By Eric Martin
* please read this with a large dose of caution - Darren, EWB.
May 12 (Bloomberg) -- President Barack Obama is proving to be a better judge of the stock market than Warren Buffett, the world’s second-richest person.
The CHART OF THE DAY shows the Standard & Poor’s 500 Index began its biggest rally since the 1930s after Obama said on March 3 that equities offered bargains for investors with a “long-term perspective.” While the measure fell 3.5 percent over the next week, reaching a 12-year low on March 9, it went on to surge as much as 37 percent.
Buffett, the chairman of Berkshire Hathaway Inc., wrote a column titled “Buy American. I Am.” for the New York Times in October, saying he may put all of his personal investments into U.S. stocks. The S&P 500 then plunged 29 percent through March 9 and is still down 3.9 percent. Berkshire, based in Omaha, Nebraska, posted its largest loss in at least two decades on May 8, in part because of Buffett’s “major mistake” of buying ConocoPhillips shares before oil retreated from a record.
“It’s been impossible to time the bottom,” said William Stone, chief investment strategist at PNC Financial Services Group Inc.’s wealth management unit, which oversees $96 billion in Philadelphia. Obama “deserves some credit for his administration putting some of the policies in place that helped us snap that lack of confidence.”
Stocks rebounded as Obama outlined a $787 billion package of spending and tax cuts to stimulate growth, the Treasury unveiled plans to finance as much as $1 trillion in purchases of banks’ distressed assets and the Federal Reserve pledged to buy more than $1 trillion of Treasuries and bonds backed by mortgages to drive down interest rates.
Obama also had better timing than Laszlo Birinyi and Barton Biggs. Birinyi, a pioneer of money-flow analysis, said on Dec. 8 that the U.S. stock market bottomed in November, before the S&P 500 lost another 26 percent. Biggs, the former Morgan Stanley strategist who runs the hedge fund Traxis Partners LLC, told Bloomberg Television on Nov. 6 that stocks hit their lows in October. His call preceded a 29 percent drop in the index.
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