Do you agree that there are indicators that tell you when to invest, and when to be in cash?
In February 2003 an IT expert suggested that I get all my customers out of the market. I asked him if he was serious. “Yes,” he answered, “it’s essential that you get everyone out of the market.”
A week later, he asked me if I had taken his advice. “No,” I said, “I did the reverse and invested more.” I was right. He’d been listening to and watching the Internet and all the experts said to get out of the market, as did regular folks. The panic made it the very best time to invest.
Three months or so ago I read something or other — was it in the Wall Street Journal? — that opined that Buffett was finished and that Berkshire’s best days were long gone. I also heard words to that effect on the PBS series Marketplace the next day. What did I do? I bought more Berkshire shares for my customers and for me. A week or two later, Berkshire, according to Bloomberg, made something like $1.5 billion on Goldman warrants, and a week after that another paper profit of $1 billion or so from BYD, the Chinese battery and auto company that is owned about 10% by Berkshire Hathaway. (Those warrants have since appreciated significantly in value.) Maybe it’s a contrary sign when people say that Buffett has lost it, since this ain’t the first time we’ve gone through the cycle. What do you think?
(With Berkshire’s recent purchase — it now owns 100% of Burlington Northern Sant? Fe, the nation’s 2nd-largest railroad — the Berkshire B stock will be split 50-1; the new price should be around $65-$70 per share. This will allow Burlington shareholders to transfer tax-free to Berkshire stock. It will also allow many smaller clients to buy shares of one of the greatest value plays, a low-fee, transparent investment.)