S&P Erred in Cutting U.S. Rating: Buffett

[Broncojohnny]

Oh and I almost forgot, Berkshire earnings came out late Friday and he has $42 billion dollars that he needs to spend. He's waiting for the market to go down right now. In fact, he's hoping it does.

[Denny]

Oh and I almost forgot, Berkshire earnings came out late Friday and he has $42 billion dollars that he needs to spend. He's waiting for the market to go down right now. In fact, he's hoping it does.

There's a difference between going down and crashing.

[Broncojohnny]

There's a difference between going down and crashing.

He'd love nothing better than to see a 75% drop. I'm serious.

[Denny]

He'd love nothing better than to see a 75% drop. I'm serious.

He would become insignificant.

[Broncojohnny]

He would become insignificant.

Nah, you got to realize what he owns. Look at what most of the blue chips did in 2008. most of them shaved about a third of their value. What I mean is that the stocks with true quality are very resilient in a market crash. A market crash culls the herd, good companies stay around and take a 40% hit, the shit gets flushed down the toilet by getting knocked down 90%. He'd love to see that 40% hit and would buy into it, laughing all the way to the bank. He has done it over and over again.

[Denny]

Nah, you got to realize what he owns. Look at what most of the blue chips did in 2008. most of them shaved about a third of their value. What I mean is that the stocks with true quality are very resilient in a market crash. A market crash culls the herd, good companies stay around and take a 40% hit, the shit gets flushed down the toilet by getting knocked down 90%. He'd love to see that 40% hit and would buy into it, laughing all the way to the bank. He has done it over and over again.

Right. The company itself will "keep on keepin' on" no matter the price of the stock. If APPL went to .05 tomorrow, Apple would still have more of a value than that and would continue its production as usual.

But all of that is the real problem with people that own stocks. They don't own a part of the company, unless they have a massive sharehold. Stock holders are what I'm talking about as taking hits. If all these panicing people pull their money out (notice I said out and not move to another stock) because there is no trust in the investment, then does any of it have any real value?

Now Buffett can pull something like a major purchase to gain some sort of ownership, but most of the "players" in the market can't anyway.

[Broncojohnny]

Right. The company itself will "keep on keepin' on" no matter the price of the stock. If APPL went to .05 tomorrow, Apple would still have more of a value than that and would continue its production as usual.

But all of that is the real problem with people that own stocks. They don't own a part of the company, unless they have a massive sharehold. Stock holders are what I'm talking about as taking hits. If all these panicing people pull their money out (notice I said out and not move to another stock) because there is no trust in the investment, then does any of it have any real value?

Now Buffett can pull something like a major purchase to gain some sort of ownership, but most of the "players" in the market can't anyway.

You are talking about the intrinsic value of the operation. And that value does exist. The quality of it is real important in downturns because shitty operations are the first to get hammered.

You look at "control" of a company all wrong. If you are buying the right company, you don't want any control of it, you want them to keep doing what they have been doing. If you are smart in picking the company then they are doing something right and you don't want them to stop.

As for the market's perception of what the value is, who cares? I don't value shares on what the average person is willing to pay for them. The average person is a moron who has no clue and panics when the stock market drops and buys in when it is near the peak. Just listen to the average person talk about the stock market. Hell, you saw it yourself with the people buying silver at $50. People love a winner. The sheep buy high and sell low, always have, always will. I value shares based on what the company can do, what kind of earnings that share generates and the quality of the business. I couldn't care less what the guy across the street thinks it is worth. I wouldn't rely on his judgement for anything because it is flawed beyond belief. Although I'll be happy to buy his share if he wants to piss his pants and take pennies on the dollar for it because of the crisis du jour.

[Denny]

But I think that with crash after crash, you'll start seeing that everything in the market will be worth less (collectively). I'll use the DOW since most reading this are more familiar with its numbers.

If the "DOW" was at 22,000, it is more of a broad reflection of what the rest of the stocks in general are doing, not just the ones being counted. So if It was double that of today, then most of the stocks would be valued around double what they are now. Now, I'm just doing this as an example hypothetical. I now not every stock would just double because of the leap. So what if it drops to half and settles a bit higher? For the most part, most of the other stocks would be reflecting that to some degree. Now if this happens and people are just completely fed up with this charade. All the stocks would still be respectively in order, just half their value.

See where I'm coming from? Maybe I'm just so totally off, I'm not making sense. Fuck me.

[Broncojohnny]

But I think that with crash after crash, you'll start seeing that everything in the market will be worth less (collectively). I'll use the DOW since most reading this are more familiar with its numbers.

If the "DOW" was at 22,000, it is more of a broad reflection of what the rest of the stocks in general are doing, not just the ones being counted. So if It was double that of today, then most of the stocks would be valued around double what they are now. Now, I'm just doing this as an example hypothetical. I now not every stock would just double because of the leap. So what if it drops to half and settles a bit higher? For the most part, most of the other stocks would be reflecting that to some degree. Now if this happens and people are just completely fed up with this charade. All the stocks would still be respectively in order, just half their value.

See where I'm coming from? Maybe I'm just so totally off, I'm not making sense. Fuck me.

I know exactly what you mean. You are right too, everything is collectively worse less based on historical norms. Right now the S&P 500 is trading at around 12 times prior year earnings, maybe 11. Historical norm is around 17 times earnings. I know it has traded as low as eight times earnings in the past, maybe even lower.

[Denny]

I know exactly what you mean. You are right too, everything is collectively worse less based on historical norms. Right now the S&P 500 is trading at around 12 times prior year earnings, maybe 11. Historical norm is around 17 times earnings. I know it has traded as low as eight times earnings in the past, maybe even lower.

OK, cool. I was getting frustrated because I thought I was babbling (more than usual). LOL

Now that we're here, what I have a concern with is that most of the investors are losing faith that it can be pulled back up collectively, much less individually. I'm getting there with the lack of resistance to this thought process.

I guess I need to see how things can improve before I can follow some trending and signals to see if that path is being taken.

[TexasDevilDog]

http://www.bloomberg.com/news/2011-0...recession.html

Billionaire Warren Buffett said Standard & Poor’s erred when it lowered the U.S. credit rating and reiterated his view that the economy will avoid its second recession in three years.

I wonder what credit rating a country would merit if they have 100% debt to GDP ratio, and are borrowing 9% of GDP this year?

[TexasDevilDog]

Any objective, intelligent person should think hard and fast about what he has to gain by making statements like these.

Stevo

BINGO! He doesn't want to loose money. He has been riding this treasury bubble for years. Don't prick the treasury bubble before he gets out.

He may not be the largest foreign holder of U.S. debt like China, but he said that Berkshire Hathaway has considerable Treasury Bill exposure.

http://www.theatlanticwire.com/business/2011/08/warren-buffett-snoop-top-ten-reactions-ratings-downgrade/40916/

[Broncojohnny]

I wonder what credit rating a country would merit if they have 100% debt to GDP ratio, and are borrowing 9% of GDP this year?

This country or some shithole?

[TexasDevilDog]

This country or some shithole?

Debt ratios are just ratios. We are not concerned about feelings, in science and mathematics numbers are just what they are. I don't manipulate the meanings of numbers if I don't like the numbers, such are some scientists about the some global studies.

[Broncojohnny]

Debt ratios are just ratios. We are not concerned about feelings, in science and mathematics numbers are just what they are. I don't manipulate the meanings of numbers if I don't like the numbers.

You are right, Bangladesh has the same ability to increase its GDP as the United States does, what was I thinking? You'll make a perfect engineer.