Wednesday, April 1, 2009

Emotional Refuse

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Further to my criticism in February of recent detractors of Warren Buffett's moves to "buy up US stocks", Steve Jordan from The Omaha World-Herald adds another dimension to my argument for me when he quotes me back contrasting my contention that Warren knows his business VS Doug Kass who reckons Buffett is dead wrong in his long-term investment approach:

Bloggers are fighting over whether Warren Buffett's recent financial plays have been wrong or wise. Darren Rickard of the Stock Market & Business Blog sought to refute Doug Kass of RealMoney Silver and TheStreet.com, who said Buffett's strategies are "stale" and don't work these days. Kass cited the declining value of several investments Buffett has made since last fall, plus the 38 percent drop in Berkshire Hathaway's own stock price. Rickard said such criticism is shortsighted and that critics "haven't given Buffett's big bets a time to play out." "Warren Buffett has faced similar stock market and economic meltdowns before, bet huge sums while stocks were affected by these meltdowns and always managed to come out smelling of roses," Rickard wrote. , Omaha World-Herald Feb 8, 2009

I missed this in my February diatribe, Doug Kass points out that Buffett's Berkshire has suffered a 38% drop in share price but what stock hasn't in this market?

Share price isn't always a reflection of real value. Like Kass' view of the stockmarket, this is short term thinking and it is wrong. Stock prices will fluctuate for manifold reasons other than concrete results and the Berkshire Hathaway stock price has been murdered far below its recent results, mostly for emotional rather than actual reasons.

The same is true of many listed stocks in New Zealand.

Emotion has departed from reality and taken some stocks down the road less traveled towards dead mans curve.

There are bargains out there, Warren Buffett is buying them and commentators like Doug Kass are doing their best to make him look bad in the short-term.

I am willing to admit that the great Sage of Omaha could be wrong this time but on the balance of probability it would be a foolish man who would bet against him.

Just be patient, Buffett has spent the last 80 years doing just that and his results speak for themselves.

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