Forum Archive Index - March 2003

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Gavin,
 
>
>Lazyhaggis wrote:
> 
>>Buffett's latest letter to shareholders effectively warns investors 
>>to get out of equities, wait on the sidelines for better value, and 
>>of a pending collapse in financial companies due to the derivatives
>>markets. After three years of falling prices stocks remain
>>unattractive.
> 
>
>Surely buffett was talking about US stocks which still have an
>historically high PE value, there are plenty of good deals in the
>New Zealand market.
> 
> 

You are correct Gavin.  I just found the link

http://www.fortune.com/fortune/investing/articles/0,15114,427758,00.h
tml

Here are a couple of pertinant quotes:

"Charlie and I are increasingly comfortable with our holdings 
in Berkshire's major investees because most of them have increased 
their earnings while their valuations have decreased. 
But we are not inclined to add to them. Though these enterprises      
 have good prospects, we don't yet believe their shares are 
undervalued." 

"Unless, however, we see a very high probability of at least 10% 
pretax returns (which translate to 6% to 7% after                   
corporate tax), we will sit on the sidelines. With short-term money 
returning less than 1% after-tax, sitting it out is no fun."


Accroding to this article, Warren is quite happy to hold onto the 
shareholdings that he owns while the prices are decreasing, so long 
as underlying earnings are increasing.

He is also looking for companies that are yielding 6-7% after tax.   
Well, guess what?  There are lots of NZ companies that will give you 
that sort of return.  IMO if Warren were an investor in the  New 
Zealander he would not be sitting on the sidelines.   I think he 
would be buying.

SNOOPY




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