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What Would Warren Do?

Tyler Durden's picture




 

Having been described by Warren Buffett as "the best single measure of where valuations stand at any given moment," Advisor Perspectives' Doug Short is perplexed at Warren's recent note to his CNBC brethren that "markets are not too frothy." Perhaps, as the following chart will shockingly identify, it is time to listen less and study more as Buffett's "Market Cap to GDP" indicator has risen seven quarters in a row and is only trumped in its absolute bubble exuberance by the very peak in 2000. Maybe, despite all the talking heads trying to explain what he meant, Tepper is right to be concerned, that the market is "dangerous" and given his historical comments - looking at this chart - what would Warren do?

 

Either stocks are expensive or GDP better hurry up and start ramping...

 

One wonders what Fed's Yellen and Williams are looking at when they say stocks are in "historical valuation norms" - are they truly judging today based on the peak in 2000 as a possible range?

 

Full construction details here.

Source: Dshort.com

 

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Mon, 05/19/2014 - 20:14 | 4775559 Shizzmoney
Shizzmoney's picture

RE

Fed's Yellen and Williams are looking at when they say stocks are in "historical valuation norms"

Translation: our "portfolios" are fine.  And *it's* fine.  So quiet, sheep.

Mon, 05/19/2014 - 20:32 | 4775621 knukles
knukles's picture

 

 

 

Warren:  Come on, Charlie, let's get a blow job.  We can pay for it later after stocks go up.
Charlie:  Whadjusay?
Warren:  (Yelling)  Let's go get a blow job.
C:  Wha? (squinting eyes, tilting head)
W:  (Screaming at the top of his lungs)  Blow job, Charlie.  Let's get a blow job!
C:  I don wanna blow you!
W:  No, I don't either.  Let's go get a blow job!
C:  You don't wanna blow me either?  Then who's left to do it?  (sobbing)
W:  I'll buy
C:  You'll piles?  What about your piles?  What about blow jobs?  I wanna blow job.  You never ever get me blow jobs anymore.
W:  (Sobbing, realizing he's locked in the same room with Charlie for eternity....)

Mon, 05/19/2014 - 20:14 | 4775560 Theta_Burn
Theta_Burn's picture

What would warren do?

Whateverthefuck is wispered in his ear...

Mon, 05/19/2014 - 20:24 | 4775607 Al Huxley
Al Huxley's picture

WWWD? - Tell everybody markets are 'not to frothy' so he could safely unload before telling everybody 'markets are looking a little frothy now...'

Mon, 05/19/2014 - 23:13 | 4776132 Cognitive Dissonance
Cognitive Dissonance's picture

That is the tried and true MO after all.

Mon, 05/19/2014 - 23:48 | 4776226 wee-weed up
wee-weed up's picture

Old uncle Warren is a drooling-on-his-chin old fart who has NO clue.

Mon, 05/19/2014 - 20:16 | 4775567 Dadburnitpa
Dadburnitpa's picture

WWWD? Steal.  Like he always does, using insider information.

Mon, 05/19/2014 - 20:19 | 4775581 10mm
10mm's picture

What would Warren do, DIE.

Mon, 05/19/2014 - 20:20 | 4775583 Grande Tetons
Grande Tetons's picture

If I were Buffet...I would just fucking retire. This is the last bubble he will see in his lifetime. Leave at the top and have history judge him a wise man rather than the corrupt son of a bitch that he actually is/was. 

Mon, 05/19/2014 - 20:27 | 4775616 fonzannoon
fonzannoon's picture

If I were Warren I would retire, and in my final interview with Becky Quick i'd announce I was 100% short the market because of it's ridiculous valuation. Then watch the fireworks go off and seal his stupid reputation as the greatest ever.

Mon, 05/19/2014 - 20:29 | 4775619 Rainman
Rainman's picture

Son of a CongressCritter ! ....... the old sonuvabich is the consumate D.C. insider.

http://caps.fool.com/Blogs/is-warren-buffett-the-worlds/912657

Mon, 05/19/2014 - 20:30 | 4775627 Tasty Sandwich
Tasty Sandwich's picture

People like Buffet have a compulsive need to do what they do.

He could have retired decades ago.

It's like Gordon Gekko explaining that it's not about how much money is enough.  It's just a game.

Tue, 05/20/2014 - 08:04 | 4776679 Mi Naem
Mi Naem's picture

"If I were Buffet..."

That's a good one. 

Mon, 05/19/2014 - 20:24 | 4775606 FieldingMellish
FieldingMellish's picture

WWWD? Sell gold, of course.

Mon, 05/19/2014 - 20:25 | 4775611 Al Huxley
Al Huxley's picture

He has none to sell - it just sits there doing nothing, no reason to hold it, would all fit inside a football field, old jews sew it in their clothes, etc....

Mon, 05/19/2014 - 20:35 | 4775641 Midas
Midas's picture

Pretty good guess, but you left out "can't eat it." 

Mon, 05/19/2014 - 21:01 | 4775718 Winston Churchill
Winston Churchill's picture

One of my poorest clients said that to me recently.
She is a financial advisor.
Two of my richest( both billionaires)clients are now getting into phyz in a big way.

Mon, 05/19/2014 - 21:53 | 4775835 BrosephStiglitz
BrosephStiglitz's picture

If that is true then I suspect those two wealthy clients are a little late to the party.  I doubt they will be able to get enough to sate their needs before supplies are exhausted.

By the way, I hear this "can cuddle a block of gold all you want, it will never go to work for you" crap all the time.  To think that Warren, Gates and some of the other Oligarchs have absolutely no physical gold, or other PMs is ridiculous.

I know Warren is uber-conservative on opportunity cost but as a liquid physical asset, any billionaire would be an absolute fool to not have around 5% of their personal wealth in it.   Chances are that Berkshire doesn't have any at all on its books, but my guess is that Warren as an individual is more than happy to diversify his personal savings at least a little into it.

Incidentally, I entered the phys PM market a little late in the day (mid '13), but I have certainly noticed a trend in diminishing metal scrap in the marketplace which coincides with some interesting research.  Jim Rogers stated that an extended commodities bull run is rare, but I think these guys underestimate just how unusual modern times are becoming.

The writing should be on the wall for anyone with a brain, an ability to research and some common sense.  The hardest part over the coming decades will be to time trades in an increasingly volatile environment.  There is a significant chance that most people who was born post 1975, and who didn't inherent significant wealth will simply be priced out of a shrinking global economy.

Mon, 05/19/2014 - 21:38 | 4775822 BrosephStiglitz
BrosephStiglitz's picture

The dude had phys silver holdings in Berkshire in until 2006.  Sold it all.  To be honest, there is a good chance Berkshire sold it to its CEO and it is sat in a big-ass vault somewhere.

Mon, 05/19/2014 - 20:26 | 4775614 Osmium
Osmium's picture

Not to worry.  GDP is a made up number, they should have no problem ramping it up.

Mon, 05/19/2014 - 20:36 | 4775638 Grande Tetons
Grande Tetons's picture

I'll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It's addictive. And there's fantastic brand loyalty.

—Buffett, quoted in Barbarians at the Gate: The Fall of RJR Nabisco. Uncle Warren, as always, looking out for Main Street.  I am sure he went long oxygen tents at the same time. 
Mon, 05/19/2014 - 21:58 | 4775891 BrosephStiglitz
BrosephStiglitz's picture

Can't argue with his logic though.

Mon, 05/19/2014 - 21:22 | 4775769 Its_the_economy...
Its_the_economy_stupid's picture

here's the problem. equities are the only game in town. Back in 2000 they were not. so, the scale of where equities are today suggest thzt this bull could run for for another 200% (or sumting lak dat).

Mon, 05/19/2014 - 22:11 | 4775898 BrosephStiglitz
BrosephStiglitz's picture

They aren't.  There are a lot of other games in town.  For most people who are too lazy to do the due dilligence, or lack the information network that the insiders have they're just a way to get gutted by someone smarter and more knowledgeable.

I was scoffing at people who were going into PMs in 2011.  Really.  I didn't see what the fuss was about.  Then I dug around a little bit and I began to understand the paper game. 

I won't be making 5% dividends, and building my wealth in the near-term.   But why would I want to?  My first priority is to build a foundation of physical wealth to offset any significant downside in systematic risk.  After that I will start worrying about dividends, coupons etc.  It seems counter-intuitive from an investment perspective because of opportunity cost, and it is.

But in a shrinking global economy that has been papered over for years, worry about the downside risk first and foremost.  Then worry about wealth creation.  I won't rule out any investment, but I if I want to gamble my savings away I'll go play the slots in Vegas.

Mon, 05/19/2014 - 21:46 | 4775834 BeetleBailey
BeetleBailey's picture

Buffett needs to:

PAY HIS FUCKING TAXES

STOP GOING ON TEE VEE

STOP LYING HIS ASS OFF

STOP SUPPORTING MOTHERFUCKING FUCKBAMA TO PROFIT FROM THAT PRICKS ASININE FUCKED UP POLICIES

FINALLY....HE NEEDS TO GROPE BECKY'S QUICKPUSSY ON CAMERA....AND BE THROWN IN A PERV WARD...

Mon, 05/19/2014 - 22:14 | 4775947 Spungo
Spungo's picture

Why do they need warren to add market confidence? If the market was strong, it would speak for itself.

Mon, 05/19/2014 - 23:14 | 4776135 Lastline
Lastline's picture

Warren needs to eat his ice cream and stick the cone up his asssssssss

Tue, 05/20/2014 - 00:01 | 4776251 ChargingHandle
ChargingHandle's picture

I think he is being disingenuous. What charts is he speaking of to say this with a straight face?  More like, let me unload my positions than I will declare that equities are too frothy. 

Tue, 05/20/2014 - 00:04 | 4776260 MFL8240
MFL8240's picture

What he meant is that the market is not to frothy for you!

Tue, 05/20/2014 - 03:27 | 4776455 CHX
CHX's picture

Talk up the market and sell

Tue, 05/20/2014 - 08:41 | 4776822 d edwards
d edwards's picture

WWWD? BTFD!

 

On a serious note, if you're waiting for the GDP to ramp up I wouldn't hold my breath, what with the 0bamao regime doing it's best to kill off business.

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