timing is everything

August 10, 2015

Why You Should NOT Follow Warren Buffett’s Investment Advice

Daily Chart August 10 2015

8/10/2015 – A positive day with the Dow Jones up 241 points (+1.39%) and the Nasdaq up 58 points (+1.16%)

Warren Buffett believes you should be fully invested. WARREN BUFFETT: Stocks are going ‘a lot higher’

Buffett reiterated that he was a long-term investor, saying he expected prices to be “a lot higher” 10 years or 20 years from now.

No one is questioning Mr. Buffett’s investment acumen here and I would have to agree with his analysis. My own mathematical and timing work shows that the stock market will be much higher 10 years from now. That is not the question. The question is, are you able and/or are you willing to take a 30-50% haircut over the next 2-3 years?

If your answer is NO, understand the following two points.

Mr. Buffett and Berkshire Hathaway are “The Stock Market”. Meaning, even if he was inclined to get out, he wouldn’t be able to. As a result, there is no point in being bearish or telling others to get out. Instead, consider this WSJ ‘Buffett Indicator’ Flashes Warning for Stocks
The difference between Mr. Buffett and most investors is so vast that people should be very careful when listening to a simple “buy and hold” investment advice, even from the man himself. As far as I know, no one has been able to fully replicate his success.

That is to say, Mr. Buffett’s advice is right on the money, but only if you are willing to take a massive beating over the next 2-3 years.

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 10th, 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 You Should NOT Follow Warren Buffett’s Investment Advice Google

June 11, 2015

Was Warren Buffett Just Lucky?

warren-buffett-investwithalex

That is the question this article attempts to explore: Stockman: ‘Warren Buffett Economy’ Will Meet Day of Reckoning

During the 27 years after Alan Greenspan became Federal Reserve chairman in August 1987, the balance sheet of the central bank exploded from $200 billion to $4.5 trillion. Call it 23 times. Let’s see what else happened over that 27-year span. Well, according to Forbes, Warren Buffett’s net worth was $2.1 billion back in 1987 and it is now $73 billion. Call that 35 times. During those same years, the value of non-financial corporate equities rose from $2.6 trillion to $36.6 trillion. That’s on the hefty side, too — about 14 times.

So, it appears that Mr. Buffett was one of the primary beneficiary of the FED induced bubble. Starting with Greenspan in 1987. And while he is still a great investor, doubling the return of the above mentioned bubble, it definitely helps when the entire financial system expands just about as much as one’s net worth.

Here is another thing most people don’t realize. Buffett’s timing throughout his life was almost perfect. He started his hedge fund in 1956, just 6 years into a 17 year bull cycle. Ending it right at the top in 1966. The same goes for the above.

In other words, if you wish to replicate Mr. Buffett’s success, you will need the following: Luck, smarts and perfect timings.

Was Warren Buffett Just Lucky? Google

May 4, 2015May 4, 2015

Has Warren Buffett Lost His “Value” Mind?

warren-buffett-investwithalex

Well, there you have it. Warren Buffett believes the stock market is inexpensive at today’s valuation levels. Straight from the horse’s mouth.

“If these interest rates were to continue for 10 years, stocks would be extremely cheap now,” the chairman and CEO of Berkshire Hathaway. If rates normalize, stocks would be on the high side on a valuation basis, he said. “They’ve fooled me so far. So I’ve been wrong,” he said. “I would have thought by now you would have seen much higher rates than we have now, which is essentially nothing.”

Fair enough. Well, if we are to take this one step further and say that interest rates are zero or negative (which they almost are – inflation adjusted), we can then argue that the stock market valuation could be and should be INFINITE.

I would argue that Buffett’s mentors Graham & Dodd would not for a second believe in what Mr. Buffett is trying to preach. Today’s unusually low interest rates should not be used for valuation purposes. Investors should realize that we are at the bottom of a 35 year bear market in yields and that they will head higher as soon as the secondary bottom on a 10-Year Note is set over the next 2 years, at around 1.4-1.5%.

How fast will they surge thereafter? Once the bottom is in, any bull market in yields can be sharp. So much so that I wouldn’t be surprised to see yields at around 6% by 2020. And if that is the case, today’s valuation levels are not only high, they are in a bubble level territory.

Has Warren Buffett Lost His “Value” Mind Google

February 5, 2015

Buffett On Interest Rates And How He Got Started

Warren Buffett believes raising interest rates in today’s environment would be a really bad idea. So do I.

If Europe’s got them at zero, and you get higher rates in the United States, that would exacerbate a problem with the stronger dollar and funds flow.

With that in mind, the FED might have to do it anyway. They have to re-load their toolkit, whatever the cost. We have discussed this complex backdrop and why the FED finds itself between a rock and a hard place in our weekly podcast….click here to listen

Finally, a fascinating look at how Mr. Buffett got started and how he grew a $10,000 investment into $170+ Million. It appears all you need is patience and time. Well, that and a brain. Click Here To Watch.