Yesterday, Warren Buffett and Berkshire Hathaway announced a stunning $34Billion Deal where the Sage of Omaha clearly put a bullish spin on the market and where he thinks the US economy is going in the next few years. Naysayers jumped on board to quickly denounce the buy, the bulls ran rampant on Wall Street to carry BNI up in trading yesterday before profit takers jumped off at end of day.
BNI which carries goods from Canada to Mexico and from the West Coast is a good play if the economy picks up. The railways are an inexpensive way to control costs by bringing in goods from overseas and carrying them to Wal Mart and other discount retailers. If the economy does indeed pick up, then goods at these retailers will move quickly off the shelf, requiring replacement which in turn will make the trains run on time. If the economy stalls, the trains stall, goods sit at the docks waiting to be shipped and the whole bet seems like a bad idea.
Trade itself is coming under fire from critics who see the impartial trade balances with some South American countries and China as a factor to blame in the stuttering American economy. Critics feel that until the trade imbalance is addressed the economy will continue to sputter and spurt through a cycle of recovery attempts. Buffet doesn’t think so. The investor has made these types of plays before and it’s paid off for the shareholders of Berkshire Hathaway, which may be announcing a 50 to 1 stock split very soon if gossips are correct. Buffet is bullish on the USA, and naysayers and doubters need to get on board with that message.
But first, rein in the politicians. A hotly contested race in New York is now being hailed as the return of the Republican Party. Yet a recent poll said the majority of American voters identify themselves as neither Republican nor Democrat, but somewhere solidly in the middle. Most people, it seems, feel the government should stay out of their wallets and their bedrooms, with a few extremists in both parties who want to put their hands, eyes and ears in both. I say keep the financial and physical pervert politicians out of my money, and out of my personal business, and guess what, most American’s agree with me. This race in NY may portend a shift in the balance on the political landscape, but we can’t go back to Republican policies. Nor should we go near Democratic policies. There has to be middle ground, and it’s up to us to find it, and broadcast that messages to the men and women in Congress and higher office and encourage our economy. It’s the number one issue facing most American’s today, who really don’t care about trade or bulls, or bears except in how it directly affects their pocket books and ability to support their families.
Of course, if the average American would take 10 hours to get educated on how to trade in the stock market by using headlines and news to plan their portfolio plays, they wouldn’t have to worry about what the politicians are doing. But education eludes the vast majority, and the thought of continuous learning is as alien as the Mandarin most should be picking up to address our future a decade or so from now when trade with China is virtually borderless.
Buffet is bullish on the American economy and so the swing trader should be also. Invest in BNI or Wal Mart, or other companies that will have an upswing in 1Q & 2Q 2010 to make the profits in your stock portfolio swell.
