It was a fairly decent start for the markets this week, as investors looked to see how the “Oracle of Omaha’s” market thoughts would get transcribed into stock prices during the day’s session(More on Mr. Buffett below).
Looking at the action within the indices today, Wall Street analyst calls were dominating the early moves, especially on the positive side of the ledger. We were seeing names like Harley-Davidson (HOG), Cliffs Natural Resources (CLF), and Apple (AAPL) rising on bullish notes. More gains were coming for the financial sector today, especially for investment brokerage plays Goldman Sachs (GS) and Morgan Stanley (MS). Where we were seeing some hesitation was in the defensive utility sector, with names like Duke Energy (DUK) and Consolidated Edison (ED) lower.
Plenty of us financial media types were fixated on the tidbits coming out of Warren Buffett’s Berkshire Hathaway (BRK-A) annual shareholder meeting. Mr. Buffett even went so far as to invite a well-known bear on the stock, Doug Kass, among a panel of guests who could fire away at Mr. Buffett on his thoughts for the markets and the future of Berkshire Hathaway. The gist of what came out of the meeting was that Mr. Buffett continues to love stocks, which you would expect as a given since the company has always invested heavily in the stock market. In contrast, Buffett bearish on bonds and interest rates. Many a financial guru, especially “bond king” Bill Gross, has called for the top in bonds for the last few years — only to see rates continue to bounce along all-time lows (remember, as demand for bonds grows, yields go down, and vice-versa).
As much as I admire and respect Mr. Buffett, there is still no denying any financial titan who is loved and admired by the business media will always look to take advantage of the fixation everyone has. As we have seen with Mr. Buffett’s dealings in the past (quasi-rescue of Goldman Sachs when the financial worlds were imploding in late 2008, early 2009), some of those opportunities are not ones the average investor can ever expect to participate in. Now you can own Berkshire Hathaway stock and ride the wave in that sense, but for dividend investors, you will be disappointed to know Mr. Buffett loves only to collect dividends, and not pay them out.
I admire Mr. Buffett’s willingness to invite someone who is bearish on Berkshire Hathaway stock, but one has to wonder if the bullish confidence may itself be coming at a time when investors should be exercising a touch more caution than the Oracle of Omaha feels is necessary.
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