From "Bull Markets; Bear Markets; Secular and Observant", long time readers will recognize it as part of our ongoing discussions of bear markets:
...Secular bear markets are characterized first by the initial decline and then by P/E multiple contraction.
During the last secular bear, 1966-1982, the cyclical bear of '73-'74 had a S&P 500 trailing four quarters P/E of 6.97 for the quarter ending 9/30/74 while the '80-'82 cyclical had a P/E low of 6.68 for the quarter ended 3/31/80.
One of my favorite Warren Buffett quotes:
December 31, 1964: DJIA 874.12
December 31, 1981: DJIA 875.00
From Bloomberg:“Now I’m known as a long-term investor and a patient guy, but that is not my idea of a big move.”That’s a secular bear market.
Berkshire Posts 25% Intel Gain by Shunning Buy-and-Hold
Berkshire Hathaway Inc. (BRK/A) locked in a gain on its Intel Corp. (INTC) bet by selling its stake less than a year after making the investment, shunning the buy-and-hold strategy favored by Chairman Warren Buffett.Meanwhile Investment News is reporting on another name that hit a 52-week and 4-year high today:
Berkshire’s Geico unit accumulated 11.5 million shares of Santa Clara, California-based Intel in the second half of 2011 for an average price of about $22 each, according to National Association of Insurance Commissioners data compiled by Bloomberg. Buffett’s firm sold the stake in the world’s largest semiconductor maker for an average price of $27.25 this year through May 8, netting about $60 million in profit.
The holding period is short for Omaha, Nebraska-based Berkshire, which Buffett built through acquisitions and by accumulating the biggest stakes in companies such as American Express Co....MORE
One bet lifts Buffett's game
Berkshire Hathaway Inc. (BRK/A)'s stock portfolio is benefiting this year from Chairman Warren Buffett's bet on Wells Fargo & Co. (WFC), the home lender that has rallied 24 percent since Dec. 31.It's almost as if the Oracle knew about QE(x).
Wells Fargo has averaged about 17 percent of Berkshire's U.S. equity investments this year, according to data compiled by Bloomberg. That compares with about 1.4 percent in the Standard & Poor's 500 Index. The gain in the bank's shares has buoyed the portfolio as other investments, such as a holding in International Business Machines Corp. (IBM), have trailed peers....MORE