Now after reading his 2006 lecture, it becomes even more funny.
In 2006’s lecture to his clients, he suddenly turns from extremely bearish in 2004 to extremely bullish (or at least "appears" to be so), and told his clients that this is an extraordinary opportunity in every 15-20 years to buy big blue-chip companies because their yield is same as treasury bond, and they got earning potential in additional to the yield. He also said the big companies’ stocks are extremely cheap.
This is really ridiculous. First, he "forgot" all the potential problems he mentioned himself in 2004. Second, he only sees that big companies have growth potential in additional to earnings yield, but bond doesn’t have growth potential, but he forgot big companies’ earning is also not fixed, and could go to negative at recession, but treasury bond’s return doesn’t change. Normally, if big companies’ return is same as treasury during a recession, that may be a good value, but if those two are the same at the peak of bull market (or well into the bull market), that is not really cheap (especially if the treasury yield is very low because of low inflation), since the corporate earning has a large room to go down in down turns.
I would say the Dow at mid-2006 is not very expensive, but it is not really cheap either. I guess Buffett felt the same since he didn’t buy a lot of stocks in 2006 and didn’t say the stocks became cheap then.
This guy is either missing the basics, or try to fool his clients. I think he has both. But no matter what, he and his century management are on my black-list now 🙂
You can see a so-called expert with a fairly good track record in 30 years and listed as a guru in gurufocus.com could be such a silly person, what about the analysts on the street…
2.you want to make sure that whoever you’re going to entrust has a proven level of honesty and integrity so you don’t have to worry.
3.you have to make sure that you have to have a basic comprehension of the strategy the person’s using so that when times get tough, as they
4.you have to assure yourself that there’s a level playing field. Everyone has to be on the same side of the fence so to speak. Everyone should