What Buffet thinks of the current mess
August 18th 2007 08:34
The Sage of Omaha, Warren Buffet, lost almost as much as the US S&P 500 index. Hickey and Walters of Bespoke, did a casual performance comparison of Buffet's portfolio to the S&P 500 index, and it was found that Buffet's portfolio as of 31st March, 2007 took an average loss of 7.64% since 19th July, 2007, compared to S&P 500 index loss of 7.69%.
The following table produced by Hickey and Walters summarised the findings:
But Buffer is not deterred as he said on Tuesday that things may get worse but it could be a blessing in disguise. "there will be real opportunities then..", said Buffet.
The Sage has spoken.
Pessimism and irrationality rules the market now, experts believe, and there is a possibility that the slump could last for a year. As long as investors are over reacting, what ever the negative outcomes for the financial markets, can be a product of their own making. There's nothing much can be done if the relatively strong fundamentals are ignored and choose to believe the other side. Then, of course, we will taste the bitter fruit because everyone wants to it to be so.
However, always expect the unexpected. Perhaps the credit rot is really bigger than what it seems. Having money in the market can make one shaky, which is normal, but there are many quality shares around to pick. A seismic shift to quality as opposed to risk taking could be a better option than an over drastic 'correction' by over selling.
Perhaps this is what the Sage of Omaha is trying to do. Buffet believes there are opportunities to scoop up some undervalued shares because the margin of safety is high on the safety line but we must remember he is a long term investor.
His words are not surprising because he said it before.
"I’d be a bum on the street with a tin cup if the markets were always efficient.”
The following table produced by Hickey and Walters summarised the findings:
But Buffer is not deterred as he said on Tuesday that things may get worse but it could be a blessing in disguise. "there will be real opportunities then..", said Buffet.
The Sage has spoken.
Pessimism and irrationality rules the market now, experts believe, and there is a possibility that the slump could last for a year. As long as investors are over reacting, what ever the negative outcomes for the financial markets, can be a product of their own making. There's nothing much can be done if the relatively strong fundamentals are ignored and choose to believe the other side. Then, of course, we will taste the bitter fruit because everyone wants to it to be so.
However, always expect the unexpected. Perhaps the credit rot is really bigger than what it seems. Having money in the market can make one shaky, which is normal, but there are many quality shares around to pick. A seismic shift to quality as opposed to risk taking could be a better option than an over drastic 'correction' by over selling.
Perhaps this is what the Sage of Omaha is trying to do. Buffet believes there are opportunities to scoop up some undervalued shares because the margin of safety is high on the safety line but we must remember he is a long term investor.
His words are not surprising because he said it before.
"I’d be a bum on the street with a tin cup if the markets were always efficient.”
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