Buffett going 100% long stocks

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His essential arguments:

i) stocks are cheap because of short-term bad news
ii) the news will improve, and in 5, 10 years time profits will be at new records
iii) by the time the news improves stocks will be much higher - staying out of stocks until news gets better will therefore cost you lots of money
iv) most investors are holding cash, a terrible long-term asset with pathetic returns and which will probably be severely eroded by inflationary policies to deal with the current crisis
v) investors holding cash think they will be able to time the end of the bear market by moving into stocks at the lows - history says they will fail to do this, and end up buying at far higher prices

Just no one forget how deep the mans pockets are!

It's not a law of nature that he must be right all the time.

wasp said:

Just no one forget how deep the mans pockets are!

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Yes, I hear he uses a 400 point STOP :-0

personal i don't think traders should be to concerned with what investors are up to. and as said he has very deep pockets and can tolerate huge draw downs

I'd consider starting to invest now, but no way in hell would I through everything in the market at this point. I'm just not convinced we've seen the last of the bad news, to start with.

rnicoll said:

I'd consider starting to invest now, but no way in hell would I through everything in the market at this point. I'm just not convinced we've seen the last of the bad news, to start with.

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I agree with you... Maybe only 10% of available cash in equities at this point and you have enough to average down if there is further decline.

Don't forget Buffett wasn't even alive in 1929...

There is some good logic in drip feeding money into the markets to average (up or down) but sticking it all in in one go seems a bit too much like bottom picking to me!

Of course he wants us all to go long and buy all the stocks, he is putting so much money into them, if we all go out and listen to him and buy, then hey presto- instant profit, Mr Buffett wins again .

hes prolly actually short knowing that no one is gona believe him!

He sold very long dated Put Options in March 2008.

Warren Buffett Also A Put Seller - Seeking Alpha

Nothing like doubling down.

I just bought over $52,000 worth of stocks last week (true story!) for 2- to 12-month position holds. I think the market will bounce post-election, within a few months at least. Tip is, I bought 81 positions all just $500-$600 per position on average (my broker loves me - commissh load's a bear), kind of like my own mini-mutual fund...rolled cash from my one of my sep iras all into equities.

I've never put that much on the line, but I think stocks like MGM DDR SNE LVS CAR GGP etc and others are oversold here, so I put my money where my mouth is... of course I could be wrong, I sure hope not lol. I've been telling friends and family I'm a buyer of the market here. There's probably going to be some more downside, perhaps even a lot more (20%?), but I know from years of actual trading experience that when short squeeze rallies hit the markets, everything roars back up so fast it makes your head spin... and I don't want to miss out. So I'll take some heat/drawdown over the next couple of months, I think this port'll double.

If it did like my DDR buys at 4.6/5.5 did last week I'll be in great shape... Mostly interested in stocks here since the market's so volatile, though some of the USD fx pairs are moving too, lately.

trading hard,

-ken

p.s. also a lot of the fund managers on cnbc are talking about how it's a great time to be buying stocks, in addition to Buffett, so that tells me there's at least enough indecision to make some kind of long/rally upside action probably in the near term, even if it is just to be a short cover type rally, since I'm in deep here a lot of the positions should do well. Though I've also learned to resist trying to call bottoms, I got DDR right, and hopefully the broad market too. Next 6-8 weeks will tell. I'm looking for a rally post Nov 4 elections. I'm normally an 80%+ in-trend directional trader and really hate trying to trade reversals, because they're so tricky.. but in this case, I think for position trading we're at or near enough of a bottom to where I'm a buyer of equities here, bigtime. (of course that means we'll get a black Monday crash next week lol, but that's ok.. I expect that kind of selling near term).

Fear still rides this market and until that subsides, I wouldn't buy a thing.

If i had any kind of reasonable cash, i'd do what buffet does as part of my retirement package.
But.. i have what i have, and daytrading suits me better.

I'm also going to continue daytrading the market on the way up as soon as we start getting rallies; the good news is that there's a long ways to go to the upside, so likely 2009'll be one of the best years in the last 10 I've been trading, for daytrading.

-ken

if i see any big rallies, i'll just do some big long spreads.. easily done.

UKtradergirl said:

Of course he wants us all to go long and buy all the stocks, he is putting so much money into them, if we all go out and listen to him and buy, then hey presto- instant profit, Mr Buffett wins again .

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It will take more than a few trade2win spreadbetters to turn the market i think...

I'm glad this worked out so well! I bought $54,000+ worth of stocks last week, and told all my traders about it, posting screencaps and making the bottom call last week. Main thing is, I put my money where my mouth was. Ca-CHING. For example I bought DDR in 3 positions down in the 4.8-5.3 range, it's since over doubled.
I hope everyone else is doing great, too!

One thing I remember is, short covering/squeeze play rallies that try and hammer out bottoms often occur very quickly, so it pays to be in front of the monitors a lot, I know I will be, during the next few weeks especially.

Ken "Cajones of Steel" Calhoun

"Buffett says the company has sold 15- or 20-year put options on the S&P 500 and three foreign indexes. The puts are exercisable only at their expiration, which is between 2019 and 2027. The options were struck at the market price on the day they were written. "

Seems a good plan to me, sell options for long after your dead! (seeing i doubt a 78yr old is gona go another 15-20yrs but who knows)

fibonelli said:

He sold very long dated Put Options in March 2008.

Warren Buffett Also A Put Seller - Seeking Alpha

Nothing like doubling down.

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Glad to see I nailed it, I'm up over $6,000 in my trading account from when I bought all my positions on October 20th. DDR LVS MGM Ca-CHING!

-ken c
dtu