Warren Buffett Rules out Double Dip Recession

Bloomberg News:


Buffett Rules Out Double-Dip Recession Amid Growth

Sept. 13 (Bloomberg) -- Warren Buffett ruled out a second recession in the U.S. and said businesses owned by his Berkshire Hathaway Inc. are growing.

“I am a huge bull on this country,” Buffett, Berkshire’s chief executive officer, said today in remarks to the Montana Economic Development Summit. “We will not have a double-dip recession at all. I see our businesses coming back almost across the board.”

Berkshire bought railroad Burlington Northern Santa Fe Corp. for $27 billion in February in a deal that Buffett, 80, called a bet on the U.S. economy. The billionaire’s outlook contrasts with the views of economists such as New York University Professor Nouriel Roubini and Harvard University Professor Martin Feldstein, who have said the odds of another recession may be one in three or higher.

“I’ve seen sentiment turn sour in the last three months or so, generally in the media,” Buffett said. “I don’t see that in our businesses. I see we’re employing more people than a month ago, two months ago.”

The world’s largest economy grew at a 1.6 percent annual pace in the second quarter, exceeding the median forecast of economists surveyed by Bloomberg News, revised figures from the Commerce Department showed on Aug. 27. U.S. economic growth will slow to 2.5 percent next year from a projected 2.7 percent this year as unemployment above 9 percent tempers consumer spending, according to the median forecast of economists surveyed by Bloomberg News this month.

‘Signs of Life’

Buffett built Omaha, Nebraska-based Berkshire into a $200 billion provider of insurance, energy and luxury goods and services over four decades. The company cut about 20,000 jobs last year as demand for its products declined.

The economy is still recovering and isn’t likely to slip back into recession as “signs of life” appear in the U.S., Bank of America Corp. CEO Brian Moynihan said today at an investor conference.

Buffett, who spoke via video connection to an assembly in Butte, Montana, said U.S. banks were ready to boost lending and encouraged entrepreneurs to seek financing for their business ideas. Berkshire is the biggest shareholder of Wells Fargo & Co., the top U.S. home lender.

‘Night and Day’

“It’s night and day from a year, year and a half ago,” Buffett said. “I know Wells Fargo, they would love to have $50 billion more of loans now. Go in and talk to the banker.”

Buffett amassed the world’s third-biggest personal fortune through decades of stock picks and takeovers. Berkshire’s stake in San Francisco-based Wells Fargo was valued at about $8.2 billion at the end of June. Buffett’s firm also owns $5 billion of preferred stock in Goldman Sachs Group Inc. and more than $1.5 billion of shares in U.S. Bancorp, according to data compiled by Bloomberg.

Berkshire gained $1,023, or 0.8 percent, to $125,000 at 4 p.m. in New York Stock Exchange composite trading. The stock has climbed 26 percent this year, compared with a decline of 1.8 percent for Wells Fargo and an 8.6 percent drop for Goldman Sachs.

The U.S.’s “central challenge” will be to speed growth, General Electric Co. CEO Jeffrey Immelt said at the conference. Immelt, 54, called for an increase in exports of manufactured goods to help compete globally. Expansion will be further bolstered when smaller businesses and consumers regain confidence in banks and are able to borrow more, Immelt said.

“We need people to be able to feel like they’re going to get loans, the process is going to work and that they understand the rules,” Immelt said. Signs across the world show growth improving as evidenced by a rise in GE’s orders, he said.

GE is the world’s biggest maker of jet engines, power-plant turbines, locomotives and medical imaging equipment.

To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net Kelly Bit in New York at kbit@bloomberg.net .

Quote for the day

The man who backbites an absent friend, nay, who does not stand up for him when another blames him, the man who angles for bursts of laughter and for the repute of a wit, who can invent what he never saw, who cannot keep a secret - that man is black at heart: mark and avoid him. - Cicero (106 BC - 43 BC)

Meyado Press Release

http://www.free-press-release.com/news-the-importance-of-having-a-will-1283501590.html

RDR

What is RDR, what does it mean to the UK industry.

Interesting overview here from Aegon

http://www.brainshark.com/brainshark/vu/view.asp?pi=243492815

More on Wills

A timely piece from City Wire regarding Wills.

http://www.citywire.co.uk/money/i-thought-i-didnt-need-a-will-but-i-was-wrong/a427192?re=10900&ea=266133

The importance of Wills

Over the coming weeks we will be running a campaign to bring to the attention of the international community the importance of having a properly constructed and valid will.

Most expatriates have assets in many jurisdictions and this makes the process of probate convoluted and time consuming if a properly recorded will is not in place.  Take for example a British domicile married to a French domicile, living in Dubai with assets in the UK, France and Dubai.  Not only are there issues of where the assets are taxed but also sharia law to contend with.

By planning ahead and having a will and exploring probate avoidance investment structures you will be doing your family a great service.

Please email me at markpaine@meyado.com if you need further specific information.

Stock picks - why you should care about the new iPhone

As a financial planner I generally shy away from giving advice on shares, or stocks as known in the US (that's a whole other story).

However in this fast moving modern age of information and online share dealing more and more clients are taking views on individual shares.  There are some basics which can be put into place in order to make the most of your dealings.

Buy what you know - either in the industry in which you work or from your view on the street - which stores are selling, where is the traffic headed, what's selling?  If you google  New iPhone you'll find a website with over 7 million hits which merely has rumours about the new iPhone. Interest of that magnitude in a product not yet launched could be a good indication of how Apple might fare over the coming months.  What you have to decide is whether the market has already priced this in or not.

How many to buy? To reduce your risk or to achieve as we say "unsystematic risk" you need to buy between 20 and 35 companies, this may not be possible initially but work up to 35 to reduce risk.  That said with risk comes reward and for the average person with job, family and social life managing 35 shares is not practical. There is a school of thought which says you should never hold more than 10 at any time.

What's your strategy - you need a business plan to trade. Are you going to day trade or buy and hold. What are your stop losses and stop gains.

Buy when there is blood on the streets - the famous mantra of the Rothschild family.  BP is a good example of this - their share price has fallen drastically over the past few days as a result of the Gulf of Mexico Oil spill.  This does not mean that fundamentally they are a bad company and the price may recover as quickly as it came off.

Stop loss - determine when you are going to call it quits.  At that point are you going to sell out or buy more to average down your purchase price.

Don't lose your shirt. Only invest or put at risk what you can afford to lose - your stop loss strategy will help this, but likewise have a limit to pull out profits when they arise and stick to that limit.  If you can pull out your initial stake and ride the profit then you are in good shape.

Look for dividends - there were a number of shares which even though their market price fell during the credit crisis still paid good dividends. In a world of low interest rates a dividend yielding share portfolio can be attractive.

How to access - there are so many ways to buy shares, via your bank, insurance platforms, online and via brokers. Depending on the volume you will trade cost factors play a large part of your decision in how to trade.

In closing, as I started out by saying a share portfolio is only a part of a well structured financial plan for you and your family but managed well it can be lucrative and even fun.