Buffett magic on Wall Street

JAKARTA, Investor Daily

There is a kind of paradox situation in American financial markets at this time. Bond market would raise expectations because the price of these securities would increase. But, see what happens to the stock market. Private equity, Hedge fund, fund managers, and financing companies have to do fire sale. Price securities jog with the subprime mortgage fall not known.
"But, for Warren Buffett this situation into a beautiful day," write Karen Richardson as publish daily Wall Street Journal edition, 22 / 8.

Yes, the name of Buffett has been a guarantee for the success of investment in the financial markets. In fact, the magic spark Buffetology with value investing, always surprises that give the opposite direction to the market generally. When he is bearish market initiative to buy shares of stock-price smithereens.

Therefore, it is not wrong when the Wall Street Journal proclaim about Buffett's presence in a mortgage company in the U.S., Contrywide Financial Corp., the company shares that have been destroyed infected selling pressure rebound 9.9% to U.S. $ 21.79 level on the closing trading Tuesday (21 / 8/ 2008).

The market seems to share Contrywide even though "the god investor” is clearly reject incoming said buying Countrywide shares. When he followed the collection of funds for the presidential candidate of the Democratic Party, Barack Obama, (Tuesday, 21 / 8/2008), TV station CNBC reporter trying to confirm the truth concerning the entry of Buffett to Countrywide. As usual, he says sklent news or rumor circulating.

However, markets are still undisciplined. Even stock-stock company with a mortgage that jog the name of the icon investment also menguat. Wells Fargo shares recorded rise up 0.73% to U.S. $ 37.37 level. while, on the weekend before this stock price plunge free.

Stories concerning magnet Buffett in Wall Street never ends. Last week, when the company Thornburg Mortgage Inc. Mortgages backed letter sell securities worth U.S. $ 20.5 billion, the market concluded that he was also involved in the purchase of securities as a standby purchaser.

Indeed, when the market price of mortgage debt in the U.S. to crash, a number of fund managers, Hedge fund and private equity is doing in sales compensation. These factors are outside grip Buffett.

Nevertheless, according to market observers capital Roland Haas, a lot of losses suffered by the fund Hedge fund manager and a kind of Bear Stearns, JP Morgan and BNP Paribas happen because this company too much leverage, or engage in transactions with the interest rate margin is high enough. "This is a basic problem faced by the United States and the world market in general at this time," said Roland

Investment

For Buffett, the financial market fluctuation, especially in the U.S. stock market and securities related to subprime mortgage to be a very appropriate moment to invest. As disclosed in interview with CNBC TV, Buffet said, he is optimistic the market sluggishness at this time to create investment opportunities. "Honest, lethargy present market opportunities for us because when the disturbance occurred, the prices become more affordable," said the boss of Berkshire Hathaway.

He added, that is not guaranteed but generally occur when
market turmoil sometimes it creates real opportunities.


Previous The Wall Street Journal (TWSJ) reporting, and business debt Servicing mortgage portfolio and other securities that are supported Countrywide mortgage will likely attract Buffet. Like other creditors mortggage, Countrywide buried in difficulty due to suprime mortgage crisis.

During this Buffet continues to add to the company's financial-services company, include they have significant exposure in the mortgage market.
Early this month, Berkshire Hathaway in the report to the regulator said, have invested in the bank of America, one of the six largest mortgage creditors in the U.S.. Berkshire is also a shareholder in the old Wells Fargo, the second largest mortgage creditor after Countrywide.

Why believe in the market as Buffett? Some noted the fact, since 1991, Buffett has been involved in a variety of buy-sell securities all of which ended advantage. Try to see what he did when Salomon Brothers ask Buffet become chief executive officer. In 1991, Salomon Brothers was faced with a variety of criminal charges from the authorities a number of related transactions in the treasury market. Buffett came convince some investors that everything will be finished and the Salomon Brothers will obey all debt and approve by Buffett.

Seven years later, Buffett again become angels when rescue Long Term Capital Management's bankruptcy because the deity is to buy all the investment assets and corporate debt, despite earlier he had decided not to buy shares Long Term Capital. The company is alive again and go back search by fund manager.

Now, many market observers consider Buffett action. Advised, in the first quarter 2007, the company, Berkshire invested about U.S. $ 3.7 billion of debt in the mortgage market. Has a rating of AA. However, a rarity, shares owned by “the icon” is not exactly shocks. Rise up of 1.9% to U.S. $ 2200 per share.

Thomas Russo partner at investment fund Gardner Russo & Gardner, said Buffet is some benefit by the purchase of assets in a relatively cheap price. This surplus to him, "said Russo.

Starting from U.S. $ 100

Warren Buffett investment only start with the money of U.S. $ 100 at the end of the decade of 50-an. In mid-decade 90-an investment value has grown to more than U.S. $ 30 billion. And according to the Wall Street Journal, cash funds at this time Warren Buffet has reached U.S. $ 50 billion.

Buffett was the person who is happy to learn and appreciate their teachers. He confessed himself a disciple of two famous investors: Benjamin Graham and Philip Fisher. Benjamin Graham, the investment strategies value (value investing), which is a combination of stock selection strategies based on fundamental analysis of the company's financial position and strategy and diversification.

In particular strategy Graham emphasizes quantitative criteria to find the market price of the shares much cheaper price rather than propriety. Unlike the Graham, Philip Fisher rely more on qualitative criteria of the key factors determine the success of companies such as quality management team.

Benjamin Graham, known as the father of modern securities analysis and dijuluki Dean of Wall Street (Wall Street Dekannya). Book klasiknya Security Analysis that be friends with David Dodd and published the first edition of year 1934, still continue to reprint at this time. Masa be small in the middle of poverty in New York.

Academic professor second investment, plus the lessons learned from experience that obtaining private investor Buffett makes piawai a unique version of the investor Buffett. Investment has been a secret topic many books best seller books such as Robert Hagstrom Jr. essay. - The Warren Buffett Way. (cd / mc)