the market - become a billionaire. Good luck with that...

Buffett will be proven 100% correct YET AGAIN...all the doubters will be proven 100% wrong YET AGAIN.

THE financial world is a mess, both in the United States and abroad [SOUND FAMILIAR?].... In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary [ARE YOU SCARED YET?].

So ... I’ve been buying American stocks...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 [IT'S REALLY THAT SIMPLE!]. 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 [REPEAT THIS SENTENCE TO YOURSELF 100 TIMES IN A ROW - THEN YOU WILL "GET IT"]. 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... 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 [HELLO? MAKE SENSE ANYONE????].

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 [PERMABEARS].

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. [ARE YOU SMARTER THAN BUFFETT?????? ANSWER - NO]

"Equities will almost certainly outperform cash over the next decade, probably by a substantial degree"

ARE YOU SMARTER THAN WARREN BUFFETT WHEN IT COMES TO INVESTING? Just ask yourself that question. I'm not - and if you believe you are, you are seriously deluded.

"Shiller is yet another permabear who gins up numbers to make it look like the market is overvalued"

Nope. Shiller called buy within a few days of the bottom in the New York Times... noting the market was definitely undervalued on a long term basis.

He's been down on RE for a while, but he's one of the guys to first note the bubble in the first place..

Thanks Bob! (200%+)

ah, bjw, nice to see you're still obsessed with me...

Warren buffet's end game of having everyone bet like him is complete. He who makes everyone believe his god is right, rules the world. Flmaozzzzzzzzzzzzzzzzzzzz

"Warren buffet's end game of having everyone bet like him is complete. He who makes everyone believe his god is right, rules the world. Flmaozzzzzzzzzzzzzzzzzzzz"

Buffett has made over $45,000,000,000 through investing. How much have you made?

swe, that only took you two days. I replied once to you, but since you have no response, I'm "obsessed"? Sweet logic there...

BSex, Buffett is unquestionably an investing genius, but not totally infallible. And the point is not to beat him (not gonna happen) so much as it is just to do well for yourself. There's more than one path to doing that, no? I wouldn't bet against the guy, just saying it's not quite as black-or-white as one might think reading this thread. How much time do you spend researching equities? Or are you mostly in index funds?

It kinda sounds like you have a crush on the Oracle.
---
By the way, Buffet's annual reports make for great reading, but over the last several years it looks more and more like he's moved away from the investment discipline that made him famous. He's an investor in Moody's & Clayton homes two companies that don't seeem to fit his model. He also makes huge derivative bets that don't always work out.

And Berkshire is so large that it's rather difficult for the firm to find sizable good opportunities that can impact the bottom line.

http://www.bloomberg.com/video/70808782/

David Rosenberg is 99% sure we'll have another recession in 2012

"How much time do you spend researching equities?"

I have a full-time job, so I can only put in about 20-30 hours per week.

I've done plenty good for meself.

Now to the issue at hand. Is investing Warren buff way the greatest path to wealth? Of all the $baires in the world, almost all made their billions starting and owning companies and if not taking over countries. Buffet is infallible Bc of tools like you who backstop every decision he makes. If he ate a bowl of shit, you'd be asking for seconds.

"It kinda sounds like you have a crush on the Oracle"

Well, if you think that me studying somebody who has made billions via investing through his own relentless effort and intelligence in order to learn how he did it, so I can hopefully duplicate it in some minor way to improve my finances / net worth, as a "crush", well then I guess I am guilty. Why not study and try to emulate the best ever? Seems like a no-brainer to me. Cheers.

"I've done plenty good for meself"

Really? So how close to $45,000,000,000 in net worth are you? You must be fairly close, if you can trash Buffett as if you were a genius compared to him. So please give us a figure for your net worth, so we can compare you and him...I can't wait.

Maybe he should be worth $90b if he was so smart. I mean bill gates a computer geek is pretty close and he can still get it up.

If money was the only measure of a person, I guess I'd be friends with borkers.

"If money was the only measure of a person..."

What a surprise - you won't answer the question. I'm shocked. Your reticence speaks volumes...

"I have a full-time job, so I can only put in about 20-30 hours per week."

Really? That's kind of amazing. If you've got that kind of free time, I can totally see where you're coming from. For those of us with full-time jobs and fairly busy family/social calendars, that's pretty much an impossible commitment (don't mean this as a slight in any way). Which is why I focus on index funds. I've done much better doing that than picking individual stocks. Undoubtedly, I won't get the same kind of reward you're likely to get out of it, but that approach seems to work well if you want minimal day-to-day management/research.

There's nothing wrong with index funds. I am putting in this kind of time b/c I plan to transition over to investing fairly soon as a full-time career and not have a "regular" 9-to-5 job. It's a sacrifice to spend this amount of time on it now, but I believe it will pay off in the future.

Most people have 20-30 hours of free time per week if you think about it (for example, 5 hours on Sat, 5 hours on Sunday + 3-4 hours on weekdays). But they spend it watching TV or doing other leisure activities instead of working at a 2nd career. IMO, where there's a will, there's a way. GL.

You may also wish to rethink what it means to be a contrarian. It's more than just doing the opposite. The story about forward earnings it not exactly secret knowledge. Stocks are not at 52 week low and risk premiums are not exactly screaming.

I was short term bullish around 2008 due to valuations having come down so much. The market has recovered quite a bit. There isn't exactly the same level of fear today that we had back in 08, so less opportunity.

A true Buffet would wait for lower prices, so he could buy at discounts to book and benefit from the safety margin that low prices bring.

"A true Buffet"

Buddy - if you can't even do something as simple as spell the guy's name correctly, I can't take what you say seriously, sorry. (FYI, it's "Buffett" with two Ts).

well that certainly refutes my argument. Hat's off to you BuffeTT wannabe index investor....

Riversider, I'm trying to be nice to you, but you make it hard. GL to you. Also, I'm not an index investor, I pick stocks. Take care and goodbye.

W67th's accomplishments include his curved penis, being a TA in business school, being estranged from his father, his wife having a funny face when she cums, having owned residential real estate and having been in litigation with his tenants, sticking it to the "man" because he left investment banking, owning a porsche and a yacht that he bought from someone overleveraged, having taken a bath with his son who took a crap in the bathtub, being friends with columbiacounty.

When you finish that third bowl of shit and wipe away buffett's jizz from your mouth, let me tell you a little theory of follow on idiot investors.

See a guy creates a tech analysis software. And he goes the country selling this pos software. Well guess what for every new idiot that trades on this software, the better this software performs. Now throw in the greatest credit bubble cycle and you have lemmings quitting their burger flipping gigs to trade full time. Goodz luckz.

Now I remember why w67th is on ignore.

W67 doesn't like Buffett because Buffett also went to Columbia Business School, but he wasn't a TA. He also didn't make beaded jewelry like when w67 was a little boy.

hi huntersburg!

"David Rosenberg is 99% sure we'll have another recession in 2012"

That's great. You think he'll put up $99 against my $1 on it? Or $96 against my $4, giving him a 4x margin beyond his expectations? Or do you think he'll just weasel his way out of the claim because all he's trying to do is make big statements so lemmings will ooh and agh?

BSexposer, if it's any consolation, I think Buffett had a man-crush on Graham.

The stock market gains that we did have was artificial, driven by Bernanke bills driving up stocks. If he can't inject more cash the market shrivels. That's what we're seeing a little of now.

A little?

A little? Baconator! Smart!

Fuckposer, who the fk cares if jordan can dunk on me? I'm taking you to the hole every Fking time, that is when you are done clocking into to your 2nd job. You know who has two jobs? My nanny. My wife's secretary. My boat mechanic.

U fktard. Do you know in my MBA class the guy who we all thought would blow us all out the water as a VP in CS firstboston ended up in a 2bdrm rental in Dallas a day trader watching his son. Fk goodz luck with your bubble dream of trading individual stks as a 'career'. U see urbandigs? He gave up his 'career' trading job to be a key Sherpa and then told all his clients that bgt in nyc 'fk you stoopid' by buying a cheap azz horse farm in ct.

But fuckposer, my 3rd nanny just moved back to washington St. I have an opening for you if you wanna get that chkn scratch together a litttle quicker working 3 jobs.

Hey guys, long time no post...Stevejhx, I completely agree with you that the Fed and the Administration must, and will, pop the oil and commodity bubble. I went short oil at 105, and my sense is that we get to 75 by November. The IEA release was merely a shot across the bough of speculators, they know 66 million barrels doesn't do jack to address supply, and furthermore, we don't have any supply issues with WTI. The whole stock market game is now a game where one needs to guess what Bernanke wants, and then invest accordingly. Ben made it clear several months ago in a Wash Post piece that he wanted the Russell 2k to go up, and voila. Now he wants to put an end to this "transitory" rise in commodities, and by golly he will.

Unfortunately, it's going to be another huge crash. Setup looks just like June 2008. Volume has been low b/c the big players are sitting it out. Until....

Anyone notice that the first page of this thread was when the Dow was at 8400 and everyone was bearish? Now that was a missed opportunity! I'm mostly in cash now however.

Interesting observation Harlem.

I found this post from aboutready exactly 2 years till today:
>i'm happy as a lark, actually. when i'm happy i don't avoid confrontation. so back to your cesspool!!!!!!
>and i'm happily on a four-week vacation in Europe. but the teens are watching a Saw movie, so i'm a bit out of that loop.

So we all know that aboutready is now on vacation, but she hasn't been posting and has been avoiding confrontation. Depression maybe?

"Hubby" controls access to laptop on vacation , and AR doesn't (and can't) post to SE. She doesn't want him to know the extent of her addiction.

Which addiction?

"Unfortunately, it's going to be another huge crash. Setup looks just like June 2008"

S&P is at 1268.45 prior to the market opening on June 27, 2011 - I will check in 1 year from now to see whose predictions were correct and whose incorrect. Cheers.

P.S. - W67th, please get help for your issues - going through life embittered, angry and frustrated is no way to live.

Ritholtz had a good comment on his website. He says the market is either under or over valued based on what the buyers time horizon is. If you are a buy and hold investor looking to own for the long term it's clearly over-valued, but if you are short term oriented looking for a trade, the market looks cheap versus teh recent past.

Hmmm...US debt problem and Greek debt problem to be substantially addressed in the near future? Perhaps human beings can actually overcome problems - whodathunkit? Certainly not the chorus of naysayers we are used to hearing from.

But, whatever, life goes on, people continue striving to make their children's lives better than their own. Maybe, just maybe, all of this striving actually has a positive effect on people's living standards and collective wealth over time. It worked during the 20th century - despite massive obstacles, such as 2 World Wars, a flu epidemic, oil embargoes, etc etc etc - and maybe it will work this century also. Just a thought.

> This just in: you always make money if you buy at the bottom! Who knew

You know, one would think this was common knowledge... but look at all the folks like bjw and steveF who bought at the peak on Manhattan RE.

Apparently easier said than done.

i think the better life so many parents are striving to provide their children is actually a shit life--and if "all of this striving" is where what you think better QOL comes from, that speaks to me of a shittier world--

the striving of parents is so over the top these days--they should leave their kids the F alone

I agree, too many parents have gone just batty these days. Some of the crap that I've seen in the last few years has absolutely shocked me.

"You know, one would think this was common knowledge... but look at all the folks like bjw and steveF who bought at the peak on Manhattan RE."

Except that I bought in Brooklyn and didn't buy a real estate index - I bought a single property at a good price. You seem to think time of purchase is the most important thing. Another piece of common knowledge that you apparently lack is that what matters most is not really timing, but price. But you probably knew that already...

Bottoms, I actually agree with you on that. Children, at least from a certain age, should do most of the "striving" themselves.

"i think the better life so many parents are striving to provide their children is actually a shit life"

Who cares whether YOU think it's a "shit life" or not? It's what people want - more money, more security, more everything - that's why the vast majority of people try to bust their ass working instead of loafing all day. That's why the Dow went from 66 to over 12000 during the 20th century. That's how the US became the economic power that it is. It's called capitalism - and it works - not perfectly, not in a straight line, but it does inevitably work over time. And that's why Buffett is (and why I'm) betting on it.

Buffett: "There are 309 million people out there that are trying to improve their lot in life. And we've got a system that allows them to do it. It doesn't allow things to get changed overnight, though. And, and, it's, it's important to have the right monetary policy. It's important for, to have the right fiscal policy. But it's nowhere near as important as just the normal regenerative capacity of American capitalism."

http://www.cnbc.com/id/39321372/Warren_Buffett_to_CNBC_U_S_Capitalism_s_Regenerative_Capacity_More_Important_Than_Government_Stimulus

I'd be careful about engaging Wbottom in discussions about children. The Michael Jackson of streeteasy (without the performance talent) has talked about him and Barney videos, and him and old New York dirty condoms, now worrying about lost innocence of the young. Something doesn't add up, and I suggest that the parents and grandparents on streeteasy be careful.

"Who cares whether YOU think it's a "shit life" or not? It's what people want - more money, more security, more everything - that's why the vast majority of people try to bust their ass working instead of loafing all day. "

Of course, it would be better if they went for things that actually improve their lot in life, rather than the things they are told will do it and won't...

"Of course, it would be better if they went for things that actually improve their lot in life, rather than the things they are told will do it and won't..."

What exactly are you arguing against? Making money? More security? Those aren't the be-all-end-all of a happy and fruitful existence, but unless you're conjuring up some other ideals no one's really mentioned here, sounds like a strawman to me.

"Insider Selling Update: 2 Buyers, 50 Sellers; Ratio Of Corporate Stock Buybacks To Insider Purchases: 16,800 To 1"

"Nothing new in the latest S&P 500 insider selling (and occasional buying). There were 2 (count them: two) purchases of stock by corporate insiders, of which one, which accounted for 97% of all purchases, came from Berkshire Hathaway. As usual selling dominated, with a ratio of 41 in notional sales to buys. "

"Corporate insiders are using little of their own money to buy shares in their companies, even as their companies announce large share repurchases, reports TrimTabs Investment Research, indicating that corporate insiders have little confidence that their company stock price is going to rise. ()"

“We’ve never seen such a sharp contrast between what insiders are doing with their own money and what they’re doing with the money of the companies they manage, ( ) ”

"With virtually no corporate insider willing to put their pesonal money where their corporate cash is, how can America be expected to have any faith in what David Rosenberg yesterday called the "artificial recovery"?

http://www.zerohedge.com/article/insider-selling-update-2-buyers-50-sellers-ratio-corporate-stock-buybaks-insider-purchases-1