Wednesday, January 20, 2010

Some thoughts from Buffett (KFT)

Below is an interestnig interview with Warren Buffett, including his thoughts on the possibility of Berkshire shares being added to the S&P500.

Also interesting are his thoughts - as a strict value investor - on Kraft's offer for Cadbury. He makes an interesting point about Kraft's sale of its pizza division at a rather cheap (10x earnings considering taxxes) price to pay far more for Cadbury.

The market is up about 20% since Warren jumped into the fray on the morning of October 16th, 2008. In the middle of the financial crisis he wrote a
New York Times op-ed titled "Buy American. I Am," and sent the S&P500 up over four percent on the day.

In the 2008 peice, Buffett said he was shifting his personal money into stocks, frmo bonds. Looks like a good move depending on the stock prices, as 10 year yields have dropped a bit but not a massive amount.

His comments then:


"A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.
Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497."














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