Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
AI Tech Stock PORTFOLIO NAME OF THE GAME - 29th June 22
Rebounding Crude Oil Gets Far Away from the Bearish Side - 29th June 22
UK House Prices - Lets Get Jiggy With UK INTEREST RATES - 28th June 22
GOLD STOCKS ARE WORSE THAN GOLD - 28th June 22
This “Bizarre” Chart is Wrecking the Stock Market - 28th June 22
Recession Question Answered - 28th June 22
Technical Analysis: Why You Should Expect a Popularity Surge - 28th June 22
Have US Bonds Bottomed? - 27th June 22
Gold Junior Miners: A Bearish Push Is Coming to Move Them Lower - 27th June 22
Stock Market Watching Out - 27th June 22
The NEXT BIG EMPIRE WILL BE..... CANZUK - 25th June 22
Who (or What) Is Really in Charge of Bitcoin's Price Swings? - 25th June 22
Crude Oil Price Forecast - Trend Breaks Downward – Rejecting The $120 Level - 25th June 22
Everyone and their Grandma is Expecting a Big Stocks Bear Market Rally - 23rd June 22
The Fed’s Hawkish Bite Left Its Mark on the S&P 500 Stocks - 23rd June 22
No Dodging the Stock Market Bullet - 23rd June 22
How To Set Up A Business To Better Manage In The Free Market - 23rd June 22
Why Are Precious Metals Considered A Good Investment? Find Out Here - 23rd June 22
UK House Prices and the Inflation Mega-trend - 22nd June 22
Sportsbook Betting Reviews: How to Choose a Sportsbook- 22nd June 22
Looking to buy Cannabis Stocks? - 22nd June 22
UK House Prices Momentum Forecast - 21st June 22
The Fed is Incompetent - Beware the Dancing Market Puppet - 21st June 22
US Economy Headed for a Hard Landing - 21st June 22
How to Invest in EU - New Opportunities Uncovered - 21st June 22
How To Protect Your Assets During Inflation - 21st June 22
AI Tech Stocks Current State, Is AMAZON a Dying Tech Giant? - 20th June 22
Gold/Gold miners fundamental checkup - 20th June 22
Personal Finance Tips: How To Get Out Of A Tough Financial Situation - 20th June 22
UK House Prices Relative to GDP Growth - 19th June 22
Will Global Markets Be Pushed Deeper Into Crisis Event By The US Fed? - 19th June 22
Useful Things You Need To Know About Tweezer Top Candlestick Pattern - 19th June 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Has Warren Buffett Nailed Another Stock Market Top?

Stock-Markets / Stock Markets 2013 Sep 21, 2013 - 11:19 AM GMT

By: Sy_Harding

Stock-Markets

I know. I know. Warren Buffett is not a market-timer, has no idea what the market will be doing this year, or next, or at any specific time in the future. Or so he says, and the media seems to accept it as fact.

So we probably shouldn’t pay attention to what he is doing and saying now.

However, in spite of what he says, Buffett has a remarkable track record of accurately calling the serious market tops and bottoms.


That record began in 1956, when he launched Buffett Partnership Ltd., a limited partnership investment company, similar in make-up to the hedge-funds of today. He managed that fund with major success, with performance that would have turned an investor’s $10,000 in 1957 into $300,000 by 1969.

He then pulled off one of the most exquisite market-timing moves of all time.

After making those huge gains in the 1960’s bull market, and while investors were still piling into the stock market with excitement, Buffett liquidated his partnership fund and returned their significantly elevated assets to his investors, telling them they’d probably be better off in government bonds for the next several years.

And indeed, the horrible 1970’s decade began almost immediately, with the Dow losing 35% in the 1969-70 bear market.

Buffett stayed away from the stock market, in spite of the 1969-1973 bull market lifting the Dow back to its 1969 peak and somewhat higher. He settled for managing the businesses he had acquired control of, including textile mill Berkshire Hathaway (which he soon began expanding into the insurance industry).

And then, with another superb market-timing move, after the Dow had lost 45% of its value in the 1973-74 bear market, Buffett returned to the stock market.

In a famous 1974 interview in Forbe’s magazine, he said, “This is the time to start investing again.” And he did so big-time, using Berkshire Hathaway as the holding company for his investments.

Were those two market moves the end of his market-timing history? Not at all.

Thanks to the powerful 1990’s bull market, by 1999, Berkshire Hathaway had certainly become way too big to be able to liquidate if Buffett became bearish on the market.

But at what turned out to be the top of that spectacular 1990’s bull market, in 1999 Buffett raised Berkshire’s cash level to a huge $48 billion.

He didn’t describe it as market-timing of course, simply saying “I just can’t find anything I want to invest in right now.”

At the same time, in September, 1999, as reported in Fortune magazine, he said, “What I am about to say – assuming it’s correct – will have implications for the long-term results to be realized by American stock-holders. . . . . Over the next 17 years, equities will not perform anything like – anything like - they have performed over the past 17 years. . . If I had to pick a probable annual return it would be 4% after inflation, and if 4% is wrong, I believe the percentage is as likely to be less as more.”

Exquisite market timing?

The market almost immediately rolled over into the severe 2000-2002 bear market and the so-called “lost decade”.

So should we be concerned that, according to the latest SEC filings of Berkshire Hathaway, Buffett has again raised and is sitting on, $49 billion in cash? And in a recent interview said, “Stocks have moved a long way. They were very cheap five years ago. That’s been corrected. . . We’re having a hard time finding things to buy.”

Of course, once again holding $49 billion in cash is not due to ‘market-timing’, but just because he’s not able to find any stocks cheap enough to buy.

And maybe he’s changed his mind from his 1999 prediction about market problems for 17 years. Besides as he says, he’s not a market-timer and never has any idea what the market will do. Yeah.

He has my attention.

Sy Harding is president of Asset Management Research Corp., and editor of the free market blog Street Smart Post.

© 2013 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Sy Harding Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in