Warren Buffett's Secret to Making 100% a Year

I love the Berkshire Hathaway annual report!

Especially Warren Buffett’s letter to shareholders. The report gives us a great view of the overall economy from a man who has his finger in every pot, and his letter to investors gives us a very good insight as to how things are going in the various sectors his operations cover. Most importantly, what I have learned in my own 40 years of reading Mr. Buffett’s reports (my grandfather was a shareholder) is what should shape any long-term investing strategy: patience and performance.

I often preach to members the joys of letting gains compound, and our $25,000-$100,000 Portfolio, which is currently at $27,531 (up 10%) after 4 weeks, is an exercise in how to quickly compound small gains over the course of a year. Primarily, we try to follow Warren Buffett’s Number One Rule of Investing, which is: Don’t Lose Money. Buffett’s Rule #2 is: See Rule #1 – and like us, it’s not that nothing Warren Buffett ever buys loses money, it’s just that he doesn’t ever buy things he isn’t willing to stick with UNTIL they make money. Sure we take a few losses along the road but, by being selective in our entries, we don’t discard stocks that we carefully selected just because the market temporarily disagrees with our valuations.

Detail Source: http://seekingalpha.com/article/255198-warren-buffett-s-secret-to-making-100-a-year?source=article_sb_popular_4_old

EW: DJIA/IHSG/EUR-USD/N225/HSI (Bullish Continuation) vs Oil/Gold/USD-IDR (Bearish Continuation)

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HANG SENG

Jim Rogers Says He's `Short' Emerging Market, Nasdaq Stocks: Video

Feb. 28 (Bloomberg) -- Jim Rogers, chairman of Rogers Holdings, talks about his investment strategy for global stocks and commodities. Gold advanced, approaching a record, as tensions in the Middle East boosted oil prices, increasing demand for precious metals as a protector of wealth and hedge against inflation. Rogers also discusses his strategy for the U.S. dollar. He speaks in Hong Kong with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg).

Source: http://www.bloomberg.com/video/67100110/

EWI: Social Mood Turns Negative: Markets Will Soon Follow, Robert Prechter Says

From the Mid-East to the American Midwest, constituents are rising up in protest against the government.  Not all these events are specifically linked but they do reflect a broader shift in human psychology that will have major ramifications on society, from politics to the markets. At least that's what Robert Prechter, the foremost follower and evangelist of the Elliott Wave Principle believes.

What's an Elliott Wave?

    "The Elliott Wave Principle is a detailed description of how groups of people behave. It reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, creating specific and measurable patterns," according to Prechter's website. In this case, we're witnessing "a change towards a negative social mood," says Prechter.  This shift has already manifested itself in a top in emerging markets, Prechter tells Aaron and Henry in this accompanying video.

Source Video:
http://finance.yahoo.com/tech-ticker/social-mood-turns-negative-markets-will-soon-follow-robert-prechter-says-535967.html;_ylt=AptJoa8c326NsYLZX2PNMlO7YWsA;_ylu=X3oDMTFhZDI5Nm9tBHBvcwM5BHNlYwNzcGVjaWFsRmVhdHVyZXMEc2xrA21hcmtldHN0b2ZvbA--?tickers=eem,fxi,udn,uup,^dji,^gspc,tbt

BOB PRECHTER: We're Still In A Massive Bear Market And Stocks Will Crash To New Lows

Investors have gotten wildly bullish of late, as the bull market that started in early 2009 keeps driving stocks to new highs. But the pigs are about to get slaughtered, says Bob Prechter, president of Elliott Wave International and editor of the Elliott Wave Theorist.

Prechter still thinks the new bull market is just a cyclical "retracement" of some of the bear market losses that we've had since the market crashed in 2008.  Prechter expected this retracement to drive stocks 50% above the market lows, but stocks have since soared 30% higher than than he expected.  So when the day of reckoning comes, Prechter thinks, it will be even more startling.  And Prechter still thinks that stocks will eventually crash to new bear-market lows (read: below 6,800 on the DOW).

What makes Prechter think this day of reckoning may come sooner rather than later?

Source Video:
http://finance.yahoo.com/tech-ticker/bob-prechter-we%27re-still-in-a-massive-bear-market-and-stocks-will-crash-to-new-lows-535963.html;_ylt=Ar_X0_1f7AmK6zqQHKSGwOFl7ot4;_ylu=X3oDMTEycWsyMWFyBHBvcwM5BHNlYwNhcnRpY2xlBHNsawNib2JwcmVjaHRlcnc-?tickers=^dji,^gspc,spy,^ixic,qqqq,gld

Six Reasons Why the Stocks Bull Market Could Keep Charging

Louis Basenese writes: After the stock market sold off this past Tuesday, it’s time to address a question that I keep getting asked:

Is the market overdue for a correction?

You don’t need to be Sherlock Holmes to figure out what the mainstream financial press wants us to believe.

    * Negativity Alert #1: Headlines abound, touting the fact that the S&P 500 index has already doubled from the 2009 lows. Oh, and that’s the quickest double on record since 1936, they add.
    * Negativity Alert #2: In addition, Bloomberg reports that over the last 120 days, we’ve enjoyed the fewest 1% pullbacks (14) ever for a market that’s risen by more than 30%.

Based on these stats, the pundits would like us to believe that this bull market is unlike any we’ve ever seen – and is ready for a retreat. But that’s a lie, so don’t buy into it…

Why the Pundits Are Wrong About This Bull Market

If you take time to dig deeper, history indicates that stocks could run higher still. Consider, for example:

    * Short-Term Performance: Market historian John Harris identified nine earlier stock market rallies just like this one. Each one lasted over 120 days, with gains between 25% and 35%, and without a 5% dip. The longest lasted 146 days. In almost every case, though, when the streaks finally ended, the bull market didn’t. On average, in fact, stocks went on to rise another 32%.
    * Intermediate-Term Performance: Based on the past six months, we’ve seen five other times in history when the market has enjoyed a similarly strong rally. In all five instances, it continued to rally for another year. And by as much 37%, according to Bespoke Investment Group.
    * Long-Term Performance: Although the current bull market surpassed the 700-day mark earlier this month, 11 other bull markets have lasted longer. Much longer. In fact, nine of the 11 prior bull markets lasted for more than 1,300 days. Do the math and it’s possible that we’re only a tad more than halfway through this bull market.
    * Valuation: Despite the impressive run-up, stocks aren’t grossly overvalued. The S&P 500 trades at a price-to-earnings ratio of 15.7. The long-term average is 15.4 since 1930. Stocks aren’t expensive on a price-to-book ratio (P/B), either. They currently trade at a P/B of 2.2 times, compared to a long-term average of 2.44.
    * Presidential Cycles: The S&P 500 has never declined during year three of the presidential cycle. Instead, it rallies by an average of 17%. So with extra emphasis, we’re thankfully in year three of President Obama’s term.
    * “Smart” Money vs. “Dumb” Money: Institutional investors (i.e. the “smart” guys) are all about this bull market. The monthly Bank of America/Merrill Lynch Global Fund Manager survey registered its most bullish reading in its 10-year history last week. However, everyday investors (i.e. the “dumb” guys) still haven’t bought into the bullishness. Only 37% of their assets are currently invested in stocks, compared to a historical average above 50%. If you want a clear sign of a top, wait until the “dumb” money pushes all their chips into stocks.

Source: http://www.investmentu.com/2011/February/six-reasons-this-bull-market-could-keep-charging.html

by Louis Basenese , Advisory Panelist