Advertisements

Warren Buffett may be souring on stocks; The Oracle of Omaha still likes the market — but he’s hardly pounding the table

Warren Buffett may be souring on stocks

By Stephen Gandel, senior editor March 1, 2013: 4:03 PM ET

The Oracle of Omaha still likes the market — but he’s hardly pounding the table.

chart-stocks-gdp2

FORTUNE — In his annual letter to Berkshire Hathaway (BRKA) shareholders, released Friday afternoon, Buffett says he still believes U.S. stocks will “do well.” He notes that he made his first stock purchase during the bleakest part of World War II, so even if things look not so great right now, you should end up doing fine as well. But compare that to last year’s letter. Buffett devoted three and a half pages – over 1,900 words – to a detailed explanation of why he thought stocks were a much better investment than say gold or bonds. (See Warren Buffett: Why stocks beat gold and bonds.) He also said he was bullish on U.S. housing. This time around he devotes four paragraphs to the case for stocks. And even in that small space, Buffett says that investors should expect periodic setbacks, and he includes two statistics that could signal one may be coming up sooner rather than later. Buffett points out that the Dow Jones Industrial Average rose “a staggering” 17,320% in the 20th century — despite “four costly wars, a Great Depression and numerous recessions.” Here’s the problem: During nearly the same period, Buffett says GDP per capita rose much less about 500%. Buffett has used this comparison of the economy to stock market valuations before. He featured the metric in a story he wrote for Fortune back in 2001. (See Warren Buffett on the stock market) By that time, stocks had already fallen a bit from their dot-com infused highs. But they still weren’t a buy, Buffett said at the time. Despite their fall, stocks collectively were trading at a value of 133% of the gross national product of the U.S. (Buffett used GNP because it goes back 80 years, but for recent history using GDP works just fine.)

So where are stocks trading today? You guessed it. 133% of GDP. The metric hit a high of 190% back in 1999. So we are a little ways from panic territory, but that doesn’t mean the market is a safe place to be right now. Far from it. Back in 2001, Buffett said investors who buy when the relationship of stock values to the economy falls in the 70% to 80% range should do well. That means stocks would have to plummet 43% before we are back in Buffett buy territory. Even so, Buffett doesn’t appear to be worried. In his own portfolio, Buffett in the past year has added to his stakes in Wal-Mart (WMT) and Wells Fargo (WFC), two companies that are likely to go up only if the economy and the rest of the market does as well. It’s hard to tell if that’s because Buffett believes stocks are cheap, or just because he believes the other investing options are worse. “The risks of being out of the [stock market] game are huge compared to the risks of being in it,” writes Buffett in the letter. “Every tomorrow has been uncertain.”

Advertisements

It’s a Dog’s Life for Singapore’s Pampered Pets; “A lot of people wouldn’t bat an eyelid on spending several thousand dollars on a dog. The litmus test is whether the dog stays with them for the rest of its life or not,”

It’s a Dog’s Life for Singapore’s Pampered Pets
March 01, 2013

The guests lean over the side of the boat to catch the morning breeze as their catamaran eases off from a jetty in Singapore. A typical cruise, except for the fact that the passengers are dogs. “Actually, this is their third cruise,” said Andy Pe, 43, the doting owner of two Black Labrador Retrievers, a Yellow Labrador, a Golden Retriever and two mongrels. “They enjoy the sea breeze and water so much.” From boat cruises and spas to their own obituary section in the leading newspaper, pets are pampered in a big way in Singapore, a city-state with one of Asia’s highest standards of living. Read more of this post

The Tyranny of the Queen Bee: Women who reached positions of power were supposed to be mentors to those who followed, writes Peggy Drexler—but something is amiss in the professional sisterhood

March 1, 2013, 3:17 p.m. ET

The Tyranny of the Queen Bee

Women who reached positions of power were supposed to be mentors to those who followed—but something is amiss in the professional sisterhood.

By PEGGY DREXLER Read more of this post

In Sweden, TV Tax Comes to Smartphones

March 1, 2013, 3:12 p.m. ET

In Sweden, TV Tax Comes to Smartphones

By GUSTAV SANDSTROM

Sweden’s public broadcaster, feeling pressure as streaming heavyweights like NetflixNFLX +0.69% and HBO gain ground with their newly-founded Nordic services, is taking the nation’s television license fees to a new level by asking smartphone and tablet users to pay up.

License fees have been in place for years as state-backed broadcasters look to fund commercial-free programming, including the BBC. In Sweden’s case, anyone owning a television is forced to pay a SEK173 ($27) tab per month for Sveriges Television, Sveriges Radio and educational broadcasting known as Utbildningsradion. That fee hardly looks like a bargain compared with the SEK79 ($12) monthly fee that Netflix Inc. and Time Warner Inc.’s TWX +0.85% HBO each charge subscribers in Sweden. Read more of this post

Dear Apple, Amazon, Google: Here’s Why Chinese Consumers Hate Your Ecosystems; Be formless, shapeless, like water. (And be flexible towards your ecosystem users)

Dear Apple, Amazon, Google: Here’s Why Chinese Consumers Hate Your Ecosystems

Mar 1, 2013 at 14:10 PM by Steven Millward, in AsiaMobileOpinion

Chinese consumers love your gadgets – that’s great news. But the bad news for Apple, Amazon, Google, and many more companies is that Chinese netizens hate your ecosystems. They really don’t want to be trapped in your walled garden. In an age of platforms and extended web services, that’s a huge monetization problem for tech companies entering the world’s biggest market.

Android, without the Google bits

This aversion to tech ecosystems in China is seen most starkly with Google’s mobile OS, Android. An estimated 189 million smartphones were sold in China in 2012, and as many as 86 percent of those were Android devices. But that huge user-base hasn’t translated into popularity for Google’s other apps and services. Read more of this post

How State-owned Shipper Sailed into Stormy Seas; Analysts blame a shortsighted strategy, a bad bet on a financial derivative and poor management for COSCO Holdings’ woes

03.01.2013 12:23

How State-owned Shipper Sailed into Stormy Seas

Analysts blame a shortsighted strategy, a bad bet on a financial derivative and poor management for COSCO Holdings’ woes

By staff reporters Liu Ran and Wu Jing

(Beijing) – One of the country’s most prominent liner shipping operators, China COSCO Holdings Co. Ltd., is struggling to avoid being kicked out of the Shanghai Stock Exchange five years after its debut. It lost 6.5 billion yuan in the first three quarters of 2012 after a 10.4 billion yuan loss the previous year. Analysts expect it to post a loss of under 10 billion yuan for all of 2012. If it is in the red again in 2013, it will be forced to temporarily suspend trading until a profit can be turned. If losses continue for a fourth straight year, it will be delisted. However, the chances it can turn the tide this year seem to be long. Analysts say management is more incompetent than it cares to admit. Problems have arisen because of strategic miscalculations and bungled investments with hedging tools. Read more of this post

Chinese companies are struggling to translate their economic might into a worldwide reputation, according to a study released by Fortune magazine

Chinese firms still short of ‘global admiration’: Poll

Updated: 2013-03-02 02:42

By HE WEI ( China Daily)

Chinese companies are struggling to translate their economic might into a worldwide reputation,

according to a study released by Fortune magazine. Not a single Chinese company was ranked in the top 50 in its annual

“World’s Most Admired Companies List” for 2013, widely considered among the most definitive report cards on global corporate reputation.

Read more of this post

%d bloggers like this: