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« Reading the "Message of the Market?" Be Careful! | Main | Progress, Technology, and Economic Fundamentals »

June 30, 2012

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Scott Murray

Jeff,

The key now is not the "when", but understanding the valuations from a generational perspective. Accumulate equity stakes now.

Buffett would say, we are very lucky to be able to buy at such bargain prices over a period of time.

In Omaha this past May, he emphasized again, don't guess the timing, just know what will happen eventually.

oldprof

Scott -- It may well take years for a final resolution in Europe.

Whether it is a crisis is another matter.

As you note, for most of us it means to keep an eye on what stocks are worth.

Thanks,

Jeff

Scott Murray

Excellent article, as always. While I agreed strongly with your premise last week for over-pessimism and what that can do, (and acted on it frankly, giving all my friends and family puts on the SDS weeklies for a nice asymmetric risk/reward) I can't help but mention one area where you were a little off.

The Euro crisis has not faded away, in fact it seems to become an annual summer event. (recency bias warning here) Clearly, the summer needs no help to embolden bears as economics generally help the sell until Leger's day crowd:

"even though summer historically displays economic slowing as most of the population goes on vacation...the British have noticed this seasonality since the late 1600’s and is the source of the saying “Sell in May and go away, stay away till St. Leger Day”, referring to the last race of the British horse racing season. This is also called the “Halloween Indicator”."
http://www.valueplays.net/2011/08/17/davidson-on-ceridian-industrial-production-and-fear/

It seems to me that it will be the news for some time in the absence of news. I.E. when there are no earnings or U.S. economic data is flat. I hate to even say flat when flat or slow data are determined by "street consensus" as opposed to concrete evidence like YOY comparisons, which have been fantastic in many areas.

Buffett acknowledges this misery phenomenon caused by major macro situations when you read his past letters. In fact, he "skips to work" during these times and hates the good market years, or as we might see it as the overvalued ones.

As he would suggest, we should be enjoying this era, as we accumulate under-priced assets over time.

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