Berkshire will soon be best buy in history!
Posted on 03 March 2009 with no comments from readers
There was an article on this blog not long back reminding people that Warren Buffett would be one of the biggest losers from this Wall Street crash, and his famous annual letter now confesses as much.
But as investors we should always be looking forwards and not back, and ask ourselves who would we trust most as our investment advisor. Probably most people would choose Warren Buffett, admittedly based mainly on his very long and highly successful track record.
Iconic errors
He also has a track record for screwing things up a bit during bad economic periods, and then – just as a few commentators are writing him off – he comes bouncing back with stellar performance to confound his critics.
Mortality is not on his side at 78 but Warren sounds in good health and up for the challenge. Who says he will not manage another decade of outperforming the S&P before going on to a place of higher returns?
I would certainly put some money on it, but not until the S&P has reached something that resembles a bottom. Warren unfortunately has been proven wrong in deciding to buy shares for his own account last autumn, although he did say in a public statement at the time he had absolutely no idea if shares might go lower from that point.
But if Berkshire Hathaway stock continues to fall then at some time in the near future it is going to represent outstanding value. How will we spot that moment?
Bottom fishing
Perhaps if Warren Buffett started buying his own stock, that would be one indicator, although his recent record on timing share purchases has not been infallible.
Rather I think the indicator will be a deafening silence in the investment world. You can sense it coming. Most financial professionals I meet are rather depressed and have little to discuss except their own losses. On television the money honeys of tout-TV are almost lost for words.
For at a real bottom there is a climactic sell-off and investors give up all hope. We are almost at that point and that would be the best moment in history to buy Berkshire Hathaway.
