The Buffett Correction Theory

Warren Buffett, chairman of Berkshire Hathaway Inc., speaks during an event marking Business Wire's expansion into Canada in Toronto, Ontario, Canada, on Wednesday, Feb. 6, 2008. Buffett said a credit crunch isn't under way and he forecast that the dollar's value is likely to decline. Photographer: Norm Betts/Bloomberg News

We all cringe, we all feel restless when we hear the words:  Correction, Recession, Depression & Bear market.

Eventually the markets will nose-dive, and for the value investor its nothing but a buying opportunity under the right conditions because in the long term i believe that the market will go back up again, The Nose-Dive will occour due to one of those mentioned above; it’s not a question of “IF?” it’s a question of “When?”. It’s all about the economy, and the economy is all about cycles, what goes up without a strong fundumental foundation led by “investors” mania well eventually go down or even worse implode.

So allow me in one paragraph to take you back to the past before we travel into the future:

A brief glance at the crashes that took place not in the distant past, that shocked the markets and ratteled the economy and why we should learn from them.

Let’s go:
1. 2000’s Dot com Bubble;

“Ill give you no numbers. I’ll give you no prices.”
“I hear this stuff all the time. about how it is a bubble, it’s ridiculous”

Those qouets took place early in 2000 by Arthur J. Samberg head of hedge fund Peqout capital Management.

These quotes describe the overall mindset of the investors & traders back then.
Let’s be rational for one second:
How can you find a good business if you don’t look at its numbers?
How can you decide wether the Security is a bargain or a good buy when you don’t check its price?

We all know how that bubble ended.

2. 2008 Financial crisis:
Subprime mortgages was the first reason for this crisis, the second one was greed and the third one was more greed.

By the way i believe that we are on the highway for the next market fall it’s only a matter of time and i’ll elaborate about it in my future posts i’m already considering some investing strategies in safe havens.

The Future:
The goru of investment, the disciple of Benjamin & Dodd. Warren Buffett.
The CEO of Berkshire Hathawy the textile company that became a conglemrate behemoth with more than $400 Billion market cap and more than $90 Billion in Cash.
Sadly legends do pass away, and when that day will come, if clouds of uncertainty will be hovering above us BRK-A and BRK-B will take some heavy beating (i believe BRK-B will fall further); but not only them, Berkshire hathaway operates in a wide ranges of the US economy, it also invests in US public companies traded on Wall street e.g (Kraft heinz, Coca-Cola, American express etc.) companies that Warren invested in will take a hit too due to uncertainty over what will come next.

The bright side of what i mentioned above is that this sell-off in my opinion is an outstanding buying oppurtunity especialy for Berkshire hathaway shareholders.
Money never sleeps. and cash will keep pumping into Berkshire from its operations, as a shareholder of BRK.B i believe that Warren Buffett and Charlie Munger already have a plan and chose the right people to manage and lead Berkshire Hathawy into prosperous future even when they are not around.

Disclaimer:

Don’t treat any opinion expressed by me as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of my opinion.

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