Steve Schaefer, 10.17.08, 3:30 PM ET Investors were moving back into equities Friday, as a bullish commentary from Warren Buffett outweighed the latest troubling indicator for the U.S. housing market. Buffett wrote an op-ed urging investors not to remain in cash during the present buying opportunity, and revealing that he has already begun shifting personal holdings into equities. Previously, Buffett's entire portfolio was in U.S. Treasury bonds, he said, noting that being greedy when others are fearful is one of his core strategies. The billionaire's investment firm, Berkshire Hathaway (nyse: BRK - news - people ), has been on the same path of late, making investments in blue-chip names at what appear to be bargain prices under sweet terms. In just the past few weeks, Berkshire has pumped billions into Goldman Sachs (nyse: GS - news - people ) and General Electric (nyse: GE - news - people ) in return for preferred shares with attractive 10.0% dividends. (See "Buffett Backs GE" and "Buffett's Golden Goldman Buy.") Still, Buffett cautioned that now is no time to be plowing money into the market willy-nilly. Investors should remain wary of "highly leveraged entities or businesses in weak competitive positions," Buffett wrote, but fear over the long-term prosperity of sound companies "makes no sense." The remarks from the world's richest man, which ran in the New York Times, helped enliven a market that was in the doldrums earlier Friday due to discouraging reports on housing and consumer attitudes. New residential construction was down to a 17-year low of 817,00 units in September, 7.7% below market estimates and 31.1% less than a year earlier. Meanwhile, the University of Michigan's monthly consumer survey showed its steepest month-over-month slide in its history, falling to a reading of 57.5. (See "Housing Starts Dwindle In September.") Plenty of investors remain on the sidelines, uneasy about the markets twists and turns, but those waiting for a bottom run the risk of missing it. With government bond yields and the value of the dollar likely to suffer from a significant debt issuance to pay for the Treasury Department's bailout efforts, remaining in cash is no recipe for gains. Rather, now may be a lucrative time for investors to plunge into consumer staples, industrials with solid fundamentals and certain commodity stocks. Many of the larger firms have global exposure that will help them surmount the flailing U.S. economy, and will stand to benefit from a pullback in consumer spending. McDonald's (nyse: MCD - news - people ) is one example. The company's extensive worldwide footprint gives it a hedge against periods of economic weakness, and the strain on U.S. pocketbooks is likely to mean less fine dining for the everyday consumer. Shares of McDonald's were up 98 cents, or 1.8%, to $55.44 Friday. Technology, another traditional safety play, may be less enticing this time around. The collapse of the financial sector could eventually sap significant amounts of IT spend in the U.S. Industry leaders like IBM (nyse: IBM - news - people ) may sail through with little damage, but smaller players are likely to feel the pinch. IBM shares were up $3.04, or 3.3%, to $94.56. Exxon Mobil (nyse: XOM - news - people ) and Chevron (nyse: CVX - news - people ), fellow Dow components, were each up over 2.0% Friday, as oil prices made a moderate comeback. Crude has shown few signs of returning to the $100.00 level, but climbed $3.62 to $73.47 a barrel as traders look ahead to the Organization of Petroleum Exporting Countries' emergency meeting Oct. 24. The cartel is widely expected to cut production.
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The Partnership: The Making of Goldman Sachs by Charles D. Ellis
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1 comment:
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Recently an insurance company nearly wind up....
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A bank is nearly bankrupt......filing chapter 11 protection.
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How it affect you? Did you buy insurance? Did you buy mini note or bonds?
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Who fault?
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They bailout trouble finance company, but they will not bail out your credit card bills…….Should they have use the bail out $$ to pump into all different industries instead ……You got no choice, and no point pointing finger but you can prevent similar things from happen again……
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Are you a partisan?
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Since the bailout already done, the question now is besides letting the economic back on track, what regulation should be done to prevent similar things from happen again…..
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The top management of the Public listed company ( belong to "public" ) monthly salary should be tied a portion of it to the shares price ( IPO or ave 5 years ).... so when the shares price drop, it don't just penalise the investors, but those who don't take well care of the company.....If this rule is pass on, without any need of further regulation, all industries ( as long as it is public listed ) will be self regulated......because the top management will be concern about their own pay check…… Instead of spending big money on hotel stay and luxury function……..Top management get monthly salary and director fee, while investor get dividends….
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Whenever anywhere, anytime, there is election campaign.....We can use this to question your candidate there….. if you agree on my point, please share with many people as possible.... Finance and Media are the two only industries can shaken politics ( Maybe Hackers can ), please help to highlight also...
Also recently some comments say that Respectable Mr Buffet had start buying, yes, he started buying with guarantee return of 10% annually….. Do we individual investor had the same offer…. If yes, I will definitely join in and buy……and the institution will definitely wouldn't short of money if they offer the same terms to the individual investors.....
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Blog
http://remindmyselfinstock.blogspot.com/
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Facebook, come and join as a friend and share with your friends…..
Remind.myself@yahoo.com
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Just image, Institution lent out the shares already, in their hand, they don't have any stock or shares already, but Institution know that in the market, there are those individual investor who borrow the share going to sell the stock, so Institution naked short also, because there is no restriction on those Institution that those stock or shares that lend out, cannot be trade by the institution at that moment.
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