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The Real Secret Behind Warren Buffett’s Success Is Finally Revealed

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 “I buy expensive suits. They just look cheap on me”
-Warren Buffett

KEY STATISTICS:  (Date of Analysis: November 7th, 2013)

Full Name: Warren Edward Buffett

STARTING CAPITAL: ZERO

NET WORTH NOW: $59 Billion (2013)

  • Date of Birth: August 30th, 1930 (age 83) Omaha, Nebraska
  • Current Residence: Omaha Nebraska
  • Parents: Howard Buffett and Leila Buffett
  • Education: Columbia Business School
  • Occupation: Chairman & CEO of Berkshire Hathaway
  • Family Life: Married to Astrid Menks (2006-present).  3 Children: Susan, Howard, Peter

QUICK SUMMARY:

Warren Buffett was born in 1930 to Howard Buffett a stock broker/US Representative and Leila Howard a housewife in Omaha, Nebraska. Buffett’s early life was unremarkable in many ways. Being born in the midst of a Great Depression to a typical American family and living in the heartland has allowed Buffett to learn American values from an early age. Starting his school in Omaha, Buffett later moved to Washington DC after his father was elected to the United States Congress.

Even from an early age Buffett showed that he had interest in stocks and an Entrepreneurial spirit. He often spend time in his father’s brokerage company trying to learn all that he could about stocks, finally pulling the trigger on his first stock investment at the age of 11. His young entrepreneurial exploits of buying soda, gum, investing in farms and other businesses is well documented as well. In 1950 he entered into a Columbia University Graduate School of Business to study under a well known analyst and investor Benjamin Graham (author of classic “The Intelligent Investor“) and that’s where Buffett’s story really begins.

After getting his graduate degree from Columbia in 1951 Buffett literally begged Benjamin Graham for a job at Graham’s investment firm for 3 years.  At the time Graham didn’t think much of Buffett and turned him down on numerous occasions. That is until he reluctantly agreed to hire Buffett in 1954, most likely because he was sick of Buffett pestering him. Buffett worked for Graham in New York until 1956, the year Graham has decided to close down his business.  

After closure, Warren Buffet moved back to Omaha to start his own investment partnership (aka hedge fund). Starting with a little over $100,000 raised ffamily and friends, Buffett has managed to accumulate a personal net worth of close to $25 Million in just 13 years by investing in undervalued stocks. In 1969 Buffett liquidated his investment partnership and returned all of the capital to investors.  At the same time he kept most of his money invested in various companies, including Berkshire Hathaway, a company that he eventually brought under his control.

Thereafter, through his control of Berkshire Hathaway and through a series of brilliant investments spanning multiple decades Buffett has turned his $25 Million fortune into a $59 Billion mega fortune today. Simply put, Mr.Buffett is a brilliant investor, analyst and an oracle of sorts succeeding beyond belief in one of the most competitive fields in the world. The stock market. What we can learn from him and his approach is priceless.  

FUN FACTS ABOUT WARREN BUFFETT:

  • Warren Buffett, the 3rd richest man in the world, still lives in the $31,500 house he bought in 1957.
  • Warren Buffett gave 85% of his money to charity (mostly to the Bill and Melinda Gates Foundation) to a total of 40.7 billion dollars.
  • Warren Buffett filed his first tax return in 1944, at the age of 14, and took a $35 deduction for the use of his bike and watch on his paper route.
  • In 2010, a lunch with Warren Buffett was auctioned off to a man for $2.63 million dollars
  • If you invested $1000 with Warren Buffett in 1957, you would have amassed upwards of $30 Million today.

WARREN BUFFETT QUOTES:

“If past history was all there was to the game, the richest people would be librarians.”

“Only when the tide goes out do you discover who’s been swimming naked.”

“Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.”

DIFFICULT TIMES & OVERCOMING PROBLEMS:

Being a money manager is one of the most difficult professions in the world. You are constantly dealing with various pressures while trying to perform to the best of your ability. There is no consistency and your world is always volatile (just like the stock market itself). Obviously Warren Buffett has thrived in this environment for many years.

His toughest challenge came in 1991 when Warren Buffett was unwillingly sucked into a huge Salomon Brothers scandal involving the US Government.  Warren Buffett was forced to take over the company as the CEO and manage the company through its darkest days. The company was hours away from being literally destroyed by the US Government and it was only Mr. Buffett’s personal assurance at the time that saved the company. By leveraging his reputation and pushing through the rough times he was able to save Salomon and his own net worth.  

PERSONAL CHARACTER TRAITS:

  • Down To Earth: Even though Warren Buffett is the fourth richest person in the world, he doesn’t show it. He still lives in the house he bought back in 1957 and is not known to splurge on luxury. He lives a simple life to the point where you wouldn’t be able to guess that he is even a millionaire if you see him walking down the street or eating in one of his favorite restaurants in Omaha.  
  • Hard Working: Officially Warren Buffett has been working since 1951 without taking (as far as I know) any real time off. Unofficially, he has been hustling since the age of 8 or for 75 years. Yet, he doesn’t call it work. He has famously said that he tap dances to work every day. Simply put, he loves what he does and its more of a play than work for him.  
  • Fair & Honest: Warren Buffett is famous for saying that rich should pay their fair share of taxes (arguing that they should pay more). He even lobbied the congress to increase taxes. You see the same consistency throughout his business career. He puts a significant amount of premium on his own reputation and believes the only way to get a good one is too be fair and honest in all of his business dealings.
  • A Great Sense Of Humor: Warren Buffett is known for his corky sense of humor and his ability to cut through the bullshit and point out the obvious. His annual report letter to the shareholders is as treasure throve of jokes and incredibly valuable real world advice. It should be on everyone’s reading list.
  • A Masterful Politician:  Even though you wouldn’t think of Warren Buffett as a politician, he is a natural born pro. If you study his career you will never see him take extreme sides of any issue. He is always somewhere in the middle. Even though he knows a lot more than he says, he rarely takes sides either for or against something.

SUCCESS ANALYSIS:

Warren Buffett’s success is very difficult to analyze. First, he wasn’t involved in one company that made him rich. He has built his fortune over the last 57 years, one day at a time and through acquiring over 50 companies that now reside under Berkshire Hathaway. He did have major scores, but a steady annual compounding of his money is what really did it for him. Second, most of his work is analytical in nature and out of the public eye. He spent most of his time analyzing companies and making investment decisions. That in itself is very difficult to pinpoint. Luckily for you, I do something very similar. Here are the factors that contributed directly to his success.

  • Right Timing: While you might not see a direct connection, Warren Buffett’s timing was perfect. If he would have been born just 5 years later, he wouldn’t be as much of a success as he is today. He would still be rich, but probably not that rich. Here is why. US Financial markets started a major BULL move in 1949 and completed it in 1966. Warren Buffett started his investment firm in 1956, giving him 10 years of one of the fastest BULL markets in history to work with. Yes, he is a great stock picker, but having a BULL market at your back makes one hell of a difference. That’s what helped him to accumulate his initial capital of $25 million. If he would have shown up just 5 years later, I doubt he would have been able to accumulate as much capital in the tough bear market years of 1970’s.  With a smaller nest egg to work with, his net worth would be a lot less today.  
  • Loves To Make Money:  From an early age Warren Buffett loved to make money. Starting with selling gum and soda at his school he quickly transitioned to buying farmland and investing in stocks.  While the money itself is meaningless to him, he uses it to keep score and to make sure he is winning.
  • Highly Intelligent & Analytical: I firmly believe that investment world (and not academia) attracts the best minds in the world. Among those people Warren Buffett is the king. Very few have been able to replicate his success over an extended period of time. This speaks to his high level of intelligence and analytics ability. Is he the smartest guy on the planet? Well, even if he is not, he is not that far behind.    
  • Incredibly Aggressive:  You might view Warren Buffett as this grandfatherly character who is always smiling and is a nice person.  Surely he is, but he is a naturally born predator as well. Case in point, his $5 Billion investment in Goldman Sachs in the darkest days of 2008 financial crisis.  He has done the same thing throughout his career on multiple occasions. You have to be aggressive to do that.  
  • Consistency & Concentration:  Starting at a young age Warren Buffett never really deviated from his original investment strategy. He has always made Value Investing his bread and butter and has spent the last 75 years perfecting his skills. I believe sticking to what he knows and understands the best is what has made him a huge success.
  • Balls Of Steel:  If you have ever been in an investment business you know that at certain points you will be standing on a edge of a cliff looking down into the deep abyss. Just as night follows day, that is unavoidable.  Yet, it is the quality of staying calm while everyone else is freaking out is what separates great investors from everybody else.  Warren Buffett has proved on multiple occasions that he can stand on the brink and whistle without a care in the world. That takes major cojones when billions of dollars are at stake.
  • Great Manager & Motivator:  Delegation and letting his managers run his companies is what has made Warren Buffett so rich.  He is not interested in running day to day operations and he prides himself on finding top management talent, motivating them and letting them do the hard work.
  • Ruthless Shark:  A well known saying in the investment community that is incredibly difficult to follow. As Warren Buffett himself says “Be fearful when others are greedy and be greedy when others are fearful”.  Meaning, one should buy stocks when the blood is running on the streets (Ex: 2007-2009 collapse). Yet, very few investors can do that. Warren Buffett has done so consistently throughout his long career.

CONCLUSION:

While Warren Buffett seems like a friendly Mr. Rogers from a few doors down the road, he is not. He is a ruthless capitalist who loves making money and allocating capital. I do not believe the money itself play an important role in his life, but the process of making it is everything to him.  It is a score card of sorts that shows him how well he has done and in what areas he needs to improve.

Warren Buffett plays to win. It is no accident that he was named the most successful investor of the last century. Yes, investing provides his with a way to show off his intelligence, but it goes much deeper than that.  Warren Buffett has also redefined the game and has shown everyone that it is possible to take it easy and be nice to people while at the same time being one of the most coldblooded capitalist on the face of this earth.

So, what can we learn from Mr. Buffett to help us become Billionaires as well? Taking out factors that we cannot control, here is what you can replicate.  

  1. Do What You Love: In most cases you will not become filthy rich overnight. Most of us will have to build our fortunes over an extended period of time while working incredibly hard. The only way to do that is to find something that you love and stick to it.  As Warren Buffett says, you must love being in the office.
  2. Fall In Loves With The Money:  There is absolutely nothing wrong with loving money.  In fact, if you don’t love money, you will never attract enough of it into your life. Warren Buffett loves money, so why shouldn’t you?  
  3. Become Aggressive:  As we see with most of our Billionaires you must be aggressive and you must play to win in all of your business dealings. Get it through your head and start winning. 
  4. Consistency & Concentration:  A truly important and timeless quality to have. If you are to become an expert in your field you are bound to outperform your competition.  Plus, maintaining consistency helps you get through the hard time without sacrificing your integrity or the integrity of your business.
  5. Grow A Pair:  Listen, you need to grow a big pair if you want to play with the big boys. Simple as that.  
  6. Delegate:  Find great people and delegate as much work as you possibly can to them. This will allow you to concentrate on more important tasks that you love.
  7. Become Ruthless:  Not ruthless enough to take candy from a crying baby, but ruthless enough to make money from the misfortunes of others.  There is nothing wrong with buying assets when others are fearful or filing for bankruptcy. It’s their problem, not yours. Buy low, sell high. Get rich. 

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The Real Secret Behind Warren Buffett’s Success Is Finally Revealed Google

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Jim Cramer: Buy Tesla. Time To Short?

Jim Cramer is notoriously known for having bad timing. That’s what happens when one claims to know what every stock in the Universe will do. According to Mr. Cramer Tesla is the next Apple and the time to buy is NOW. 

Is It? 

Tesla is overvalued and highly speculative. If we take Jim Cramers analogy and Tesla is the next Apple, it should be selling at 2.7X revenue (AAPL valuation) or at about $44 a share. Not 15X Revenue or $237 a share. I know this analysis is too simplified and doesn’t take Tesla’s potential into consideration, but it does show you how out of sinc the valuation is.    

Futher, TSLA is testing its lows. If it breaks down, watch out below. There is a large gap around $140 that the stock must close. Finally, highly speculative and overvalued stocks like Tesla do very poorly in bear markets. As our mathematical and timing work indicates, the bear market of 2014-2017 is just around the corner. If you would like to know the exact date of its start and its internal composition, please Click Here. 

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Jim Cramer: Buy Tesla. Time To Short? Google

Elon Musk is maybe the next Steve Jobs. Elon Musk is maybe the next Henry Ford. Elon Musk is maybe the next… Maytag Repairman?

That’s how Goldman Sachs analyst Patrick Archambault is looking at the founder of Tesla. That isn’t to say he thinks Musk will be as lonely as the Maytag Repairman. Rather, Goldman believes Tesla may be viewed in the future as disruptive technology, revolutionary mass-produced vehicle, or transformative consumer product.

But, those are only three possibilities out of five, according to Goldman. The other two is the company will continue as they previously expected or else fail. Assigning weights to all five possibilities and projecting results for the next ten years in each scenario gets Goldman to value Tesla’s automotive business at $180 per share

In a March 18 note, Goldman’s Archambault writes:

“If Tesla’s auto business were to be truly disruptive (to the whole auto industry, not just luxury vehicles), then there would be considerable upside. Keying off the history of the iPhone, (adjusting for the replacement cycle) would imply 3.1mn units by 2025 and a PV [present value] of $442 per share. The Model-T trajectory implies 3.3mn units and $478 per share; and the volume implied by a basket of transformative durable goods (laundry appliances/dishwashers/refrigerators) gets us 1.8mn units and $329 per share. However, this is offset by our base case (broadly unchanged from our previous forecast) and a downside case where Tesla’s present value is lower and hence we arrive at probability weighted share price of $180 for the auto business alone.”

On top of that $180, Goldman also values the company’s battery business – future “gigafactory” and all – at $20. That leaves a price target for Tesla at $200 for the next six months.

Sure, $200 is up from the $170 target Goldman had before. But, that’s still $37 lower than where it traded. Goldman rates the stock as a neutral.

Jim Cramer calls Goldman’s report “hilarious” and believes only one scenario is most likely. “Tesla’s the newApple,” says Cramer on CNBC’s Squawk on The Street

While CNBC contributor Andrew Busch, editor and publisher of The Busch Update, thinks Tesla is an innovative company, he’s not quite sure it can be compared with Apple.

“I don’t know if they’re quite the Apple of the next generation,” says Busch. “Clearly, they don’t have the same platform and broad distribution.”

Tesla makes a very high-end automobile while Apple makes an assortment of consumer technology products. Instead, Busch is enthusiastic about Tesla’s ability to consistently beat earnings estimates. Last month, the company reported 2013 fourth-quarter earnings of $0.33 per share versus and Wall Street’s anticipated $0.21.

“That’s what you look for in a stock,” says Busch. “As long as they keep doing that – keep increasing their sales, keep making technological improvements and advances –keep buying them. And, until they stop that cycle – until they miss – then I wouldn’t sell the stock just yet.”

Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, believes the stock’s volatile technicals match the fundamentals for Tesla.

“The chart is very similar to the fundamental story, which is that it’s quite controversial at these levels,” says Ross. “It’s very easy to call the stock the next Apple or to call it a disrupter. But this is a stock that trades on potential and that potential can be your best friend or your worst enemy.”

After building a base of support since last autumn, the stock broke above resistance, according to Ross’ charts. Sure enough, that level was around the $200 per share. At the beginning of this month, Ross’ Tesla’s chart shows the stock in a flag formation, which is generally the prelude to bullish move. Yet Ross urges some caution.

“Flags have failed before,” says Ross “Given that phenomenal rise over the past few months, you have to [take] it with a grain of salt. I could see a test of that breakpoint around $200 a share. A break below $200 would be a clear sell signal.”

Ross thinks those who are inclined to buy can do so at current levels provided they do so in moderation.

“If you like the story, if you like the potential, if you think it’s the next Apple like Mr. Cramer,” says Ross, “you can buy the stock here. But, just adjust your position size accordingly. There’s a lot of risk but also a lot of reward. Keep the position small and just keep your expectations in check. This is about the future.”

As well, Busch thinks the Tesla’s stock will trade in range of 15% above and below the $200 per share level. With such large swings, Busch also doesn’t believe investors should invest a huge portion of their portfolio on the company.

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Millions Of Russians Ask To Be Put On Obama’s Sanction List

Here we go again. Idiot-In-Chief Obama just triggered the next stage of the “Ukrainian” conflict. Thus far, I have been 100% correct on all of the developments associated with Russia/Ukraine/West over the last 4 weeks. In my last post on the subject matter I have said, “Russia is done. It will walk away with Crimea and call it a day. The only thing that will change that is further sanctions against Russia”. While the first round of sanctions was laughable (just as the second one), the second round puts Putin in a position where he MUST respond.

And respond he will. Will Russia now go into east Ukraine, turn off gas or retaliate otherwise is yet to be seen. Based on what Putin said in his speech yesterday, it will be something big. I guarantee you that. And here is what drives me crazy….

Obama noted that the measures were being taken in the full knowledge that the move could be “disruptive to the global economy”.

That’s just exactly what we need. Expect Putin to retaliate shortly. Good job team Obama.

US President Barack Obama.(AFP Photo / Saul Loeb)

US President Barack Obama.(AFP Photo / Saul Loeb)

US puts sanctions on key sectors of Russian economy, top officials, businessmen

US President Barack Obama has announced a new executive order imposing further sanctions on key sectors of the Russian economy and top Russian officials and businessmen. The measures will impact Russian energy, mining, defense and engineering sectors.

“We’re imposing sanctions on more senior officials of the Russian government. In addition, we are today sanctioning a number of other individuals with substantial resources and influence who provide material support to the Russian leadership, as well as a bank that provides material support to these individuals,” Obama said.

The new list of sanctioned officials includes 20 names, according to the list published by the US Department of Treasury.

Aleksey Gromov, First Deputy Head of the Presidential Administration; Sergey Ivanov, Chief of Staff of the Presidential Executive Office; and Sergey Naryshkin, Speaker of the State Duma, the lower chamber of the Russian Parliament, are among those mentioned.

Prominent businessmen Arkady and Boris Rotenberg are also on the list – as well as the Russian Railways president, Vladimir Yakunin and businessman Gennady Timchenko, head of the Volga Group.

Bank Rossiya identified by the Treasury Department as the sanctioned entity will be “frozen out of the dollar,” Reuters reports quoting US officials. Bank Rossiya, headquartered in St. Petersburg, has some $10 billion in assets. Several senior government officials are known to use the bank, and Kovalchuk, who is its head, has also been sanctioned individually.

The new penalties mark the second round of economic sanctions the US has levied on Russia this week. Obama noted that the measures were being taken in the full knowledge that the move could be “disruptive to the global economy”.

The US president made the announcement just under two hours after the Russian Duma ratified the Treaty for the Accession of Crimea and city of Sevastopol to the Russian Federation.

  

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Warning: Real Estate Market Begins Its Decline

National Real Estate Propaganda Group (aka The National Association of Realtors) February report is beyond laughable.  Let’s take a look…

U.S. home resales dropped slightly in February to a 19 month-low as cold weather and a shortage of homes for sale continued to sideline potential buyers.

Damn, I forgot about that snow storm in California. In terms of shortage….. call Citi, Blackstone, Wells, Chase, Freddie, Fannie, etc… they should have at least a Million units of your inventory sitting on their balance sheet.  

Even though temperatures remained chilly in February, pinching sales, a modest improvement in inventory on the market indicates buyers are expected to jump in soon.

Sure, millions of buyers are sitting on the side line, waiting to jump in. Whatever makes you guys sleep better at night. 

If you want the truth, stop reading this BS and read my comprehensive Real Estate Report showing you exactly when, how & why our real estate market is about to crash……again. 

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Warning: Real Estate Market Begins Its Decline   Google

Existing Home Sales Edge Down to 19-Month Low in February

U.S. home resales dropped slightly in February to a 19 month-low as cold weather and a shortage of homes for sale continued to sideline potential buyers.

The National Association of Realtors said on Thursday home sales dropped 0.4 percent to an annual rate of 4.60 million units, the lowest level since July 2012, and in line with economists’ expectations. January’s sales pace was unrevised at 4.62 million.

Even though temperatures remained chilly in February, pinching sales, a modest improvement in inventory on the market indicates buyers are expected to jump in soon.

“The weather surely cannot get any worse,” NAR economist Lawrence Yun told reporters. “The new supply will help tame price growth.”

The median existing home price rose 9.1 percent in February to $189,000 from the same month in 2013.

Mortgage rates have risen almost a full percentage point in the past year and the increase in house prices has far outpaced income growth, making home-buying less affordable.

In addition, there has been a shortage of homes for sale on the market. Home resales have declined in six of the last seven months, having peaked in July.

The number of previously-owned homes available for sale at the end of February represented a 5.1 months’ supply, still tepid but up from 4.9 months’ worth in January. A healthy market has about a six-to-seven month supply.

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GOLD. The Only Asset That Will Outperform In The Upcoming Bear Market?

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Gold and gold related assets sold off over the last couple of days. Coming down to close a fairly large gap that was opened up on March 12th. Just as it should have. Remember, all financial markets and individual stocks tend to close their gaps. Sometimes it takes just a few days and sometimes decades. Yet, rest assured, the market will close its gaps. Which indicates a short-term bounce for gold in the near future to re-test it’s March 14th top. 

Long-term, gold is very well positioned for a multi year rally. I base this conclusion on my timing and mathematical work and its application to the equity markets. Our mathematical work indicates a fairly strong bear market in the US equity markets between 2014-2017. When the bear market kicks in and the US Economy slips back into a recession, the FED will open up the flood gates…..once again. They will have no other choice. 

Since Gold does fairly well in such an environment, we anticipate Gold to break out above 2013 top and keep going for at least a few years as investors seek safety and an inflation hedge. Further, we believe the bull market in gold will resume itself as soon as the bear in equity markets starts. That should happen relatively soon.  Today’s technical setup confirms this notion as highly probable. If you would like to know exactly when the bear market in equities will start (to the day), please Click Here 

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GOLD. The Only Asset That Will Outperform In The Upcoming Bear Market? Google

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Attention Everyone: John Kerry Won The Cold War

A few days after Vladimir Putin wiped the floor with the warmongers in Washington, John Kerry wants to make sure everyone remembers “America Won The Cold War, Get Over It”. Unfortunately for us, “My co&# is bigger than your #9ck” tirade between Russian and US politicians is not yet over. Can’t we all get together and drink Coca Cola?

On a more serious note, this is the type of behavior that will lead to an eventual war with Russia. Over the last two weeks I published an incredibly important report, clearly outlining when, how & why the US will start a military conflict with a coalition of Russia/China. To see the report CLICK HERE. It is this type of stupidity and war drum beating that will lead to an eventual destruction of this beautiful country. Great job Obama and Kerry.  

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Attention Everyone: John Kerry Won The Cold War Google

John Kerry to Russia: You Lost the Cold War, Get Over it

 

Secretary of State John Kerry had harsh words today for Vladimir Putin, saying he is surprised and disappointed in a speech the Russian president gave about the country’s right to take over Crimea from Ukraine.

“It really just didn’t jibe with reality or with what’s happening on the ground,” Kerry said, speaking to a group of university students at the State Department. “The president may have his version of history, but I believe that he and Russia, for what they have done, are on the wrong side of history.”

Kerry refused to give any details about what the United States will do if Russia goes further toward annexing the Crimean peninsula but said such an act would be as “egregious as any step that I can think of that could be taken by a country in today’s world, particularly by a country like Russia where so much is at stake.”

He suggested that the United States didn’t believe the Kremlin would move beyond Crimea given Putin’s speech today, which focused on the historical ties Russia and the Ukraine have. Kerry acknowledged those ties but said they were no excuse for the invasion.

“Russia has an enormous historical connection to Ukraine,” Kerry said. “We know this, but that doesn’t legitimize just taking what you want because you want it or because you’re angry about the end of the Cold War or the end of the Soviet Union.”

 

 

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Russian Billionaires Buying Russian Stocks. Should You?

z22Russian stock market has been body slammed over the last few weeks due to Russia’s conflict with Ukraine/West. Losing 25% of its value in just 20 trading days. Yet, over the last 4 trading days the market is up 12%. Russian billionaires are buying hand over fist (see the article below), the valuations are very low and the conflict is likely to be over. Is it time to buy?  

Not yet. I will admit that the Russia stock market is substantially undervalued (unlike it’s American counterpart). The conflict in Ukraine is likely to be over and no real economic sanctions will fly against Russia. Yet, here is what’s stopping me.

  • The RTS Index has been in a technical downtrend since 2011. While we might get a technical bounce from today’s lows it will take a lot more for the bear market to reverse itself. 
  • The RTS collapsed 75% during the financial crisis and the bear market of 2007-09. Our mathematical and timing work indicates that the US will have a severe bear market between 2014-2017. If so, Russian market is likely to continue with its downtrend. 

As such, it is a little too early to invest in the Russian market at this stage. Further downside is highly probable. However, if the market is able to reverse it’s bearing trend, it might make sense to reconsider. Fun fact, the Russian market is still up 2,600% from 1998 crisis bottom. 

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Russian Billionaires Buying Russian Stocks. Should You?  Google

 Russia Billionaires Buying Stock as BofA Says Bottom Near

 Two of Russia’s top billionaires are taking advantage of the bear-market collapse to buy back shares on the cheap.

Vagit Alekperov, chief executive officer at oil producer OAO Lukoil and Russia’s 11th-wealthiest man, has stepped up his purchases of the stock, buying $147 million in the first quarter, according to data compiled by Bloomberg. Mail.ru Group Ltd. (MAIL), the Internet company controlled by Alisher Usmanov, Russia’s richest man, said yesterday it plans to buy $45 million of its own stock.

Lukoil and Mail.ru have each fallen more than 14 percent this year inLondon share trading as President Vladimir Putin’s bid to prise the Crimea peninsula from Ukraine spurred concern Russia’s economic slump will deepen. TheMicex (INDEXCF) Index, the benchmark in Moscow, rebounded 8 percent in the last two days after sliding into a bear market last week. Bank of America Corp. said yesterday that stocks “could be nearing the trough” of the rout.

“Buybacks by Russian companies will be substantial because valuations are extremely attractive and the companies generate a lot of cash,” Mattias Westman, the chief executive officer of London-based Prosperity Capital Management Ltd., which manages about $4 billion in Russia and other former Soviet countries, said by phone. “The market is rallying as it seems Russia has no plans to split up Ukraine. There are still some risks, although further sanctions against Russia will most likely be cosmetic.”

Photographer: Simon Dawson/Bloomberg

OAO Lukoil Chief Executive Officer Vagit Alekperov.

Novatek, Rosneft

Mounting concern that the U.S. and Europe will impose economic sanctions on Russia following its annexation of Ukraine’s Crimea peninsula has sent valuations for the Micex to the lowest since May 2012. Mail.ru plunged 18 percent this year while Lukoil declined 15 percent. Bank of America Corp. said yesterday that “the market could be nearing the trough of the selloff.”

OAO Novatek bought 2.5 million shares between March 11 and March 14, according to a March 17 statement. The company resumed its share buyback program as the “current share price significantly diverges from the intrinsic value,” Chief Executive Officer Leonid Mikhelson said.

OAO Rosneft’s CEO Igor Sechin and top managers bought the oil producer’s shares after the drop, the company’s press service said by phone. Rosneft slumped 3.9 percent last week.

Cheapest Valuations

The Bloomberg Russia-U.S. Equity index of the most-traded Russian shares in the U.S. rallied the most in two weeks, increasing 4.1 percent to 83.44 in New York yesterday. Yandex NV (YNDX), Russia’s biggest Internet company, jumped 6.7 percent to $32.03 and trimmed this year’s decline to 26 percent. The Market Vectors Russia ETF (RSX), the biggest U.S. exchange-traded fund that holds Russian shares, surged 4.7 percent to $23.51, the biggest gain since July.

Photographer: Simon Dawson/Bloomberg

USM Holdings Ltd. Owner Alisher Usmanov.

The Micex decreased 0.7 percent to 1,326.32 by 5:42 p.m. in Moscow, taking its drop this year to 12 percent. The gauge is the cheapest among 21 developing countries monitored by Bloomberg, trading at 4.8 times estimated earnings. That compares with a valuation of 14 for India’s S&P BSE Sensex Index and of 9.1 for Brazil’s Ibovespa.

Mail.ru rallied 11 percent to $36.70 in London yesterday, gaining the most since August 2011, while Lukoil added 3.5 percent to $53.30. Mail.ru traded at 19.7 times estimated earningsyesterday, rebounding from an eight-month low of 17.5 on March 14. Lukoil traded at a multiple of 4.1, up from a 20-month low of 3.8 reached on March 3.

Military Phase

Usmanov, with a net worth of $17.5 billion, ranks 42nd worldwide on the Bloomberg Billionaires Index. Alekperov, with $10.3 billion, ranks 113th globally, according to the gauge.

Oleg Tinkov, founder of consumer bank TCS Group Holding Plc., criticized fund managers in January for acting as “speculators” after his company’s stock plunged 28 percent in the month.

Ukraine’s government said its conflict with Russia has entered a military phase as clashes in the breakaway Crimea region intensified, killing at least one Ukrainian serviceman. Western leaders condemned Putin’s push to annex Crimea and promised further sanctions as early as this week.

“We don’t know what the responses are going to be on the political side, and that creates a lot of uncertainty,” Bryan Carter, portfolio manager at Acadian Asset Management, said in an interview at Bloomberg headquarters in New York yesterday.

Tensions are increasing after Putin signed a treaty annexing Crimea into the Russian Federation yesterday. The Black Sea peninsula in a disputed March 16 referendum voted to leave Ukraine and join Russia.

‘Bottom Fishing’

“There is bottom-fishing going on,” Vladimir Osakovskiy, chief economist for Russia and theCommonwealth of Independent States at Bank of America Corp. in Moscow, said by phone yesterday. “The outlook for the market will depend on the type and intensity of further sanctions. If we are talking real economic sanctions, those that would restrict trade and cut access for Russian companies to international capital markets, then we would see a new bottom. The risk is still there.”

Mail.ru agreed to buy 12 percent of Russia’s biggest social network VKontakte, raising its stake to 52 percent, and started to buy $45 million of its own stock in an employee incentive program, the company said in statements yesterday.

“The volatility in the markets caused by political events allowed the employee benefit trust an opportunity to buy stock at what we consider a good valuation,” Mail.ru’s Chief Financial Officer Matthew Hammond wrote in an e-mail yesterday from Dubai. The program “looks to buy GDRs in the market when we consider it a good price,” he said.

Lukoil Purchases

Alekperov’s purchases of Lukoil stocks in the current quarter compares with a total of $93 million in the same period last year, data compiled by Bloomberg show.

Lukoil’s press service and investment relations department were unable to comment on whether Alekperov plans to further increase his stake in the company when contacted by Bloomberg News by phone and e-mail after normal business hours in Moscow.

The RTS Volatility Index, which measures expected swings in the index futures, decreased 3.1 percent to 45.62 today and RTS index futures rose 0.3 percent to 113,390 in U.S. hours.

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Why The FED Will NOT Be Raising Rates Next Year

Janet Yellen spooked the markets on Wednesday by indicating that the FED might start tightening sooner and faster than previously anticipated. Sending the DOW down 200 points in a matter of minutes. Yet, let me ask you this. Will the FED be tightening if the market finds itself below 14K on the DOW and with economic data showing the country is in a recession (or quickly approaching one)? 

I don’t think so. And that is exactly what our timing and mathematical work indicates. If anything, the FED will be trying to figure out a way to pump even more money into out economic system in order to try and re-inflate the markets. Will her comments this week be enough to set the market on a bearish path? Perhaps. If you would like to know exactly when the Bear Market of 2014-2017 starts and its exact internal structure, please CLICK HERE.  

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Why The FED Will NOT Be Raising Rates Next Year  Google

Fed may raise rates as soon as next spring, Yellen suggests

WASHINGTON (Reuters) – The U.S. Federal Reserve will probably end its massive bond-buying program this fall, and could start raising interest rates around six months later, Fed Chair Janet Yellen said on Wednesday, in a comment which sent stocks and bonds tumbling.

Yellen’s remarks at her first news conference as the head of the central bank pointed to a more aggressive path toward higher interest rates than many had anticipated, and bets in financial markets shifted accordingly.

The comments came after a two-day meeting in which Fed officials made another reduction in their bond-buying stimulus and decided to jettison a set of guideposts they were using to help the public anticipate when they would finally raise rates.

The Fed said the change in its rate hike guidance did not mark a shift in its intentions and that it would wait a “considerable time” after shuttering its asset purchase program before pushing borrowing costs higher.

Yellen, who had fielded numerous questions without a hitch, hesitated when asked what the Fed meant by “considerable.”

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Federal Reserve Chair Janet Yellen answers a question …

Federal Reserve Chair Janet Yellen answers a question at a news conference following the March 2014  …

“I — I, you know, this is the kind of term it’s hard to define, but, you know, it probably means something on the order of around six months or that type of thing. But, you know, it depends — what the statement is saying is it depends what conditions are like.”

Several analysts wondered whether her answer was an unintended slip, given the deliberately vague language of the Fed’s statement.

Either way, the reaction in financial markets was swift and sharp. Prices for U.S. stocks and government bonds added to earlier losses triggered by fresh Fed forecasts that showed policymakers are inclined to raise rates a bit more aggressively than they had been just a few months ago. The U.S. dollar rose.

“The forecast change could be interpreted as a relatively hawkish shift … and as such the general market reaction seems well-founded,” said JPMorgan economist Michael Feroli.

Futures traders moved to price in a first interest rate hike as soon as April 2015. Previously, it was July.

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Federal Reserve Chair Janet Yellen talks at a news …

Federal Reserve Chair Janet Yellen talks at a news conference following the March 2014 Federal Open  …

Most top Wall Street economists, however, continued to see the first rate hike in the second half of 2016, according to a Reuters poll.

MIXED MESSAGES

Yellen sought to use her news conference to emphasize that rates would stay low for awhile and rise only gradually. She also said they could end up staying lower than normal “for some time” even after the jobless rate drops to a healthy level.

The Fed would look not only at how close inflation and unemployment are to its goals, but how fast, or slowly, those measures are approaching those goals, she said.

At 6.7 percent, the unemployment is well above the 5.2 percent to 5.6 percent range Fed officials see as in keeping with full employment. The central bank’s favored inflation gauge is barely more than half of its 2.0 percent target.

View gallery

Federal Reserve Chair Janet Yellen sits down before …

Federal Reserve Chair Janet Yellen sits down before she holds a news conference following the March  …

The Fed has held interest rates near zero since late 2008 and has pumped more than $3 trillion into the economy with its bond purchases to try to foster a stronger recovery.

Of the Fed’s 16 policymakers, only one believes it will be appropriate to raise rates this year; 13 expect a first rate hike next year, and two others see the first rate hike coming in 2016, according to the new forecasts.

But once rate hikes start, Fed officials see slightly sharper increases than they did in December, when they last issued forecasts. They now see rates ending 2016 at 2.25 percent, a half percentage point above their December projections. ID:nL2N0MG1AP]

The unease in markets “might be a sign that people think Yellen will tighten sooner rather than later,” said Wayne Kaufman, chief market analyst at Rockwell Securities in New York.

MEASURED WIND DOWN

The central bank proceeded with its well-telegraphed reductions to its massive bond-buying stimulus, announcing it would cut its monthly purchases of U.S. Treasuries and mortgage-backed securities to $55 billion from $65 billion.

The decision to further scale back its stimulus keeps the Fed on track for the measured wind down laid out by Yellen’s predecessor, Ben Bernanke. The Fed repeated that it plans to continue trimming the purchases in “measured steps” as long as labor conditions continue to improve and inflation shows signs of rising back toward the Fed’s 2.0 percent goal.

The Fed’s assessment of the U.S. economy chalked up recent weakness partly to adverse weather.

It had said since December 2012 that it would not consider raising short-term rates until the jobless rate fell to at least 6.5 percent, as long as inflation looked set to remain contained.

But the unemployment rate has fallen faster than anticipated, and officials dropped the guidance, saying they would look at a range of economic indicators to judge the economy’s readiness for higher rates.

Minneapolis Fed President Narayana Kocherlakota dissented, saying that getting rid of the numerical guidance could hurt the credibility of the Fed’s commitment to return inflation to 2.0 percent.

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The Secret Ingredient Needed For This Bull Market To Continue

Acceptance. 

That’s right, your acceptance. At least according to Josh Brown from Ritholtz Wealth Management. Just accept that this Bull Market is getting started, the CapEx cycle is about to kick in and we will surely see this market take off to the moon.  Screw China, credit bubble, the FED, speculation, overvaluation, unemployment, cycles, timing, technicals and everything else I talk about on this blog. Just accept and welcome this bull market into your soul. That’s all you need brother. Praise the Lord.  

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The Secret Ingredient Needed For This Bull Market To Continue Google

 

Bull market needs one thing to keep going: Josh Brown

After reaching a major milestone last week, stocks have been a mixed bag; U.S. markets have largely shrugged off escalating tensions between Western nations and Russia this week over a possible annexation of Ukraine’s Crimea region. Early Wednesday afternoon major indexes were flat as investors awaited comments from Fed Chair Janet Yellen.

Many investors are beginning to wonder if the five-year-old bull market has hit its peak.

Josh Brown, CEO of Ritholtz Wealth Management and author of “The Reformed Broker” blog, says we’re in the “acceptance phase” of this bull market — a stage nestled between enthusiasm and greed. If the good times are to continue for investors, then capital spending has to increase.

While the capEx cycle remains elusive — “there’s no evidence of it yet” Brown says — a new survey of CEOs by the Business Roundtable shows that almost 50% of the CEOs surveyed expect higher capital spending in the next six months, up from 39% three months ago.

“If you’re bullish now the bull case can’t be more multiple expansion as was the case last year,” Brown argues in the video above. “The cap ex cycle is long overdue…it’s been restrained for five years.”

If Brown is right, you may want to follow his investing lead: he’s overweight industrials, financials, tech and energy — all sectors that benefit from additional cap ex spending. Banks especially are ripe for a comeback.

“They’re the cheapest sector in the market…historically very low priced to earnings,” he notes. “If rates go higher then banks should do well. A lot of people still have distrust in the financial system which works in your favor if you’re a long-term investor.”