An tSionna: Warren Buffett
Just a little over a year ago Warren Buffett in a now famous New York Times Op-Ed piece indicated that he thought stocks were cheap and that he for the first time in a very long period was a personal buyer of US equities. The title of the article was "Buy America. I Am". Here is a link to the original article: http://www.nytimes.com/2008/10/17/opinion/17buffett.html?_r=2&scp=2&sq=warren%20buffett&st=cse&oref=slogin.
We discussed this editorial a few days later. We said at the time we would come back periodically to see how Warren had done. http://lumencapital.blogspot.com/2008/10/buffetts-new-york-times-editorial.html Time has a way of getting away from us and we did not write much about Buffett's bet over the past year although we never forgot the editorial. Buffett's purchase of Burlington Northern Railroad {BNI} last week reminded us to go back and see how Warren had done over the past year. For reasons we explained then we used an average price of 928 over a two day period as a price basis to grade Warren.
We discussed this editorial a few days later. We said at the time we would come back periodically to see how Warren had done. http://lumencapital.blogspot.com/2008/10/buffetts-new-york-times-editorial.html Time has a way of getting away from us and we did not write much about Buffett's bet over the past year although we never forgot the editorial. Buffett's purchase of Burlington Northern Railroad {BNI} last week reminded us to go back and see how Warren had done over the past year. For reasons we explained then we used an average price of 928 over a two day period as a price basis to grade Warren.
The first thing we'd note is that Buffett, who has never characterized himself as a short term investor, certainly did not buy at the bottom. We say this not knowing if he continued to buy into his original stake but base this claim only when we know he said he was buying stocks. At one point in the Spring Buffett was down over 25% on his investment.
Yet we know that Buffett was and continues to be bullish on the economy and hence on stocks. His purchase of BNI illustrates that. The S&P 500 closed yesterday @ 1093.08. That puts Buffett up about 18% since then, not including dividends. Buffett took a lot of flack from the pundits when he penned that article. As of now however it looks to us like he's getting the last laugh. We'll check in on Warren again in maybe about a year. We think he'll still be making money on his October 2008 purchases.
*Long ETFS related to the S&P 500 in client and personal accounts. BNI may be a component of several different ETFs we own for personal & client accounts but we do not own any of the shares in any account.
posted by CR English at 7:51 AM
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