Friday, July 24, 2009

Buffett to CNBC: Invest in Stocks Even At Dow 9000

Warren Buffett tells CNBC that the economy still isn't showing any signs of life but that doesn't mean investors should stay away from stocks for the long-term.
In a live interview on Squawk Box this morning, Buffett says "business is still flat." But he stresses that doesn't mean he's negative on stocks, predicting the market will revive before the economy does.
"The market is very, very likely to turn up before business. But I don't try and time stocks. I try to price stocks." ( This I have been writing and explaining since long.)
He repeats his advice from his "Buy American" op-ed in The New York Times last fall: don't wait to buy stocks until the economy improves. By then, he says, you will have missed the biggest stock gains. ( Market always rise before the good news comes in.I have been writing here , buy when the chips are down as stock and market both will wait for none.They go up as soon as they smell good news)
Even with the Dow hitting highs for the year around 9000, Buffett repeats his belief that stocks will outperform cash investments, such as Treasury notes, over the long-term. "I would much rather own equities at 9000 on the Dow than have a long investment in government bonds or a continuously rolling investment in short-term money."
As usual, he points out he is not making any predictions about what the stock market will do in the next coming weeks or months.
Buffett repeats his belief there are "real inflationary possibilities" down the road, due to the massive stimulus being applied to the struggling economy. But he also repeats his view the stimulus is necessary despite the after-effects, because helping the economy recover should be the nation's top priority.
Buffett again endorses Ben Bernanke as Federal Reserve chairman, saying "I don't think you could have anybody better than Bernanke in the job. He understands all the issues."
Buffett's bearish comments today on the economy echo what he's been saying in recent weeks. Earlier this month, Buffett told us consumer sales remained "very, very soft" and about a month ago he said in a live interview on CNBC that he was seeing no "green shoots" on the economy.
Buffett declines to comment on Berkshire Hathaway's recent move to sell about 17 percent of its stake in the credit-rating agency Moody's (NYSE:
MCO - News).
Buffett's live interview was designed to promote a new online animated series called Secret Millionaire's Club in which he voices a cartoon version of himself who helps teach kids about finance and investing.

My Comments:
Remember one thing.Never play in F&O .......Never ....Never...Never....Leave it to big players.They have scores of sources to have information on world economy and things that are going to pan out.And hence accordingly they play the game.We are very small people to have these type of information.Without information one will always end losing in F&O.It is ST game for a month or two to as short as intraday squaring.
I just read yesterday that China is consuming commodities in big way and hence the metal prices at London stock exchange went up and hence there was a mad rush for Metal stocks like Sterlite, Tisco,Jindal Gr etc.All big players are buying Metal stocks that includes big individual names and MF's.
That is where one will get beaten.They have 24 hrs of news and handy and hence they play accordingly and we keep on thinking how this stock is running so much or how it is going so much down.
Even after looking at the Balance Sheet people has lost money.Even after reading all those things like RNOW,Cash Flow,Sales,Profit margins, Credibility of management still I have seen people making loss.Like say Northgate Ltd.It was having a reserve of over 300 cr and suddenly they showed a loss of 300 cr and the reserve is all gone......The sales are what to say about it?
Stock Market is all about sentiment and LUCK.I have seen very great investor selling Infosys very early and seen people know nothing about stock market and invested in Infosys ,on someone else recomendation and they hold for many years and made millions.
No one know when the valuation has gets saturated and when it is a buy.There is no parametres for that.There is no book for that.They will show all explainations when one should buy and when value is said to be mouthwatering but they are not fullproof methods.I have seen people who are always keeping watch on their portfolio and still making loss or making very less profit and people never looking at stocks and making millons........


  1. dear Mr desai,
    i have been your fan for a very long time. i wish to draw your attention to some recent changes in the market functioning. buy and hold is dead unless u have a time horizen to survive a business cycle.

    along with luck there is some mathematics which is needed. you just do 63 day ema and 100 dema combination or 12week 26 week exp moving average combo . remain long till price remains above both and shift to cash if price breaks this.

    u may ask why moving averages ? because stock markets are a place where sentiments are traded and price contains all info past present future. people immitate successful behaviour and that's how trends develop and moving average following is nothing but trend following. try this and dont give a damn to tv analysists and u will find how easy this system works.

    also the primary requirement is trade in bluechips or atleast index stocks. if interested i can send u my excelbooks by mail id is showing combo use of 12 week 26 week ema and u will find out how we remained out of markets during most drawdowns.


  2. Dear Mr Himanshu,
    I appreciate your offer and I understand that DMA's plays important role in deciding trend for ST.
    I will very politely disagree with your stand that Buy and Hold strategy hold no GOOD now.
    I still firmly believe that it is the best way to make money.
    I agree that one can buy stock and sell at 30-40 % profit to buy at later low price as they use to correct and never goes up in vertical line.
    But it has been proved time and again that those who have invested for LT has always make money.Take example of Warren Buffet, RJ or any other investor whose name we do not know but they are there.
    As you wrote, primary requirement is to trade in bluechips and that is where I have no expertise but if any of my reader wants to have it then they are free to avail your offer and I request you to send them if they ask for the one.
    I am totally a Buy and Hold guy and I never trade.
    It may have happened that you remained out of market during all drawdowns and I do not challenge it.I believe in what you say and if someone here feels like approaching you do help him but that is not my way of doing things.
    Thanks for the offer again.....