Home » Posts tagged 'warren buffet'

Tag Archives: warren buffet

Olduvai
Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Post Archives by Category

Just What Is Warren Buffet and the Fed Seeing To Make Them Do This?

May 25, 2020

Just What Is Warren Buffet and the Fed Seeing To Make Them Do This?

The US is lurching towards an economic catastrophe.

If you’ve been paying attention, over the last few weeks there have been several LARGE “tells.” Those tells were two of the BIGGEST cheerleaders for stocks in history, Warren Buffett and the Fed, getting EXTREMELY bearish.

First and foremost, Warren Buffett, the man who famously stated that he likes to own companies for a long-time, ideally “forever,” has begun dumping huge quantities of stocks.

All told, Buffett sold 21 stocks worth over the last four months. He’s unloaded large portions of his holdings in Goldman Sachs, JP Morgan, and other large banks, as well as multiple airline stocks, pharmaceuticals, and energy stocks.

The media claims Buffett is doing this because he wants to make sure he owns less than 10% of these companies, but when do you remember Buffett ever unloading so many stocks worth billions of dollars in such a short period?

On top of this Buffett didn’t use the March meltdown to load up on investments.

Put another way, during the largest market collapse in years, at a time when many businesses were on sale, Buffett didn’t buy anything (he sold the airlines stocks he tried to buy) but rather chose to start unloading several of his largest positions?

Whatever Buffett is seeing in the economy that is making him do this… it’s NOT good.

Then there’s the Fed.

For decades now, the Fed has been a cheerleader for the economy and stocks.

Indeed, it is extremely rare to find the Fed ever issue a gloomy view of the economy or markets. Which is why it’s astonishing to see the Fed making statements that you would expect from a raging bear.

During the last week, Fed Chair Jerome Powell has publicly stated:

…click on the above link to read the rest of the article…

Beware Buffet’s Words: These 3 Critical Stock Market Indicators Signal Huge Losses Ahead

September 6, 2018

Beware Buffet’s Words: These 3 Critical Stock Market Indicators Signal Huge Losses Ahead

Last month, I wrote a piece about Warren Buffet’s favorite stock market metric and how it was signaling huge losses ahead.

If you haven’t read it yet – you can here. It’s even more relevant today.

And though Buffet’s favorite market indicator’s signaling huge danger ahead for investors – he just recently preached that stocks are still attractive.

This seems rather contradictory if you ask me. . .

Even though his favorite market value metric is at an all-time high – more so than during the DotCom bubble and Housing bubble. And with the S&P 500, NASDAQ and Dow Jones Index at record levels – Buffet’s still recommending stocks.

But, here’s the best part: he went on to say that he believes there will be another stock market crash eventually.

So, why does he talk about buying stocks when he’s expecting a coming crash?

His reasons are pretty simple: investors can’t time when the market will crash. So instead of sitting on the sidelines – waiting and missing the upside – just buy now. And when market prices do crash eventually – which he acknowledges they will – you can simply buy more at lower prices (also, he adds, compared to bonds – stocks are more attractive).

 

I kinda-sort-of agree with him. It’s not the best idea to try and time a market crash, as many value guys call it a ‘fools errand’.

There’s always that one person (we all know them) who thinks they will sell out right before prices collapse. But in reality, it never works out that way.

History’s littered with the corpses of investors and the hedge-funds that thought they could do this.

So instead of trying to time things accurately – just measure the potential risk and reward.

…click on the above link to read the rest of the article…

In Praise of a Genuine Gold (Not Gold-Backed) Bond

August 20, 2018

In Praise of a Genuine Gold (Not Gold-Backed) Bond

Buffet dismissed gold because it pays no interest. But what if there was a genuine gold bond that paid interest in gold?

Keith Weiner at Monetary Metals asks Who Would Invest in a Gold Bond?

Berkshire Hathaway CEO Warren Buffet famously dismissed gold. “Gold has two significant shortcomings, being neither of much use nor procreative.”

Nevada now has legislation pending, to enable the state to issue gold bonds. Not gold-backed bonds, which are a way to sink deeper into debt, to borrow more dollars using gold as collateral. True gold bonds, which are denominated in gold, pay interest in gold, and return investors’ principal in gold.

Interest. That is what Warren Buffet declared that gold has not got. And now an AA-rated state government is close to paying interest on gold. That is an interesting development (permit me my little pun). But there is a challenge.

Although there is no downside, and no special interest groups are harmed, the bill might not pass. The Democrat majority who controls the state legislature could perceive the gold bond as a Republican partisan measure. I can say that this assumption is totally wrong. Most mainstream Republicans are not especially fond of gold. For example, it took Arizona five years to pass its gold legislation, with three vetoes by two Republican governors.

Unfortunately, politics has become hyper-partisan. If Nevada Democrats perceive this as a Republican bill, they will vote it down. Since they are in the majority, they will kill the bill. That must not happen! The decay in our monetary system is at an advanced stage. No one can predict how much time remains, but I can say one thing with absolute certainty. We need to begin developing an alternative. We need to begin remonetizing gold, and that means gold bonds.

…click on the above link to read the rest of the article…

Warren Buffet’s Favorite Stock Market Metric Is Signaling Huge Downside Ahead

August 4, 2018

Warren Buffet’s Favorite Stock Market Metric Is Signaling Huge Downside Ahead

Today – Apple became the first public company worth over $1 trillion dollars. . .

Thanks to very low interest rates – the company’s piling on debt and buying their own shares back – shrinking the float.

And because of a worldwide rush into mutual funds and exchange traded funds (ETF’s) – there’s crazy demand for Apple shares.

The king of ‘buy and hold’ investing and a Champion of equities – Warren Buffet – must a have grin on his face from ear to ear. Because Apple’s surge just netted him a huge profit for his company – Berkshire Hathaway – of over $2.6 billion.

Many, now, may be thinking that they should buy Apple and other such stocks – right?

Well, not exactly.

Because according to this favorite Buffet metric – the market looks extremely overvalued and the future looks scary.

The Market Cap-to-GDP metric is a long-term value indicator. And it’s become popular recently thanks to Warren Buffet.

During an interview in 2001 with Fortune – he claimed that this indicator is “probably the best single measure of where valuations stand at any given moment.”

And what his favorite indicator’s showing us today is that stocks are more over-valued than they’ve ever been. . .

So – what is the Market Cap to GDP – aka the ‘Buffet Indicator’?

It’s easy. Just calculate the total market value of all stocks outstanding and divide it by the nations GDP.

When the ratio is greater than 100% – it means that stocks are considered overvalued and have historically less upside going forward.

And when the ratio is less than 100% – it means the opposite. That stocks are considered undervalued and historically have more upside.

I look at it this way: when the ‘Buffet Indicator” is more than 100%, the stock market is negatively asymmetric (high risk, low reward). And when it’s less than 100%, the stock market is positively asymmetric (low risk, high reward).

…click on the above link to read the rest of the article…

2017 Year In Review

December 27, 2017

Tortoon/Shutterstock

2017 Year In Review

Markets fiddle while Rome burns

Every year, friend-of-the-site David Collum writes a detailed “Year in Review” synopsis full of keen perspective and plenty of wit. This year’s is no exception. As with past years, he has graciously selected PeakProsperity.com as the site where it will be published in full. It’s quite longer than our usual posts, but worth the time to read in full. A downloadable pdf of the full article is available here, for those who prefer to do their power-reading offline. — cheers, Adam

Introduction

“He is funnier than you are.”

~David Einhorn, Greenlight Capital, on Dave Barry’s Year in Review

Every December, I write a survey trying to capture the year’s prevailing themes. I appear to have stiff competition—the likes of Dave Barry on one extreme1 and on the other, Pornhub’s marvelous annual climax that probes deeply personal preferences in the world’s favorite pastime.2 (I know when I’m licked.) My efforts began as a few paragraphs discussing the markets on Doug Noland’s bear chat board and monotonically expanded to a tome covering the orb we call Earth. It posts at Peak Prosperity, reposts at ZeroHedge, and then fans out from there. Bearishness and right-leaning libertarianism shine through as I spelunk the Internet for human folly to couch in snarky prose while trying to avoid the “expensive laugh” (too much setup).3 I rely on quotes to let others do the intellectual heavy lifting.

“Consider adding more of your own thinking and judgment to the mix . . . most folks are familiar with general facts but are unable to process them into a coherent and actionable framework.”

~Tony Deden, founder of Edelweiss Holdings, on his second read through my 2016 Year in Review

“Just the facts, ma’am.”

~Joe Friday

…click on the above link to read the rest of the article…

Noted Short Seller Marc Cohodes Comments On The Recent Events At Home Capital

June 26, 2017

Noted Short Seller Marc Cohodes Comments On The Recent Events At Home Capital

The past two months have been a roller coaster ride for Home Capital shareholders culminating in the announcement of Berkshire Hathaway’s investment in the company this week.  But the deal raises at least as many questions as it answers, not least of which is whose interests are being served?  There are many professed facts about the company and the events of the last two months that just don’t add up.  We think shareholders and the public are still a long way from discovering the truth of what has transpired at the company.  Given the evident intervention in the Home Capital drama by various arms of the Canadian government, there must be something vital to the economy at stake here.  It seems to us that a deep dive into the Home Capital story is in order.

It all starts with Gerry

The most salient fact to know about Home Capital is that it is a veritable extension of the person who ran it for almost 30 years, Gerald Soloway.  Soloway and fellow Home Capital board member John Marsh gained control of a public shell company in 1986 and merged the then tiny Home Savings of St. Catharines into the shell.  From this humble start, Soloway grew Home into the 9th largest bank in Canada, and was by all accounts, a domineering presence within the company (so domineering, in fact, that he was viewed internally as still running the company even after handing the CEO reins to Martin Reid.)  In a very real way, the culture of the company reflects the values and character of Soloway himself.  So far so good, a Canadian success story, right?  The fly in the ointment is that Soloway is a serial, convicted fraudster, going back even before the start of the Home Capital story, and it appears that many of the business practices of the company reflect his penchant for cutting corners.

…click on the above link to read the rest of the article…

This Chart Shows the First Big Crash Is Likely Just Ahead

March 15, 2016

This Chart Shows the First Big Crash Is Likely Just Ahead

The story on Wall Street and CNBC continues to be that we’re in a correction and this is a buying opportunity. Even Warren Buffett joins the chorus of stock market cheerleaders for the skeptical public. Well, I agree with the skeptical public, not the experts here!

The bull market from early 2009 into May 2015 looks just like every bubble in history, and I’m getting one sign after the next that we did indeed peak last May. The dominant pattern in the stock market is the “rounded top” pattern:

S&P 500 rounded top

After trading in a steep, bubble-like channel from late 2011 into late 2014, with only 10% maximum volatility top to bottom, the market finally lost its momentum… just as the Fed finished tapering its QE. That’s because the Fed was the primary driver in this stock bubble in the first place!

But the first sign that the bubble had indeed peaked was the break of that upward channel last August. Surprise, surprise! Without the Fed’s stimulus, stocks started to sputter out!

With that sign we can point to what now looks like a series of major tops, in one major index after the next, since late 2014:

  • Dow Transports, November 2014.
  • Dow Utilities, January 2015.
  • The DAX in Germany and the FTSE in the UK: April, 2015.
  • The Dow and S&P 500: May 2015.
  • The Shanghai Composite: June 2015.
  • The Nasdaq, Biotech and the Russell 2000: July 2015.
  • And finally, the Nikkei in Japan: August 2015.

The Shanghai Index crashed 45% in 2.5 months, similar to the Dow in late 1929 on its first 2.5-month wave down. That one was so obvious that when I said it was about to burst, it peaked that day and rolled over the next!

…click on the above link to read the rest of the article…

Warren Buffett is Everything That’s Wrong With America

April 3, 2015

Warren Buffett is Everything That’s Wrong With America

I think I’ve never understood the American – and international – fascination with money, with gathering wealth as the no. 1 priority in one’s life. What looks even stranger to me is the idolization of people who have a lot of money. Like these people are per definition smarter or better than others. It seems obvious that most of them are probably just more ruthless, that they have less scruples, and that their conscience is less likely to get in the way of their money and power goals.

America may idolize no-one more than Warren Buffett, the man who has propelled his fund, Berkshire Hathaway, into riches once deemed unimaginable. For most people, Buffett symbolizes what is great about American society and its economic system. For me, he’s the symbol of everything that’s going wrong.

Last week, Buffett announced a plan to merge a number of ‘food’ companies in a deal he set up with Brazilian 3G Capital. For some reason, they all have German names (I’m not sure why that is or what it means, if anything): Heinz, Kraft, Oscar Mayer. Reuters last week summed up a few of the ‘foods’ involved:

 

His move on Wednesday to inject Velveeta cheese, Jell-O, Lunchables, Oscar Mayer wieners, and Kool-Aid into his portfolio, stuffs an already amply supplied larder. The additions came from the acquisition of Kraft Foods Group Inc by H.J. Heinz Co, which is controlled by 3G Capital and Buffett’s Berkshire Hathaway. His larder already included everything from Burger King’s Triple Whopper burgers, Coca-Cola soft drinks and Tim Horton donuts to See’s Candies and Dairy Queen icecream Blizzards, as well as such Heinz brands as Tomato Ketchup, Ore-Ida fries, bagel bites and T.G.I. Friday’s mozzarella sticks.

…click on the above link to read the rest of the article…

 

 

Thousands Of Layoffs Coming After Buffett Merges Heinz With Kraft, Creating 5th Largest Food Company In The World

March 25, 2015

Thousands Of Layoffs Coming After Buffett Merges Heinz With Kraft, Creating 5th Largest Food Company In The World

Another day, another mega-M&A deal taking advantage of abnormally low bond rates, this time however not involving biotechs or a specialty pharma seeking to purchase a debt-free balance sheet, but one involving the Oracle of Omaha himself, and his Heinz investment, which will merge with Kraft Foods whose market cap was over $40 billion this morning on the news of the merger, and create the third largest food and beverage company in the US, and 5th largest in  the world.

And while the resulting company will certainly be an unprecedented food giant, one which leaves the US food industry even more concentrated, here is the rationale behind the deal and the punchline for American workers: “significant synergy opportunities.” Translation: thousands of layoffs imminent.

Details from the press release:

H.J. Heinz Company And Kraft Foods Group Sign Definitive Merger Agreement To Form The Kraft Heinz Company Combination Creates Unparalleled Portfolio of Powerful and Iconic Brands

  • Merger will create the 3rd largest food and beverage company in North America and the 5th largest food and beverage company in the world.
  • Combined company to be named The Kraft Heinz Company and to be co-headquartered in Pittsburgh and the Chicago area.
  • The new company will have revenues of approximately $28 billion with eight $1+ billion brands and five brands between $500 million-$1 billion.
  • Stock and cash transaction, with Kraft shareholders to receive a special cash dividend of $16.50 per share upon closing and stock in the combined company representing a 49% stake in the new company.
  • Berkshire Hathaway and 3G Capital will invest an additional $10 billion in The Kraft Heinz Company; existing Heinz shareholders will collectively own 51% of the new company.
  • Significant synergy opportunities with strong platform for organic growth in North America, as well as global expansion, by combining Kraft’s brands with Heinz’s international platform.
  • The Kraft Heinz Company is fully committed to maintaining an investment grade rating; Company plans to maintain Kraft’s current dividend per share, which is expected to increase over time

Full press release:

…click on the above link to read the rest of the article…

 

 

Total Smart Grid Control: “Warren Buffett Wants to Tell You When You Can Wash Your Clothes” – See more at: http://www.thedailysheeple.com/total-smart-grid-control-warren-buffett-wants-to-tell-you-when-you-can-wash-your-clothes_012015#sthash.Tv6qmIDI.dpuf

January 10, 2015

Total Smart Grid Control: “Warren Buffett Wants to Tell You When You Can Wash Your Clothes” 

Bloomberg News began its recent piece on this with the slightly different line, “Warren Buffett wants to tell you the best time to wash your clothes.”

But the article continues on with not just Buffett wanting to give you a friendly reminder of a more cost-effective time of day to use energy…

No apparently, in conjunction with Siemens AG, Buffett’s UK Northern Powergrid Holdings Company is testing a new smart-grid system that will be able to literally take control of when a homeowner can use their appliances. They are testing quote, “a so-called smart grid that has the ability to control when consumer appliances will be used in the home.”

Bloomberg is using the phrase “behavioral shift.”

Hundreds of millions of smart meters have been installed all over the globe at this point. Testing of these kinds of systems is going on right now in the U.S., United Kingdom, Australia and France among others. Some smart grid projects are using smart meter systems that send signals from every outlet in a home every fifteen seconds, essentially giving anyone sitting at the grid’s control hub a complete view of every move involving energy inside a home.

Flip on a light? Take a shower? Make a cup of coffee? Flush the toilet? Well under these smart grid systems, you are also making data and someone somewhere is going to know about it. If you use more electricity than your neighbors, well then, you are also a statistical outlier, something that has given police probable cause to randomly question people in the past on the basis they might be growing drugs in their home due their increased electricity usage…

– See more at: http://www.thedailysheeple.com/total-smart-grid-control-warren-buffett-wants-to-tell-you-when-you-can-wash-your-clothes_012015#sthash.Tv6qmIDI.dpuf

Olduvai IV: Courage
Click on image to read excerpts

Olduvai II: Exodus
Click on image to purchase

Click on image to purchase @ FriesenPress