THE DOT - if this turns orange or red be alert

Friday, October 10, 2008

Mythical Berkshire- technical outlook

The weekly chart of Berkshire shows a classic case of a top with the correction/downtrend already in progress. We are in wave 3 down, which should drop to 106k to make a 50% retracement but more likely to 95000, which is also a prior top and should serve temporarily as support. Berkshire has still the Buffett premium, since it did not have the steep loss other insurance companies had so far. The wave 1 magnitude of 40k gives possible targets for wave 3 two standard variations, the lowest is a 1.38 factor of 55000 and factor 1.618 of 65000 points down. The first one creates a target of 94000 and the second one at 84000. The first one matching the minimum support line but the 80000 area will come at some stage as well.

The question is if it's within wave 3 or rather wave 5? Basically, I have to say that Mr. Buffett is evidently one of the best investors until recently but he is doing repeatedly things which do not make sense to me. Starting at the 40 bil. nominal amount of short puts on indices which carry quite some theoretical losses as of now (but as an extremely shrewd investor he is, he made them 'European style', that means only at expiration they can be exercised). But also that he called recently at1250 SPX the markets at a good value was not the Warren Buffett we know. Not because we are 30% lower now but as the financial system breaks down to call a 16 times earnings market as a good value puzzles me quite a bit.

I took the freedom to analyse his astrological chart. He is blessed with the exceptional skill to gather money as he already proved as a six year old buying 6 packs for 25 cents and reselling them at 30 one by one. He had the perfect training to have an insightful father who happened to be a stockbroker. So, his fate took his course and he made money. Actually, he ran one of the first hedge funds by operating an investment pool and the amazing matter of fact he made an incredible profit around 40% on a yearly basis but charged his fellow pool members what he condemned very recently at Hedge Funds a 1.5 and 15 % profit share after earning a given interest rate benchmark. After he founded Berkshire, he seemed to have stopped charging that profit share and pays himself only a decent salary, which a rookie gets coming from an Ivy League MBA school. To come to my final point, as astrology shows, we are going into extremely stressful times in the next 3-4 years, Similar to the ones which were present at the big depression in 1930 and he will have a period of a few years where he will not have the support of the stars, to put it modestly.

No comments:


About Me

I am a professional independent trader