Thursday, September 11, 1997
Buffetting, Bucking,
and Bumping Buffett?
by
Mark
Robertson
CNBC ran a series of sound bites yesterday that offered the question, "Has Warren lost his touch?" They pointed to the recent decline in Berkshire Hathaway's share price, and went so far as to itemize the six- to eight-week performance of Coca-Cola, Gillette, and Wells Fargo.
The sketch then proceeded to interview a series of seemingly Wise gooroos, who went so far as to suggest that the answer was "Yes." One sage proclaimed that the Oracle's old-fashioned approach might be out of vogue, and that perhaps Buffett now needed to consider technology stocks as the only hope for keeping up with "this market"!
CNBC reminded us that Buffett declined the opportunity to appear, but I'd observe that Warren's public appearances are almost as rare as his sell decisions.
We probably ought to remind ourselves of what he has actually said about Berkshire Hathaway and his individual investments. First, he's been outspoken with respect to his opinion that the BRK share price is a little steep. His annual report and SEC filings include this suggestion, to the amazement of the investment community. He's also suggested that turbulence in his blue-chip holdings won't cause any loss of sleep either. He reminds us that he buys stocks under the illusion of a market closed for five years. The only consideration is whether or not Coca-Cola, et al, will be selling more product five years from now, and whether they're likely to remember how to make a decent profit while doing it!
Buffett has been fond of pointing out "that if the markets were efficient, he'd be a bum on the street corner with a tin cup." The reflection that perhaps he ought to switch horses now, using six to eight weeks of results in the face of a forty- to fifty-year career in intrinsic value investing, strikes me as particularly Wise.
I have a hunch that Warren's resting comfortably behind his desk, sipping on a Cherry Coke, and smiling. With bearish sentiment and wild-eyed notions like the CNBC sketch swimming across the screen, perhaps this market's not terribly different, after all. As any committed Fool can appreciate, he's "been there, done that," and we should be fairly comfortable with tired, old strategies after all.
Best wishes,
Mark Robertson