South Korea To Screen Passengers For Elevated Temperatures For All US Flights
With growing concerns about air travel due to the breakout of Covid-19 in Asia, South Korea’s transport ministry announced that all passengers bound for the US would have to undergo mandatory temperature checks before boarding planes starting March 3, reported Bloomberg.
Korean Air said last Friday that it would start checking the temperatures of passengers boarding planes to the US and would deny anyone with a temperature higher than 99.5 Fahrenheit. Flights from Incheon to Los Angeles on Friday were the first to undergo temperature checks of passengers.
South Korea’s transport ministry said mandatory temperature checks on all flights would go into effect on Tuesday. The ministry said airlines using disinfectant sprays to sterilize cabins were other efforts to minimize the spread of the virus. It said temperature checks could be coming to other routes in the near term.
The Trump administration has been hesitant to slap South Korea with the same flight restrictions that have been placed on China. Vice President Mike Pence announced on Saturday that the US had raised the travel warning to level 4 on South Korea.
The “president has also directed the State Department to work with our allies in Italy and in South Korea to coordinate a screening, a medical screening, in their countries of any individuals that are coming into the United States of America,” Pence said.
With the virus spread in South Korea showing no signs of abating in the intermediate term, President Trump might want to reconsider the closure of air traffic to the country before a breakout of the virus is seen on the West Coast.
From crude oil to gas to gold, commodities markets continue to be affected by the outbreak of coronavirus and the impact it has had on global economic sentiment. Read on for our pick of unfolding market trends from S&P Global Platts news editors.
1. Oil traders brace for weak demand
What’s happening? A state of contango – where prices for forward delivery are higher than those for nearer delivery dates – has spread through the Dubai crude oil market, implying traders are bracing for unusually weak demand in the second quarter and beyond. Oman crude also fell into contango at the end of last week, ending the month at parity with Dubai.
What’s next? Market conditions will increase pressure on OPEC and its non-OPEC allies to agree to extend and deepen production cuts at their meeting in Vienna from Thursday. As things stand, it is likely the Asian market will demand deep price cuts to Middle Eastern grades. Prices are expected to be issued from next week onwards.
2. NYMEX natural gas futures hit 4-year low
What’s happening? The NYMEX prompt-month natural gas futures contract tumbled to its lowest level in nearly four years on February 27, settling at just $1.75/MMBtu. A steady decline in the benchmark futures price this winter comes amid sluggish residential-commercial demand and a struggle to absorb mounting US supply.
What’s next? From November 1 to date, US production has remained near record highs, averaging over 92.3 Bcf/d. This winter should see storage levels finish the current withdrawal season almost 250 Bcf above the five-year average, according to S&P Global Platts Analytics. Reduced summer-season injection demand could potentially be exacerbated by the shut-in of LNG export facilities in response to the coronavirus.
3. Copper, gold move in tandem in response to coronavirus
What’s happening? Copper, often cited as a bellwether for the global economy, has been hammered on coronavirus fears. Meanwhile, there has been a hefty inflow of capital into gold, one of the market’s favorite safe haven trades. This has seen the correlation between the two prices narrow, indicating that economic sentiment is turning increasingly sour.
What’s next? Eyes are on how quickly the virus will spread, and the lasting impact on the global economy. The London Metal Exchange three-month copper price dropped nearly 10% to $5,573/mt by February 28. Conversely, most analysts expect continued strength in the gold price, which touched a near-seven year high of $1,689/oz last week.
4. Brazilian corn farmers keep close eye on weather
What’s happening? Corn planting in Brazil’s Mato Grosso region accelerated in the week ended February 21, with sowing completed in 79.6% of the projected harvest area, above the five-year average of 72.6%, according to the Mato Grosso Institute of Agricultural Economics. The region is Brazil’s largest corn producer, accounting for over 50% of exports.
What’s next? Farmers will be watching the weather closely. Corn planting during the ideal time – by the end of February – gives a good yield if weather conditions are favorable. Pre-harvest corn sales in the state have been brisk so far and the availability of corn for exports will depend largely on domestic sales and corn prices, which continue to remain firm.
Kudlow, Mnuchin Favor Fed Rate Cut As Virus Fallout Response; Fiscal Stimulus “Not Under Heavy Consideration” In White House
After last week’s not one but two Bloomberg op-eds by the Fed’s biggest ever dove, Narayana Kocherlakota, in which the former Minneapolis Fed president advocated not just a rate cut, but an emergency intermeeting rate cut, we said that with the idea now “incepted”, it was only a matter of time before officials took it on as their own.
And sure enough, with the market now holding the Fed hostage and – in agreement with both Goldman and Bank of America – pricing in not just one but two rate cuts on or before March 18 as if the global economy is on the verge of a depression, moments ago Bloomberg reported that as part of the Trump administration’s idea to contain the economic and market fallout from the rapidly spreading coronavirus, because somehow printing more money will help thousands of sick Americans defeat the deadly virus, the two most important people in Trump’s advisory orbit, National Economic Council director Larry Kudlow, and Treasury Secretary Steven Mnuchin, both favor the Fed cutting interest rates before its next scheduled meeting on March 17 and 18. As Bloomberg further adds, within the White House, a rate cut is currently the most actively discussed economic measure to combat the virus, the people said.
To the White House’s chagrin, however, the market was hardly excited by this incremental update-cum-trial balloon, because traders have already priced in not just one but two emergency rate cuts, and as such what the White House is proposing is not incremental.
Worse, it suggests that some of the various fiscal stimuli that had been floated including payroll tax cuts, or even Hong Kong-style money paradrops are not being discussed, and that once again it is up to Powell to bailout permabuls.
Which also is not news: on Friday, Fed Chair Jerome Powell already signaled the central bank is open to a rate cut, in a rare statement on Friday before markets closed. Powell said the coronavirus “poses evolving risks to economic activity,” and that the central bank will “use our tools and act as appropriate to support the economy.”
Meanwhile, on Monday, after Powell failed to act over the weekend, the president made plain his feelings about the independent central bank on Monday, tweeting that Powell has been “slow to act.” Naturally, even that is not new, with Trump frequently criticizing Powell for not being dovish enough, and has urged the Fed to cut rates below zero even before the coronavirus outbreak.
Which is why the real news reported by Bloomberg, and which is hardly risk-asset positive, is that within the White House, there have also been discussions of an economic stimulus package that would likely be heavily weighted toward tax cuts, but it’s not under serious consideration.
This means that unlike countries like Italy, which over the weekend promised a $4 billion package including tax credits and liquidity support for businesses, and China whose regulators announced a waiver for small companies struggling to repay loans, Trump plans on leaning on the Fed to prevent a recession.
Which begs the question: what can the Fed actually do to restore an economy that is crippled by fear of pandemic, and since it can’t print antibodies, will the Fed merely spike stocks briefly, only to see them tumble in coming days when the pandemic gets even worse and the disconnect between the economy and markets is back to the widest it has ever been.
That said, there is yet hope on the fiscal side: as Bloomberg reported earlier, Mnuchin and his G-7 counterparts are holding a phone call on Tuesday to discuss coordinating responses to the economic threat of coronavirus, a report which helped kick start today’s monster rally, which however will hardly last.
38% Of People In Survey Are Avoiding Corona Beer Due To Coronavirus
A survey of more than 700 beer drinkers has revealed some stunning results. First, there are apparently no signs of intelligent life for the human race left on Earth. And second, people are completely ignorant as to what the coronavirus is, how it is transmitted and what can be done to prevent it.
We say that because 38% of those people surveyed have said they “would not, under any circumstances,” buy Corona beer as a result of the deadly coronavirus spreading, according to KRON/CNN. There’s obviously zero link between the two, aside from them both having similar names.
16% of the people surveyed said they “were not sure” whether the virus is related to Corona beer and 14% of respondents who regularly drink Corona beer said they would no longer order it in public.
Sometimes your brand just gets unlucky.
Ronn Torossian, Founder and CEO of 5WPR, the public relations firm that conducted the survey said: “There is no question that Corona beer is suffering because of the coronavirus. Could one imagine walking into a bar and saying ‘Hey, can I have a Corona?’ or ‘Pass me A Corona’?”
He continued: “While the brand has claimed that consumers understand there’s no linkage between the virus and the beer company, this is a disaster for the Corona brand. After all, what brand wants to be linked to a virus which is killing people worldwide?”
Constellation brands, brewer of the beer, says the timing couldn’t be worse. They were on the precipice of introducing a new Corona branded hard-seltzer product for the summertime. Promotion for the drink, which uses the phrase “coming ashore soon”, has already been criticized.
Klobuchar Drops Out Of Dem Race, Will Endorse Biden
The culling of the Democratic field continues…
Following Tom Steyer and Pete Buttigieg, Minnesota Senator Amy Klobuchar has become the latest Democratic primary candidate to end her campaign following Joe Biden’s first-place win in South Carolina.
Sources say she will endorse Joe Biden, which is hardly a surprise. Buttigieg is reportedly meeting with Biden about an endorsement.
BREAKING: Amy Klobuchar is ending her Democratic presidential campaign, plans to endorse Joe Biden. https://t.co/omRIv4O3nP
On Sunday night, we noted the following tweet from Democratic campaign insider Robyn Kanner. Looks like she was correct:
I think we’re only 72 hours out from an overwhelming majority of Presidential candidates dropping out. It’s been a hell of a race. Proud of all the staffers on campaigns. Let’s unite. Let’s beat Trump.
The shadow of Corona virus creeps ever-darker across the scene like a cosmic messenger from Karma Central telling mankind to stop and assess. We’re about to find out what we’ve wrought with the wonders and marvels of globalism. Is there anything you can think of over at the Wal Mart or the Walgreens that isn’t made in China? I mean, everything from a dustpan to a lint brush? I can’t say for sure, because I’m not over in China, but the place is apparently not open for business these days. One must surmise that a lot of activities in the USA may not be open for business much longer, either.
The action in my local supermarket yesterday had an undercurrent of stealth desperation; no overt panic buying, no fighting in the aisles, but an edge of suspense. Personally, I cleaned out an entire product-line of cat food, loaded up on cooking oil, rice, dry beans, and evaporated milk — and I wasn’t the only one checking out with the sixteen-roll bindle of toilet paper. Obviously, many products were still there on the shelves to get (minus that cat food). Is the time perhaps at hand when a lot of stuff won’t be? Just sayin’.
The message is getting out — though not from US authorities yet — that everybody may soon be spending a lot of time home alone. That’s exactly what has happened in China and a region of northern Italy. France banned events with more than 5,000 people (why that number, exactly?). Japan has canceled school for the time being — duration unknown for now. So a USA lockdown is not merely hypothetical. These, then, are two fundamental conditions the world faces for a while: nobody moves and nothing gets produced.
Are we taking this thing too seriously (some might ask)?
I don’t pretend to know the answer, except, again, to point to China and think that they can’t possibly just be fooling around with all those zombified cities and shuttered factories.
The next question might be: will the global economy return at some point to “normal” operating conditions, that is, the fabulously complex network of supply lines, markets, and payment arrangements as they worked up until January 2020?
I am for sure not sure about that. Once a gigantic and fantastically precise mechanism breaks, I doubt it comes back together neatly and quickly. In the physical universe, the power of emergence is like the cue ball on a billiard table, and it appears that all the rest of the colored balls will be bouncing off the bumpers and sinking into pockets for while… and eventually the global table will look a lot different.
I’ve long maintained that of all the many networked systems we depend on, banking and finance are the most fragile, the most susceptible to dangerous disorder. And, of course, that is exactly what we’re seeing in the stock markets. Trillions of dollars in notional wealth have vaporized. Over on the bond side, interest rates are crashing toward zero as loose capital desperately seeks a safe harbor. But how safe is Bond Harbor, exactly, when all the advanced nations are so deep in the borrowing hole that they can never really meet their obligations? And Gawd knows what is going on with the “innovative” financial IEDs in Derivatives Land? How can they not be blowing up with price movements of the kind that went down last week?
As that colossal hairball unravels, nobody will get paid for anything for a period of time, again, duration unknown. There was chatter last week about a supposed Sunday meeting of global Central Bank poohbahs looking to come up with a battle plan for arresting the damage. It must have been mighty secretive because there’s nothing about it on the news wires Monday morning.
But what can they do, really, except the only thing they know how to do, which is to jam more “money” into crumbling arrangements? And then, we must ask, when does this stuff lose its credibility as “money?” Answer: when the contours of the black hole it is disappearing into become obvious and undeniable — and some might argue that we can already see all that. If the equity markets turn up today, that will probably be an indication that the CB Boyz and Gurls have launched a direct stock-buying blitz… meaning that, until further notice, markets are not really markets. That would be a set-up for another round of cratering when the CBs shoot their wads on that gambit.
One thing I’m hearing a lot is how much this emergency spotlights the USA’s need to reindustrialize. That would be a natural conclusion, but I warn you it will not work out the way they’re saying. I’m not going to harp on this for now, but our energy supply situation is not what it’s cracked up to be, specifically shale oil, which depends utterly on a reliable stream of loans to keep up the incessant fracking — not a bright prospect with credit markets frozen — and above and beyond that, it’s an industry that doesn’t pay for itself, doesn’t make a red cent. So, watch for carnage in the shale oil patches. The next trick will be to nationalize the industry, and that will only add another layer to a looming national bankruptcy.
Now, that suggests to me that we’re not actually able to return to manufacturing at the scale we abandoned a few decades ago — in other words, Make America Great Again. If we make anything, it’ll be at a much smaller scale, and maybe even a scale that would seem laughably humble. When the dust settles from present financial meltdown — and that might take a while — Americans with any remaining capital might want to invest in water-power and hydroelectric sites. (Note, there are plenty here in Washington County, New York). The hydroelectric part is a bit iffy, since that does require a lot of copper and steel for the turbines. But water-power itself can drive machinery. Again, just sayin’.
Of course, one of the ironies of this situation is that the entire news media assumes that the election contest is proceeding along the usual formal trajectory. No one seems to wonder whether the party conventions can even be held if the corona virus sticks around through the spring, or even the election, for that matter.
In Retaliatory Move, US To Limit Staff At China’s State-Owned Media “Propaganda” Companies
The US plans to cap the number of personnel who can work at Chinese government-backed “propaganda” news outlets in the US, reported The Wall Street Journal, citing a senior Trump administration official on Monday afternoon.
The senior official said caps on Chinese media outlets operating in the US could be reduced to 100, from 160. The four news outlets the US government will limit are Xinhua News Agency, China Radio International, China Global Television Network and China Daily — they must comply with the new limits by March 13.
Chinese state media outlets have freely operated in the US for years, and it now appears the Trump administration wants to restrict their reporting.
Trump officials are declaring the media outlets are not practitioners of journalism, but rather operatives of the Chinese communist government.
A State Department official said foreign journalists in China are working in harsh conditions where “freedom of the press is under a severe siege.” He described the Chinese news organizations that the Trump administration is expected to target with new limits as the “propaganda apparatus” of the Chinese government.
“China has long masked intelligence operations with journalistic credentials,” Jonathan Turley, a law professor at George Washington University, said. “The danger is China could reciprocate against our journalists.”
The decoupling between China and the US continues…
The US stock market continued its freefall last Friday. The Dow lost another 357 points to finish off the worst week since 2008. One would expect a save-haven like gold to thrive in the midst of the massive stock selloff, but it had a bad day on Friday as well crashing through the $1,600 mark and plummeting as low as $1,568.
Gold rebounded Monday and was trading back above $1,600, but how do we make sense of its precipitous plunge? Has gold failed as a safe-haven?
The short answer is no.
The safe-haven bid is there, as evidenced by the rebound on Monday. But as with everything in the economy, there are multiple dynamics driving the gold market.
In the first place, some analysts believe the coronavirus scare is causing a bit of a tug-o-war on gold. On the one hand, we have the expected safe-haven buying. But fear of a sharp economic downturn also raises concern that consumer demand for gold could drop, particularly in big jewelry markets such as India and China. Worry that a longterm economic slowdown could hit consumers in these countries particularly hard could be putting some downward demand pressure on gold. China and India rank as the first and second biggest gold consuming countries in the world and account for about 1,000 tons per year.
But there is a more fundamental reason we saw a big gold sell-off as stock markets crashed, and it is not a good sign for the overall state of the market.
In a nutshell – panic.
Traders and investors were scrambling to liquidate assets to raise capital for margin calls. In other words, they were selling gold to keep afloat. As one analyst told MarketWatch, “Investors are selling anything with a bid and running for cover, and that includes typical hedges like gold.”
We’ve seen this same thing happen before – in the early stages of the 2008 crash. As the MarketWatch article pointed out, there was a rash of gold-selling as the stock market began to tank in ’08.
Once investors understood and appreciated the scope of central bank stimulus coming down the pike, they began buying gold.”
From there, the price of the yellow metal more than doubled.
In a note to clients, RBC Capital Markets reiterated that investors were “cashing out to cover losses and meet margin calls in other markets.”
We do not view this as a loss in faith in gold’s role as a ‘perceived safe haven’ or a fundamental shift in the attitude toward gold.”
More central bank easing is almost certainly in the cards. CME Group’s FedWatch translates Fed funds futures pricing into traders’ monetary policy expectations. As of Friday morning, it was pricing in a 72% chance of a quarter-point rate cut at the Fed’s March meeting, and better than even odds of two more such rate cuts by the end of July. And futures are beginning to point to an even bigger 50 basis-point cut in March.
Federal Reserve Chairman Jerome Powell up expectations with an unusual move Friday, releasing a note saying the central bank will “act as appropriate” to support the economy, raising expectations we could see another cut as early as the March meeting. The Bank of Japan also issued a statement saying it will “strive to provide ample liquidity.”
As Peter Schiff said during an interview on Fox Business last week, gold is in the most “unloved bull market ever.”
We’ve been climbing this wall of worry, so I think too many people look to take profits. They really have no idea how high the price of gold is going to go. And it’s not the coronavirus that’s driving it. It’s Fed monetary policy. And especially the additional easing that I think the markets are correctly starting to price in that is going to result from the coronavirus.”
As the stock market really started selling off, it wasn’t just profit-taking. It was a panic rush to liquidate gold and raise cash. But the rebound Monday indicates the safe-haven bid is not dead. MineLife Pty senior resource analyst Gavin Wendt told Bloomberg gold’s fundamentals “remain overwhelmingly strong.”
Any near-term price corrections aren’t significant in terms of the bigger picture. Bullion’s retreat last week was nowhere as bad as the 10%-plus drubbing equity markets took, so it can be argued gold has passed its safe-haven challenge.”
“I Have To Plead For Tests” – NYC ER Doc Warns “There’s Going To Be 1000s Of US Cases By Next Week”
Dr. Matt McCarthy, an infectious disease physician at an NYC Emergency Room, and author of the best-selling book “Superbugs”, unleashed a storm of man-on-the-ground doom-speak about the Covid-19 virus spread across the US this morning on CNBC.
“Before I came here this morning, I was in the emergency room seeing patients,” he said on CNBC’s Squawk Box.
“I still do not have a rapid diagnostic test available to me.”
Alongside, former FDA Commissioner Dr. Scott Gottlieb, McCarthy pointed to problems identified with the Centers for Disease Control and Prevention’s (CDC) diagnostic tests for the virus. The CDC sent test kits earlier in the outbreak to public health labs around the country, but those kits were problematic and potentially inaccurate, CDC officials have since said.
McCarthy, a staff physician at New York-Presbyterian Hospital, says he still does not have access to test kits.
“I’m here to tell you, right now, at one of the busiest hospitals in the country, I don’t have it at my finger tips,” he said.
“I still have to make my case, plead to test people. This is not good. We know that there are 88 cases in the United States. There are going to be hundreds by middle of week. There’s going to be thousands by next week. And this is a testing issue.”
In contrast to McCarthy’s “in the field” analysis, TV Doctor Drew Pinsky claims it’s “overblown press created hysteria.”
As Summit News’ Steve Watson notes, David Drew Pinsky, otherwise known as ‘Dr Drew’, has slammed the media for over-hyping the coronavirus, leading people the world over to panic buy provisions and medical supplies.
Speaking with Daily Blast Live, Dr Drew said
“Let me frame it this way: we have in the United States 24 million cases of flu-like illness, 180,000 hospitalizations, 16,000 dead from influenza,”
“Why is that not being reported? Why isn’t the message: get your flu shot?” he added.
In a previous appearance on the show, Dr Drew urged that “We are not overreacting; the press is overreacting, and it makes me furious.”
“The press should not be reporting medical stories as though they know how to report it,” he continued.
So, who do you believe, the TV doctor or the NYC ER doctor who wrote the book on epidemics.
Every year, investors anxiously await the release of Warren Buffett’s annual letter to see what the “Oracle of Omaha” has to say about the markets, economy, and where he is placing his money.
Before we blindly heed Buffett’s advice we must factor in that he has long been a source of contradiction. As Michael Lebowitz previously penned:
“The general platitudes of market and economic optimism Buffett shares in his CNBC interviews, letters to investors and shareholder meetings often run counter to the actions he has taken in his investment approach.
“If something close to current rates should prevail over the coming decades and if corporate tax rates also remain near the low level businesses now enjoy, it is almost certain that equities will over time perform far better than long-term, fixed-rate debt instruments. These elements, coupled with the ‘American Tailwind,’ will make ‘equities the much better long-term choice for the individual who does not use borrowed money and who can control his or her emotions.”
To clarify, Buffett is suggesting that over the coming decades, it will be better to be invested in equities (aka S&P 500 Index) versus Treasury bonds, given that the yield on bonds is so low.
That point doesn’t quite square with facts. Buffett is now holding his largest amount of cash in the history of the firm.
As the old saying goes: “Follow the money.”
If he thinks stocks will outperform bonds why is holding $128 billion in short term bonds?
There is an important distinction to be made if you choose to follow Mr. Buffett’s advice. It is true that stocks will outperform bonds over the long-term given the right starting valuations and a long enough time frame. Currently, using Warren Buffett’s favorite measure of valuations (Market Capitalization to GDP), there is a substantial risk of low returns from stocks over the next decade.
While valuations DO NOT predict market crashes, they are very predictive of future returns on investments from current levels.
Period.
I previously quoted Cliff Asness on this issue in particular:
“Ten-year forward average returns fall nearly monotonically as starting Shiller P/E’s increase. Also, as starting Shiller P/E’s go up, worst cases get worse and best cases get weaker.
If today’s Shiller P/E is 30x, and your long-term plan calls for a 10% nominal return on the stock market, you are assuming a best case scenario to play out in a market that is drastically above the average case from these valuations. We can prove that by looking at forward 10-year total returns versus various levels of PE ratios historically.
Importantly, this is likely the reason that Buffett is sitting on $128 billion in historically low yielding bonds. The graph below provides further evidence using his favorite valuation indicator, market cap to GDP.
Not surprisingly, like every other measure of valuation, forward return expectations are substantially lower over the next 10-years as opposed to the past 10-years.
“Price is what you pay, value is what you get.” – Warren Buffett
Do What I Say, Not What I Do
So the question is this:
“If Warren is suggesting you should just invest in the index and hold on, why is he sitting on so much cash?”
The immediate observation is that he is just waiting on a “good deal” to come along. He has been vocal about looking for a new acquisition. However, he hasn’t done so. Why, “valuations” are sky high.
Unfortunately, “good deals” based on valuations, and market crashes, have typically been highly correlated throughout history. As he said in his letter:
“Anything can happen to stock prices tomorrow. Occasionally, there will be major drops in the market, perhaps of 50% magnitude or even greater.”
Interestingly, while Buffett has been telling everyone else to buy a stock index, and avoid bonds, he has been doing exactly the opposite by “buying bonds.”
Make no mistake, Buffett is indeed a great investor, and has made a tremendous amount of money for his shareholders over the years. One of the reasons for this is that at times of market excesses he has preferred holding cash.At the time he is leaving money on the table, but that cash can be deployed when markets are panicking and value appears. Remember, Buffett had cash on hand in 2008 to lend to Goldman Sachs at 10%.
The downside to holding cash is that performance of Berkshire Hathaway is no longer outperforming the S&P in recent years. This is due to the shear “size” of the company as Buffett no longer has the luxury of making small value-based acquisitions of a few hundred million in value. Such acquisitions don’t “move the needle” in terms of returns for shareholders. Berkshire has grown to the point it has essentially become an index itself.
The chart below shows Buffett’s annual cash holdings versus the S&P 500 ($SPY) over the last several years.
So, what would have happened if Buffett had taken his own advice and invested his cash into the S&P 500 index rather than bonds. The index is highly liquid, so he could have sold the index at any time he needed cash for an acquisition, and the shares could have been lent out for an additional return on his investment.
However, the chart below shows the difference in market cap of the Berkshire Hathaway currently, with the cash invested in the S&P 500 index, as compared to the returns of the S&P 500 index. Not surprisingly, returns to shareholders improved over the last decade.
While it may not look like much on a percentage basis, the cumulative return lost to Berkshire Shareholders over the last decade was roughly $90 Billion dollars.
Or rather, a $1000 investment in 2010 would have grown to nearly $4000 versus just $3500.
Summary
As Michael Lebowitz previously wrote:
“Warren Buffett is without question the modern day icon of American investors. He has become a living legend, and the respect he receives is warranted. He has certainly been a remarkable steward of wealth for himself and his clients.
Where we are challenged with regard to his approach, is the way in which he shirks his responsibilities as a leader. To our knowledge, he is not being overtly dishonest but he certainly has a way of rationalizing what appears to be obvious contradictions. Because of his global following and the weight given to each word he utters, the fact that his actions often do not match the spirit of his words is troubling.”
Warren Buffett did not amass his fortune by following the herd but by leading it.
He is sitting on a $128 Billion in cash for a reason. Buffett is fully aware of the gains he has forgone, yet still continues his ways. Buffet is not dumb!
Before taking his advice to buy an index and hold on, you may want to consider more carefully why he is telling you to “do as I say, not as I do.”
