Top Approaching in Berkshire Hathaway?

By: Elliott Wave International

Editor's note: The following article originally appeared in a special September-October double issue of Robert Prechter's Elliott Wave Theorist, one of the longest-running financial letters in the business. From Sept. 25 to Oct. 1, Prechter's firm, Elliott Wave International, is throwing open the doors to all of its investor services 100% free. Click here to join EWI's free Investor Open House now.

It piques our interest when a person or company makes the front page of a magazine or newspaper. On August 15, USA Today ran an article with a chart on the share-price performance of Warren Buffett's company, Berkshire Hathaway. The Guardian and other papers covered the news, too, which was that the stock had cleared $200,000/share.

The stock (symbol BRK-A) has returned a 19.7% compounded annual return to shareholders since 1965, the year Buffett turned a failing textile company into an investment company. It has returned 22.8% annualized since 1977. Let's just say that the stock has produced about 20% per year compounded.

The above figure shows that the stock has just met a 16-year resistance line on arithmetic scale. The next figure shows that it is still a bit shy of that line on log scale. Continue reading "Top Approaching in Berkshire Hathaway?"

Today's Video Newsletter: SOROS makes another Billion, HERBALIFE and the KETCHUP KING!

Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your mid-day market update for Thursday, the 14th of February.

Yesterday our MarketClub TV show covered the foreign exchange markets and just how big and important they are in the world of trading. There is news today that US hedge fund investor, George Soros, made another billion dollars since last November betting against the Yen. With the help of our Trade Triangle technology, we will see whether or not you would have made any money in the Yen move. What do you think about this currency?

If you didn't see yesterday's show, you can watch it here. Continue reading "Today's Video Newsletter: SOROS makes another Billion, HERBALIFE and the KETCHUP KING!"

Buy-And-Hold No Longer Gold?

When I first contacted Christopher Hill, editor of, about doing a guest blog post he jumped at the chance and hit me with his idea for an educational post for our members. Truthfully this post is a LONG time coming. It delves into the Buffett world. Now most people either love his style or think he's just lucky.

Well read the article below and make your comments and thoughts known. Do you think Buffett will survive? Do you think Faber is crazy? Whatever it is let's get the comments rolling as this is a great topic.


Legendary stock investor Warren Buffett has been in the news a lot lately.  This past weekend, the noise was all about Berkshire Hathaway, Buffett’s investment holding company.  The Bloomberg website reported Saturday:

“Warren Buffett’s Berkshire Hathaway Inc. posted a fifth-straight profit drop, the longest streak of quarterly declines in at least 17 years, on losses from derivative bets tied to stock markets.

Fourth-quarter net income fell 96 percent to $117 million, or $76 a share, from $2.95 billion, or $1,904 a share, in the same period a year earlier, the Omaha, Nebraska-based firm said in its annual report. Book value per share, a measure of assets minus liabilities that Buffett highlights in his yearly letter to shareholders, slipped 9.6 percent for all of 2008, the worst performance since Buffett took control in 1965.”

As if this wasn’t enough bad news, earlier this week it was revealed that Berkshire Hathaway, which lists more than 70 operating businesses in its latest annual report to shareholders, is cutting manufacturing jobs and closing facilities.

Due to all the bad headlines, some are starting to question if the “Oracle of Omaha” is starting to lose his magic touch.  And investors, in particular, wonder if the buy-and-hold investing strategy, which Buffett is known to champion, is ineffective for these volatile times.

One veteran investor who openly questions the buy low, sell high approach to stocks these days is Dr. Marc Faber, otherwise know as “Dr. Doom” by the financial press.  Faber, who publishes the “Gloom Boom & Doom” report, predicted the current financial crisis and is famous for telling his clients to get out of U.S. stocks a week before the October 1987 market crash.  Back on December 1, Faber said the following on CNBC regarding the buy-and-hold strategy:

“We’ve moved into an environment of very high volatility where you will have up and down moves of, like, 20 percent all the time and that is a traders’ market… The Warren Buffett approach is dead and it’s been dead for ten years and it’s going to be dead for another ten years… We can have huge rebounds and then huge downturns again and I think the best for the average investor is to play it relatively in small amounts and not gear up and take big risks.”

Is Dr. Faber correct in his assertion that the stock market is now a traders’ market?  Buffett’s critics might say so, and point to the performance of his investment vehicle as proof.  Yet, I still remember those who dismissed Buffett as being over-the-hill in the late nineties due to his avoidance of technology stocks.  And what ever happened to these individuals?  Recently, Marc Faber has been calling for a rebound in equities.  Just last week, he told investors gathered in Tokyo:

“A countertrend rally could occur soon where stocks would suddenly rise quite substantially.”

If Faber is right and equities rally, then fall again significantly, expect the strategy, and poster boy, of buy-and-hold investing to come under even more fire down the road.

Christopher E. Hill
“Tracking The World’s Greatest Investors”

Crazy Columbus Day ... plus more horror stories

There's no doubt about it, these are crazy times in the market.

My business partner, Dave Maher, came up with the new name for one of the most volatile days in market history ..."Crazy Columbus Day." I think many of us in the industry will always refer to Columbus day with a crazy in front of it.

This is the time to remain cool, calm and collected. Looking back, how did this all happened? It was like a snowball rolling down a hill, gradually building over a period of time and turning into a huge problem. Now that we are sitting in the dust of the crash we ask, who's to blame? It doesn't matter if you're on the Democratic side of the aisle or the Republican side, both parties are to blame for the mess we are in now.

Legendary speculator, George Soros doesn't understand them.

Felix G. Rohatyn, the man who saved New York from financial catastrophe in the '70s, calls them “hydrogen bombs.”

Warren E. Buffett calls them “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”

They are all referring to the non-transparent derivatives market. All of these well known financiers figured out the dangers of these toxic financial instruments years ago, yet the Chairman of the Federal Reserve insisted that everything was fine and that the risk in the derivatives market was well spread out.

There was one woman that the CFTC who could have prevented this financial mess. However, this woman left the agency after being verbally beaten down for warning of the possible crisis. Could she have stopped the snowball before it began rolling?

I recently read an article in the New York Times newspaper (online) that I think you'll find fascinating, as I know I did.

Having been a member of several futures exchanges I know that transparency is without a doubt the key to a healthy and vibrant market. The lack of transparency for the past 12-15 years in the derivatives market is nothing short of criminal.

The lack of transparency allowed large banks to make unusually big profits as no one had any idea of what they were actually trading. It all sounded so good on paper. Structured investment vehicles (SIV), collateralized debt obligations (CDOs) all of these looked great in the derivatives modeling world. Unfortunately in the real world, financial modeling does not always work out. And when it comes to big money, the element of greed always comes into play. Greed is something you cannot model into an equation.

Here is the link to the New York Times article I hope you find it interesting, informative and eye-opening.

Adam Hewison
Co-creator, MarketClub