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Why Warren Buffett Is No Longer A Value Investor

Daily Chart September 8 InvestWithAlex

9/8/2015 – A big up day with the Dow Jones up 391 points (+2.43%) and the Nasdaq is up128 points (+2.73%) 

While this will upset quite a few of Mr.Buffett’s disciples, I no longer believe that Warren is following his own advice.  Advice such as, “Be greedy when others are fearful, fearful when others are greedy, buy $1 bills for .50 cents, etc…” Here is why….

Warren Buffett plans to invest $32 billion, soon

Warren Buffett said Tuesday the U.S. economy is growing at about 2 percent, and he’s planning to invest $32 billion in the next four to five months.The previous time the Oracle of Omaha spoke with CNBC in early August, he discussed the conglomerate’s $37.2 billion acquisition of Precision Castparts (NYSE: PCP), an aircraft equipment maker, saying “This a very high multiple for us to pay.”

There you go, even Mr.Buffett thinks he is paying a “A Very HIGH Multiple”.

My question is……..why? 

As my previous posts here clearly illustrate, I believe we are in an overvaluation bubble of epic proportions. In the past, Mr. Buffett didn’t have a problem with sitting on the sideline while waiting for the market to crater. Then picking up wonderful investment opportunities at give away prices. That is how he has made his fortune.

It is unclear why Berkshire Hathaway is trying to get rid of its cash by investing right in the middle of this overvaluation bubble. Could it be due to the fact that Warren Buffett has fallen into a trap frequented by most other investors. Particularly today. A cult like believe in the FED and their ability to backstop any market decline? A believe that we are in the early stages of a 16-18 year bull run? A believe that our economy will improve and not slide back into a recession?

Sure, the investments he is making today will pay off over the next 15-20 years. Short-term, I believe this to be a very dumb decision. Something Mr. Buffett will surely write about in his 2017 Annual Letter To Shareholders. Mark my words.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. September 8th, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Why Warren Buffett Is No Longer A Value Investor Google

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Buying Opportunity Of A Lifetime or A Bull Trap?

Dow short term

On Monday, August 24th, the Dow futures flashed -400, then -600, -800 and by the time we opened, we were down 1,000 points. In my weekly update to my premium subscribers two days earlier, I have suggested that the market is likely to bottom within the first 60 minutes of trading on Monday. However, due to the extent of the decline, I had to recalculate all of my price targets.

Five minutes before we opened I presented a new target to my subscribers…Dow 15,365. Which typically entails 15,365 (+/- 25 points). The Dow bottomed at 15,370 in the first 5 minutes of trading and then ripped 200 points higher in a matter of about 30 seconds. In other words, even though I have identified the exact bottom, I wasn’t able to take advantage of it. The market moved too fast…

Here are the two most important things you have to understand about that bottom……

  1. It Was Untradable:  First, there was a massive discrepancy between all primary indices and associated ETF’s. For instance, DIA opened $4 lower than the Dow Jones. It was the same story for QQQ/NDX, SPY/SPX and quite a few other high volume stocks…FB, AAPL, etc…I couldn’t buy and by the time I finished typing the number of shares to buy into my terminal and looked up, the Dow was up 200 points. Why is this important? Based on my research work, such “untrabable” bottoms or spike downs get retraced about 90-95% of the time. At the very least. In other words, expect to see those levels again.
  2. Anecdotal: I tend to hang out with well to do professionals (lawyers, doctors, bankers, etc…) As we were having breakfast a week ago, 100% of them agreed that this was a “buying opportunity of a lifetime”. They couldn’t stop boasting about how many shares of this and of that they have bought right at the bottom….RIGHT?!?! Anyway, when I brought up the possibility of this being just the first leg down in a multi-year bear market, I was immediately dismissed as being “always too bearish”. Even though I haven’t been this bearish since 2007.

So, did I just miss a buying opportunity of a lifetime or a this a bull trap? I think the analysis above speaks for itself.

z32

Buying Opportunity Of A Lifetime or A Bull Trap?  Google

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COT Reports & Weekly Market Calendar – September 8th, 2015

I am back. There were some major and interesting changes in COT Reports over the last two weeks. Let’s take a look at that first. 

COT Reports: If you are not familiar, the Commitments of Traders (COT) reports provide a breakdown of each Tuesday’s open interest for markets in which 20 or more traders hold positions. In other words, it gives us a preview of what commercial interests are buying or selling. As the theory goes, we want to be on the same side of the trade as the big guys.

While not a good timing tool, currencies, commodities and the stock market (to a lesser extent) tend to move in the direction of the bets made by the commercial players. Not always, but often enough.

Latest data, as of September 1st, 2015

Currencies: 

  • USD:  3K Long Vs. 63K Short – Significant decrease in net short position. Substantial short interest remains.
  • Canadian Dollar: 77K Long Vs. 4K Short – Slight net decrease in commercials net long position. Significant long interest remains.
  • British Pound: 61K Long Vs. 11K Short – Slight increase in net long interest. British pound is now bullish.
  • Japanese Yen: 125K Long Vs. 90K Short – Massive net increase in short interest. Japanese Yen is now neutral.
  • Euro: 124K Long Vs. 64K Short – Slight decrease in net long exposure. Significant long position remains. No changes.
  • Australian Dollar: 139K Long Vs. 1K Short-  Slight increase in net long position. Significant long position remains.

Conclusion: Based on the information above, commercial interests expect the US Dollar to decline while Canadian Dollar, British Pound, Euro and Australian Dollar rally. Japanese Yen is  now net neutral. 

Markets/Commodities/Volatility: 

  • E-Mini S&P 500: 545K Long Vs. 572K Short – Big swing from large net short position to neutral. Commercials took profit after later August sell-off.
  • VIX: 54K Long Vs. 70K Short – Massive swing from a large long position to net neutral.  Commercials took profit after late August sell-off.
  • Gold: 69K Long Vs. 73K Short – Slight increase in net long exposure. Still neutral.

Conclusion: Based on the information above, commercial interests are now net neutral. This is consistent with the market remaining in a tight, relatively speaking, trading range. Gold is likely to remain within its trading range. 

Next Week’s Market Calendar: 

  • No major market news this week in the US. Only in Asia/EU.

Z30

COT Reports & Weekly Market Calendar – September 8th, 2015 Google

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COT Reports & Weekly Market Calendar – August 21th, 2015

COT Reports: If you are not familiar, the Commitments of Traders (COT) reports provide a breakdown of each Tuesday’s open interest for markets in which 20 or more traders hold positions. In other words, it gives us a preview of what commercial interests are buying or selling. As the theory goes, we want to be on the same side of the trade as the big guys.

While not a good timing tool, currencies, commodities and the stock market (to a lesser extent) tend to move in the direction of the bets made by the commercial players. Not always, but often enough.

Latest data, as of August 18th, 2015

Currencies: 

  • USD:  3K Long Vs. 83K Short – Significant short interest remains. No major changes.
  • Canadian Dollar: 88K Long Vs. 3K Short – Slight net decrease in commercials net long position. Significant long interest remains.
  • British Pound: 46K Long Vs. 34K Short – Slight increase in net short interest, but remains neutral.
  • Japanese Yen: 134K Long Vs. 8K Short – Slight decrease in net long exposure. Quite a large long position in Yen remains.
  • Euro: 117K Long Vs. 40K Short – Slight decrease in net long exposure. Significant long position remains. No changes.
  • Australian Dollar: 131K Long Vs. 1K Short- Significant long position remains.

Conclusion: Based on the information above, commercial interests expect the US Dollar to decline while Canadian Dollar, Euro, Yen and Australian Dollar rally. British pound is neutral. 

Markets/Commodities/Volatility: 

  • E-Mini S&P 500: 309K Long Vs. 586K Short – Few changes. A substantial short position remains.
  • VIX: 85K Long Vs. 16K Short – No changes. A substantial long position suggests market turbulence ahead.
  • Gold: 83K Long Vs. 65K Short – Slight increase in net long exposure. Still neutral.

Conclusion: Based on the information above, commercial interests expect the stock market to decline as volatility surges higher. Gold is likely to remain within its trading range. 

Next Week’s Market Calendar: 

  • Wednesday – US Durable Goods
  • Thursday – GDP Data.
  • Wed.-Friday – Jackson Hole Symposium

Z30

COT Reports & Weekly Market Calendar – August 14th, 2015 Google

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Jim Rogers Explains Why Central Bankers Are About To Panic

There is only a handful of people worth listening to when it comes to investing. Jim Rogers is one of them. Below is the podcast he did a few weeks ago and it is definitely worth a few minutes of your time.

Jim talks about equity markets, Russia, China, Greece, oil and gold. Plus, bureaucratic idiots in Washington. I’ll tell you one thing, it is nice when Jim’s views match my own.

In short, Jim anticipates major….major problems in the US Equity markets. Should you?

z32

Jim Rogers Explains Why Central Bankers Are About To Panic Google

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Where Have All The Bulls Gone?

Daily Chart August 20 2015

8/20/2015 –  A big down day with the Dow Jones down 358 points (-2.06%) and the Nasdaq down 141 points (-2.82%).  

The Dow is down 550 points off of its Tuesday’s top. And after scanning though most of the financial media outlets, I was hard pressed to find a single bullish article. That is unusual. So, is it possible the market is oversold and is about to stage a big bounce? Or, are we breaking down and this sell-off is about to accelerate. Click Here to find out.

I couldn’t agree more with Mr. El-Erian. Watch the video below, it is definitely worth a few minutes of your time. Here are some of my notes.

  • Emerging markets tend to get the ball rolling. That has certainly been the case here.
  • Markets might overshoot to the downside.
  • Emerging markets are now oversold.
  • Lot’s of opportunities are coming your way.
  • The FED screwed. – I agree.
  • As soon as investors realize the FED is not in control, markets will tank. – I have held this same few for quite a while now.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. August 19th, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Where Have All The Bulls Gone?  Google

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How Meditation Can Improve Your Investment Returns

meditation investwithalexA great article on the subject matter from Bloomberg and I highly recommend that everyone reads it. To Make a Killing on Wall Street, Start Meditating. 

I have been seriously meditating for over 7 years now and I swear by it. Most people don’t have the slightest idea of how stressful it is to be involved in the money management/trading business. In fact, I continue to maintain that it is one of the most challenging professions out there. And while some people turn to drugs, alcohol, partying, hookers, gambling and other destructive/compulsive behaviors, for me meditation is the only healthy (and free) option.

Listen, most people will gain a competitive advantage on Wall Street NOT through superior knowledge…..you can teach a monkey to read a balance sheet or a chart…..but through their psychological make up and patience. In other words, your brain can either be your best friend or your worst enemy. Simply put, meditation, over time, turns your brain/being into a powerful weapon when it comes to trading and/or investing.

Plus, there is a number of additional benefits. Wisdom and a potential enlightenment immediately come to mind. As a quick note, don’t follow anyone or get a “Guru”. Just close your eyes and destroy your mind. It’s the best drug out there. I highly recommend it.

z33

Can Meditation Improve Your Trading? Google

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Marc Faber Explains Why The Stock Market Is Going Down

Why are stocks going down? Marc Faber explains. Overvaluation, devaluation, slowing economies, deflation, etc….. No recovery in sight. I tend to agree.

Z30

Marc Faber Explains Why The Stock Market Is Going Down  Google

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Why The FED Will Not Raise Interest Rates

Daily Chart August 19 2015

8/13/2015 – Another negative day with the Dow Jones down 160 points (-0.91%) and the Nasdaq down 40 points (-0.80%)

Let’s talk about today’s FOMC Minutes.

As the FED continues to beat around the bush, futures now suggest that the FED will forgo raising interest rates in September. This joyous realization was followed by “Let’s Party 150 Dow Point Spike” followed by a “Oh S#*$, the Economy Ain’t Alright” 150 point sell-off.

I will simply repeat what I have said here last week. No further commentary is necessary.

I am 75% confident that the FED will not raise interest rates at all and 100% confident that they will not raise it in any meaningful way. What is meaningful? Even 8 separate hikes at 25 bps each would be laughable here.  And while anything above that will matter, I am extremely confident that we will not even get close to that over the next 2-5 years.

Here is why…….

  • Last week China has launched an official currency war by devaluing the Yuan 3 times in a row (thus far). Japan is trying to do the same and the EU is threatening further easing and/or QE. In this ocean of devaluation, the US cannot afford to have a strong currency.
  • Plus, the US Economy is rolling over into a recession. Some of today’s official numbers are starting to reflect that.
  • We are on the verge of a massive down leg in our equity markets. At least based on my mathematical and timing work.
  • Commodities have collapsed.
  • Deflationary forces are reappearing throughout the economy.
  • Etc….

As I have mentioned before, this is the worst case scenario for the FED. They are already TOO LATE. Now they are stuck in a situation where our economy and capital markets collapse while they are rendered powerless. As soon as other investors realize that……well…….watch out below.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. August 19th, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Why The FED Will Not Raise Interest Rates  Google