ECON Bob Prechter: Bear Market Rally Is Over, Stocks Headed For New Lows

[Spirit Of Truth]

http://finance.yahoo.com/tech-ticker...d-For-New-Lows

[undead]

good advice

[energy_wave]

By Jonathan Stempel and Lilla Zuill

NEW YORK (Reuters) - If you always wanted to invest alongside Warren Buffett, but found it too expensive, you now have your chance.

Buffett's decision to conduct a 50-for-1 split of Class B shares of his Berkshire Hathaway Inc (BRKa.N) (BRKb.N) lowers the price of entry for ordinary investors who long found it prohibitively costly to buy the stock.

The split is one piece of Berkshire's $26 billion takeover of Burlington Northern Santa Fe Corp (BNI.N), and is intended to make it easier for shareholders of the railroad who want to swap their shares for Berkshire stock to do so.

Berkshire Class B shares closed Monday at $3,265. After a 50-for-1 split, they would cost just $65.30. Class A shares of Berkshire trade around 30 times the price of the Class B shares, or around $100,000, and are not being split. The split requires approval of Berkshire shareholders.

"I do think it will attract more investors," said Justin Fuller, author of the Buffettologist.com blog.

Buffett, 79, had never split Berkshire stock. The world's second-richest person reasoned that splits could attract speculators rather than the long-term investors he prefers for his Omaha, Nebraska-based insurance and investment company.

In a shareholder letter in March 1984, when Berkshire Class A shares traded around $1,300 and 12 years before the B shares were created, Buffett said a split would "attract an entering class of buyers inferior to the exiting class of sellers."

His tune has changed little. "I'm not big on stock splits," Buffett told CNBC television on Tuesday. He said Tuesday's split, however, will let small Burlington shareholders as well as larger ones participate in a tax-free stock swap.

The price of Berkshire Class B shares is roughly six times that of Google Inc (GOOG.O), the highest-priced stock in the Standard & Poor's 500 stock index .SPX. Berkshire is the largest U.S.-based company by market value not in the index.

Buffett believes stock splits result in "no intrinsic increase in the value of anything," said Frank Betz, a principal at Carret/Zane Capital Management LLP in Warren, New Jersey. "But the market belies that."

NO RIFF-RAFF

Berkshire created Class B shares in 1996 to thwart unit trusts "purporting to be low-priced 'clones' of Berkshire" by chopping up the Class A shares in pieces to be sold, Buffett said in his shareholder letter that year.

"Charlie and I do not care whether our shareholders own Berkshire in large or small amounts," Buffett wrote, referring to Berkshire Vice Chairman Charlie Munger.

"What we wish for are shareholders of any size who are knowledgeable about our operations, share our objectives and long-term perspective, and are aware of our limitations, most particularly those imposed by our large capital base," he added.

One question posed by the stock split is the future of Berkshire's annual shareholder gathering, which Buffett calls "Woodstock for Capitalists," usually the first weekend in May.

http://www.reuters.com/article/marke...51012420091103

[Dozdoats]

If you always wanted to invest alongside Warren Buffett, but found it too expensive, you now have your chance.

Globalist scum WB should hold his breath till he gets any of my money.

dd

[Spirit Of Truth]

Originally Posted by Dozdoats

If you always wanted to invest alongside Warren Buffett, but found it too expensive, you now have your chance.

Globalist scum WB should hold his breath till he gets any of my money.

dd

Nice sig.

[MamaDel]

"He thinks it'll be another 5 or so years before we turn the corner but the good news is when we do, it'll be the buying opportunity of a lifetime."

I think it should have said:

He thinks it'll be another 5 or so years before we turn the corner but the good news is IF we do, it'll be the buying opportunity of a lifetime.

MamaDel

[Richard]

Originally Posted by MamaDel

"He thinks it'll be another 5 or so years before we turn the corner but the good news is when we do, it'll be the buying opportunity of a lifetime."

I think it should have said:

He thinks it'll be another 5 or so years before we turn the corner but the good news is IF we do, it'll be the buying opportunity of a lifetime.

MamaDel

The trouble is now any upturn will be blunted by offshore outsourcing, immigration, manufacturing going to cheap labour countries, the cost of Govt programs including ObamaCare, th greatly increased national debt to pay off the banks' bad debt, measures to reduce CO2 etc etc all in all pointing to a very slow recovery.

[Spirit Of Truth]

Originally Posted by Richard

The trouble is now any upturn will be blunted by offshore outsourcing, immigration, manufacturing going to cheap labour countries, the cost of Govt programs including ObamaCare, th greatly increased national debt to pay off the banks' bad debt, measures to reduce CO2 etc etc all in all pointing to a very slow recovery.

And an overall 350%+ debt-to-GDP ratio....what's really whacky is the U.S. federal debt to GDP ratio is relatively healthy compared to many other developed nations like Japan, the UK, etc. Everyone wants a lot for a little, and therein lies a huge problem for democracies.

[Spirit Of Truth]

Prechter's TechTicker interview continues:

http://finance.yahoo.com/tech-ticker...Prechter-Warns

For those who believe in "rational markets" and the idea that investors on Wall Street have not completely lost touch with reality, consider the following diagrams.

Today, the official unemployment rate, which is seriously skewed in the first place, broke above 10%. Here's what's been expected:



Meanwhile, expectations for future corporate earnings are at the loftiest levels in human history:





What this represents is that mass mood is about as insanely optimistic relative to historical reality as is possible at the current juncture. An upset of unprecedented scale from the psychologically important Dow 10,000 level is likely to unfold. What shape this takes is known only to God, but I do believe it will be of biblical significance.

[Spirit Of Truth]

The way the DJIA close within a few points of Dow 10K over the past two days is reminiscent of when the DJIA closed at 2999.75 on July 16th and 17th of 1990, just when Saddam Hussein made a major speeach threatening Kuwait. That weekend Iraq massed troops on Kuwait and the DJIA fell 5 percent. Two weeks later, Iraq invaded Kuwait and the DJIA well 25% from the 3K mark.

http://finance.yahoo.com/q?s=^DJI





Wouldn't be surprised if Israel pulls the trigger here on Iran and sets off WW3.

While people are saying, "Peace and safety," destruction will come on them suddenly, as labor pains on a pregnant woman, and they will not escape. [1 Thessalonians 5:3]

[UncurledA]

Spirit of Truth:

What this represents is that mass mood is about as insanely optimistic relative to historical reality as is possible at the current juncture. An upset of unprecedented scale from the psychologically important Dow 10,000 level is likely to unfold. What shape this takes is known only to God, but I do believe it will be of biblical significance.
__________________

__________________

You made your point very well, and over the months you've really helped me mentally articulate a gnawing feeling something is very fundamentally wrong with the deep desire for 'herd' and acceptance, among people. We must do what's right, seek out the truth even if it scares us, and point to and lead into the light though no one follow. That is the lesson I learn.

[China Connection]

The general population believes what they want to believe. The other thing is where is there something to believe in that is positive. I have learnt to get on with life. Prepare to an extent yes. but live day by day.


Most people are locked in to where they are living. Don't expect them to be able to change as they are set in their ways.

[Spirit Of Truth]

Also see Prechter's interview on CNBC:

http://elliottwave.com/cnbc-11-05-2009.aspx