Buffet Vs Bernanke : The Battle of Sub Par – Sell S&P 500
Warren Buffet lost his magic last year, delivering what he deemed as “sub par” returns last year and warning that the performance streak may end this year.
The skill of stock picking is lost these days as I keep hearing of hefty retrenchments on the equity teams of banks. That should not be surprising as statistics show many of us do not do our own investments anymore with the proliferaton of ETFs and mutual funds, all too big to fail these days.
Poor Buffet, if not for his legend, is better off just trading indices instead of the companies in them if he wanted to beat the benchmark.
I am not going to pretend to be a Buffet groupie and drag out a Buffet bible to support my point. Simply put, that the man has a point !
He is not saying that the markets are going to crash. He is just saying that a rising tide lifts all boats ! Just jab at any stock on index and you got a winner. Even better, just buy the ETF or a mutual fund and you will never lose out, even to Buffet if you had bought last year.
Have you asked yourself how this rally happened ? After the Italian elections, revolting PMI numbers from all over the world, the US sequester last Friday and China’s stocks dropping like a stone ?
Because of him.
Official portrait of Federal Reserve Chairman Ben Bernanke. (Photo credit: Wikipedia)
Mr “Bad News is Good News” guy as headlines all scream for more Fed stimulus.
Fed’s Bond Buying Should Continue, Official Says
Buffet said one thing thought, this time round.
He says that newspapers are good.
Because hedge funds, mutual funds, private banking customers and the likes, read them.
And because we all have such short term memories which I compensate for with a huge archive of potentially useful information, I want to remind all my friends, not with my own lousy charts, but with Demark proven wrong.
DeMark Sees S&P 500 Falling 5.5% After Peak Near 1,500
DeMark is not wrong. It is just that newspapers made Bernanke right.
And this is my golden opportunity now to sell S&P at 1540 level to target that 5.5% correction. Btw, the VIX is still alive, at my cost, which seems to be the base for now.
I better do it before the newspapers catch on.
There is a good chance that the recent “correction” is the only significant correction that we will see for a while, unless job numbers turn out to be a bummer… Otherwise, it seems that the market is powering through. If the current trend continue, we are likely to see is performance anxiety among asset managers.
Euro debt crisis is a sideshow for now. Sequestration effects are unlikely to have any short term impact.
People in US are feeling better not because the economy has improved for them. Rather personal balance sheet is no longer a negative.