SteveR

A Bailout for Berkshire?

I am always amazed at how simple a message that Buffet sends and how so many just don't understand. I have stopped fighting it and just learned to accept it. In fact, if people did understand his message the market wouldn't be this low now, nor would it have been as high over the past decade. After all he did sit on a lot of cash for many years.

I have a homework assignment for you. Go read Buffet's Fortune interview with Alice Schroeder about the Stock Market Valuation at the height of the tech stock boom around '99. It is also in his recent book, snowball. For a guy who doesn't look at the market as a whole, it is the best and simplest valuation method I have ever seen by anyone. I think if you understand his parameters, which are fairly simple, you can arrive at a conclusion that the market was overvalued greatly at the time. If we had to give it a number lets say it was a 10. Take those same parameters today, almost 9 years later (which by the way resulted in a SP500 net 10% decline) and you would conclude probably that the market today is about a 1 or 2. In other words, an order of magnitude lower. In goes the $30 billion.

You make good arguments and honestly I think you are far more intelligent than I am, but you need to zoom out and see the big picture. To use a Buffetism, it's as if you are looking at a beautiful women with a zoom lens and you are focused in on this slight blemish on her face telling the world how ugly she is. If you could just use that little button on the camera with the "-" sign and zoom out you would see the wonderful beauty that Buffet and I can see.