Monday, March 4, 2013

BloggeRhythms 3/4/2013

Warren Buffett spent three hours this morning on CNBC's Squawk Box, talking in Nebraska with Becky Quick with long distance questions from Joe Kernan in New York as well.
 
As usual, Buffett was his folksy, casual, conversational self talking about a host of issues regarding the state of the economy and offering his sagely advice. And while I truly doubt there’s anyone else on earth you could find who has more business savvy, or has proven to be a greater financial success, some of his commentary today had me truly confused. 
 
He very clearly made the point that his company, Berkshire Hathaway, is still buying stocks, even though prices have increased and that, "Anything I bought at $80 I don't like as well at $100. But if you're asking me if stocks are cheaper than other forms of investment, in my view the answer is yes. We're buying stocks now. But not because we expect them to go up. We're buying them because we think we're getting good value for them."
 
He said stocks are not "as cheap as they were four years ago" but "you get more for your money" compared to other investments. He added, "The dumbest investment, in my view, is a long-term government bond."
 
Now, I sat there scratching my head, and then went back to carefully read my own entry from just last Thursday, February 28th, when I wrote about smart investors stock sell-offs and said, “I mention this today because of an article in Newsmax Wires, Money News, headlined, “Billionaires Dumping Stocks, Economist Knows Why.”
 
The opening line was, “Despite the 6.5% stock market rally over the last three months, a handful of billionaires are quietly dumping their American stocks . . . and fast."
 
Then it goes on, "Warren Buffett, who has been a cheerleader for U.S. stocks for quite some time, is dumping shares at an alarming rate. He recently complained of “disappointing performance” in dyed-in-the-wool American companies like Johnson & Johnson, Procter & Gamble, and Kraft Foods.
 
In the latest filing for Buffett’s holding company, Berkshire Hathaway, Buffett has been drastically reducing his exposure to stocks that depend on consumer purchasing habits. Berkshire sold roughly 19 million shares of Johnson & Johnson, and reduced his overall stake in “consumer product stocks” by 21%. Berkshire Hathaway also sold its entire stake in California-based computer parts supplier Intel.
 
With 70% of the U.S. economy dependent on consumer spending, Buffett’s apparent lack of faith in these companies’ future prospects is worrisome.” 
 
Now, in Buffett's suggestion to Ms. Quick this morning, there was no qualification I heard as to business type, avoiding consumerism or anything else. He simply addressed the subject of stocks and his opinion that they’re still a good buy in his eyes.
 
So, although Mr. Buffett prides himself on picking winners for the long haul, and staying with what he’s bought without worry about short term hiccups or blips, it seems to me a significant mind-change in less than a week is pretty mercurial. 
 
And that’s when it struck me that perhaps that’s the difference between Buffett and everyone else. Because, sensing when to buy, sell or hold is an art form all by itself. And if stock trading strategies at his level change almost instantaneously, it really doesn’t matter what advice he gives to anyone else. Because by the time you try to digest what he’s said, and implement the plan yourself, he’ll be long gone and on to something new.
 
In the meantime, however, the best part of my morning came during a commercial break whereupon I flipped the channel to Fox and read a blurb saying that in a few minutes they'd be visited by Donald Trump, who was coming to discuss his TV show which really made me laugh.
 
Because here I was watching a real multi-billionaire talking freely and trying to deliver whatever sage advice he could to help others share and learn from his good fortune. As opposed to a phony fraud who’s been reduced to hosting some inane waste of TV time, because apparently everything real he’s touched has turned to zilch.
 
So, to sum it all up, I think its great that you can sit back in your own home and be exposed to someone like Warren Buffett providing valuable business insight likely not available anywhere else for those who truly want to better themselves. And at the same time, there’s another choice where folks can relax and listen to pabulum having no value at all. 
 
And, to me that’s what’s so great about our society overall. Because when you boil it all down, most often your personal success or failure directly depends on yourself and precisely what you choose to do with your effort and time, having absolutely nothing to do with anyone else at all.
 
That’s it for today folks.
 
Adios

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