Buffett “Weighing Machine Metric”: Time to Buy Stocks

A metric that Warren Buffett uses to assess the market’s valuation is now showing that it is a good time to buy stocks, Carol Loomis and Doris Burke write for Fortune. According to Loomis and Burke, Buffett believes that over the long term, there should be a “rational relationship between the total market value of U.S. stocks and the output of the U.S. economy (gross national product).” If the total stock market value as a percentage of GNP falls to the 70 to 80 percent range, Buffett has said, buying stocks is likely to work out very well for investors. […]

What Does It Mean to be a Value Investor?

In a piece written for Forbes.com’s “Gurus’ Guide to 2009“, John Heins and Whitney Tilson do a great job in examining just what makes an investor a value investor. While value investors come in all shapes and sizes — large-cap, small-cap, activist, non-activist, U.S.-focused, foreign-focused — Heins and Tilson list 12 similarities they share. A sampling: They focus on intrinsic company value and buy only when there is a substantial margin of safety, rather than trying to guess where the herd will go next. They understand and profit from reversion to the mean rather than projecting the recent past indefinitely […]

Buffett: Fear Is Winning — But It Won’t Win In The End

In a wide-ranging interview with Dateline NBC’s Tom Brokaw, Warren Buffett says that fear is currently winning out over hope in the U.S. economy — but that he wouldn’t bet against the country’s ability to recover from this crisis and go on to new heights. “Right now fear is [winning],” Buffett said. “It really is an economic Pearl Harbor. … The country is facing something it hasn’t faced since World War II. And [people] are fearful about it. And they don’t know quite what to do about it. And … temporarily it looks like we’re losing. … Interestingly enough, we […]

Buffett’s ’08 Bargain Binge: $20 billion +

The final tally from Warren Buffett’s 2008 buying spree: $20 billion-plus. “While most investors panicked or were forced to sell, [Buffett] put more than $20 billion to work last year, positioning his insurance-focused conglomerate to profit if the economy and markets recover in coming years,” writes Alistair Barr of MarketWatch. Buffett’s firm had about $44 billion in cash entering ’08, according to Barr, who notes that Buffett had had trouble finding attractively valued investments in recent years. That changed last year, however. Among his big buys in ’08: purchase of 60% of Marmon Holdings for $4.5 billion; a $3 billion […]

Buffett’s “Timeless” Predictions

CNBC.com outlines eight timeless predictions by Warren Buffett on its Warren Buffett Watch blog. While CNBC labels these as predictions, we tend to think of these more like lessons that Buffett offers up to long-term stock market investors. After a year like 2008, Buffett’s lessons provide some perspective on dealing with recessions, bear markets and investor psychology. 1. Recessions can’t be avoided forever. 2. We’ll survive current and future recessions just as we’ve survived past problems. 3. Recessions will create opportunities. 4. All stocks won’t be cheap. 5. The crowd will make mistakes. 6. Investors will mistakenly think falling stock […]