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Selling BRK/A below $151,650~ Or BRK/B below $101.10
When there are record few deflation bears in the headlines or sentiment surveys, it pays to tighten trailing stops and prepare for market declines and deflation.
The number of bears was recently the lowest since the market crash year of 1987, a generation ago.
Speaking of Jubilee Generations, Mr Buffett grew up during the Great Depression and studied with Benjamin Graham at Columbia in New York City. Mr Graham, a handsome skier with an excellent memory, ran a long and short hedge fund, the Graham-Newman Partnership. That did not do so well, perhaps another reason Mr Buffett feels comfortable betting against hedge funds.
Mr Graham survived and prospered during the Great Depression with value stocks bought at low prices. Some studies found most of Mr Graham’s outstanding performance came from one stock, Geico, currently a large private holding of BRK. Perhaps like Mr Graham, Mr Buffett or his successors may take Geico or other holdings public again if the opportunity presents itself.
Our point is this:
For someone who grew up the son of a Congressman during the Great Depression of Deflation with Decades of unemployment leading to war, it is surprising to find an optimist concerned about inflation who is writing (selling) naked puts without collateral after calling derivatives weapons of mass financial destruction.
Our simple New England contrary streak leads us to ask Is it possible that the inflation prosperity surprise may be on the downside?
We see many more dollars of credit derivative IOUs, some $605 Trillion to be exact, and many more dollars of unfunded government agency mandates including some $104 Trillion in entitlements, mostly Medicare.
http://www.bis.org/press/p091111.htm
http://www.dallasfed.org/news/speeches/fisher/2010/fs100112.cfm
Compare this to a $60 Trillion Global, $14 Trillion American economy, $12 Trillion in Treasury Debts or $1 Trillion in Federal Reserve Note Cash.
January 22nd, 2010 at 12:05 am
[...] Jubilee Prosperity » Blog Archive » Selling BRK/A below $151650 …Selling BRK/A below $151650~ Or BRK/B below $101.10. We have a lot of respect for Warren Buffett, perhaps the most successful investor of all time, exemplified by his Berkshire Hathaway Holding Company. And today the bullish rumour is … Read more [...]
January 26th, 2010 at 1:26 pm
Aloha All
We learned at least one person was unclear why we headlined
selling BRK/A below 151,650 or BRK/B below 101.10 when recent
prices were 109,995 and 73.43 respectively.
The long-term trend is our friend.
We like to buy on weakness in a primary uptrend or sell on strength in a primary downtrend.
With all the excitement about the 30:1 and 50:1 net 1500:1 splits, the 50:1 motivated by taxes from the BRK acquisition of BNI and the BRK KFT acquisition of Cadbury, we wish to remind folks Mr Buffett seems to be going against core declared principles promoting free markets while supporting government bailouts and guarantees that riddle them with moral hazard, calling for higher taxes while seeking to buy tax credits, eschewing stock splits while completing a 1500:1 stock split, and declaring derivatives weapons of mass financial destruction while selling naked puts that reduced the credit rating and earnings of BRK.
We think the clear long-term trend of BRK may be down, so caveat emptor…
Regards*Rich