The people, who are calling depression and a prolonged bear market, do not belong in the same class of investors as the great Warren Buffett.

Looking at the latest annual report of Berkshire Hathaway, page 16, I find the following:

“The second category of contracts involves various put options we have sold on four stock indices (S&P 500 plus three foreign indices). These puts had original terms of either 15 or 20 years and were struck at the market. We have received premiums of $4.5b, and we recorded a liability at
year end of $4.6b. The puts in these contracts are exercisable

Buy ! only at their expiration dates, which occur between 2019 and 2027, and Berkshire will then
need to make a payment only if the index in question is quoted at a level below that existing on
the day that the put was written. Again, I believe these contracts, in aggregate, will be profitable.”

Do you think Buffett would be wrong? Do you think there would be a decoupling between US and other markets?

If you had been advising clients to short the markets, I suggest you eat humble pie and tell
them you made a mistake. Otherwise, you will be eating humble pie all be yourself – NO CLIENTS!

Last Friday, an important index made a very important move. Two moving-averages are
about to cross. This is as important as the yield adjusted 13-26 week cross for Gold at
$625 - just before it went on to >$1000. The Dow Jones Transportation Index 50-day SMA hit 4751.66 and the 200-day SMA hit 4773.55. At the present 5100, it only takes 3 days for the MAs to cross. 50 days ago, this index was 4500 while 200 days ago, it was 4800. The reverse cross-over was last September.

wai chee


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