Dennis Ng VS Warren Buffett

[sereneloong]

Here's an article from Bloomberg where billionaire Warren Buffett has the complete opposite view from Dennis.

Perhaps he has vested interests but the data doesn't seem to support his views either.

Anyone has any thoughts on this?
Serene

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Buffett Bets ‘Very Heavily’ Against Second Recession Even After Jobs Data
Q
By Andrew Frye - Jul 8, 2011 8:59 PM GMT+0800

Billionaire Warren Buffett said he is wagering on continued economic expansion and doesn’t expect a second recession.

“I would bet very heavily against that,” Buffett told Bloomberg Television’s Betty Liu on the “In the Loop” program today after data showed slowing U.S. job growth. “How fast the recovery will come, I don’t know. I see nothing that indicates any kind of a double dip.”

The unemployment rate unexpectedly climbed to 9.2 percent in June, the highest level this year, and hiring by companies was the weakest since May 2010, Labor Department data showed. U.S. employers added 18,000 jobs last month, less than the 105,000 median estimate in a Bloomberg News survey.

“It means that we’re still a ways off from getting to where we should be,” Buffett said in the interview, in Sun Valley, Idaho. “We’re seeing growth around the world, but it’s not mushrooming.”

Buffett’s Berkshire Hathaway Inc. (BRK/A) added about 3,000 jobs last year after cutting more than 20,000 positions in 2009. The Omaha, Nebraska-based company employed about 260,000 people at units from insurance and shipping to consumer goods and energy, Berkshire said in February. Employment gained last year at Berkshire units including car insurer Geico and railroad Burlington Northern Santa Fe. Staffing fell at carpet-maker Shaw Industries.

“Jobs come with demand,” Buffett, 80, said today. “We’re seeing demand a lot of places but we’re not seeing it in the construction field.”
Bricks, Carpet

Berkshire owns a real estate brokerage, a maker of manufactured homes and units that construct roofs and sell bricks and carpet. Buffett said in February that a housing recovery would begin “within a year or so” and that he’s preparing the company’s businesses for growth. Buffett is chairman and chief executive officer of Berkshire.

Berkshire expanded its Acme Brick unit with a $50 million acquisition, and Johns Manville, the roofing subsidiary, is building a $55 million plant in Ohio, Buffett said in his annual letter. Shaw will spend $210 million on plant and equipment this year, Buffett said.

“We will come back big time on employment when residential construction comes back,” Buffett said. The unemployment rate will drop to 6 percent “within a few years,” he said.

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

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

[sereneloong]

To view the entire interview of Warren Buffett's view on why he doesn't think there would be a second recession, pls click link below and scroll down to play video.

http://www.cnbc.com/id/43684048

[Dennis Ng]

28 Jul 2011

I learned from Warren Buffet, Jim Rogers and George Soros that we need to do our independent thinking. So I'm NOT concerned even if others, including Warren Buffett, share my views.

I will review what they (eg. Warren Buffett) say and see whether what they say make sense or NOT, and whether I should change my view. But as of now, I don't think I will change my view.

Even in Oct 2010, I already expected the failure of QE2 and that unemployment rate in U.S. to remain high...that was even before official approval of QE2.

Next year, I expect a Crash in U.S. government bond markets, prices to fall by 20% to 40%, 10 year bond yield to spike up from current 2.9% to 4% to 5%...global stock markets to Crash. Beijing and Shanghai property market to crash by up to 50% as well.

Despite having record profits, Goldman Sachs just announced to cut 1,000 jobs in U.S. and move the jobs to overseas, including Singapore. U.S. companies can increase their profits, by CUTTING jobs, not increasing jobs. Guess either Warren Buffett does NOT know this or he pretends NOT to see the FACTS in front of his eyes.

Cheers!

Dennis Ng

Here's an article from Bloomberg where billionaire Warren Buffett has the complete opposite view from Dennis.

Perhaps he has vested interests but the data doesn't seem to support his views either.

Anyone has any thoughts on this?
Serene

-----

Buffett Bets ‘Very Heavily’ Against Second Recession Even After Jobs Data
Q
By Andrew Frye - Jul 8, 2011 8:59 PM GMT+0800

Billionaire Warren Buffett said he is wagering on continued economic expansion and doesn’t expect a second recession.

“I would bet very heavily against that,” Buffett told Bloomberg Television’s Betty Liu on the “In the Loop” program today after data showed slowing U.S. job growth. “How fast the recovery will come, I don’t know. I see nothing that indicates any kind of a double dip.”

The unemployment rate unexpectedly climbed to 9.2 percent in June, the highest level this year, and hiring by companies was the weakest since May 2010, Labor Department data showed. U.S. employers added 18,000 jobs last month, less than the 105,000 median estimate in a Bloomberg News survey.

“It means that we’re still a ways off from getting to where we should be,” Buffett said in the interview, in Sun Valley, Idaho. “We’re seeing growth around the world, but it’s not mushrooming.”

Buffett’s Berkshire Hathaway Inc. (BRK/A) added about 3,000 jobs last year after cutting more than 20,000 positions in 2009. The Omaha, Nebraska-based company employed about 260,000 people at units from insurance and shipping to consumer goods and energy, Berkshire said in February. Employment gained last year at Berkshire units including car insurer Geico and railroad Burlington Northern Santa Fe. Staffing fell at carpet-maker Shaw Industries.

“Jobs come with demand,” Buffett, 80, said today. “We’re seeing demand a lot of places but we’re not seeing it in the construction field.”
Bricks, Carpet

Berkshire owns a real estate brokerage, a maker of manufactured homes and units that construct roofs and sell bricks and carpet. Buffett said in February that a housing recovery would begin “within a year or so” and that he’s preparing the company’s businesses for growth. Buffett is chairman and chief executive officer of Berkshire.

Berkshire expanded its Acme Brick unit with a $50 million acquisition, and Johns Manville, the roofing subsidiary, is building a $55 million plant in Ohio, Buffett said in his annual letter. Shaw will spend $210 million on plant and equipment this year, Buffett said.

“We will come back big time on employment when residential construction comes back,” Buffett said. The unemployment rate will drop to 6 percent “within a few years,” he said.

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

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

[tohsimon]

Hi,

I agreed with Dennis's comment on job shifting to Asia or other regions outside US. I works for a US company with 8000plus employees worldwide. Our corporate has planned to employed 500 to 700 R&D staffs to be based in India and China for this year to early next year. This gives us an indication of the thinking process of the corporation in US.

[jfoo2]

So many news about financial firms cutting jobs....besides the one mentioned above.

Credit Suisse to cut 4% of staff worldwide

http://www.channelnewsasia.com/stories/ ... 59/1/.html

HSBC may cut more than 10,000 jobs

http://ca.reuters.com/article/businessN ... L620110728

including Standard Chartered, UBS etc.

[Dennis Ng]

Hi,

I agreed with Dennis's comment on job shifting to Asia or other regions outside US. I works for a US company with 8000plus employees worldwide. Our corporate has planned to employed 500 to 700 R&D staffs to be based in India and China for this year to early next year. This gives us an indication of the thinking process of the corporation in US.

Hi all,
yes, so the trend in U.S. is the companies in U.S. might be recovering in terms of sales and profits, but the increased in sales is more from increased expansion in Asian markets. And part of the increased profits is due to them cutting down employees in U.S. and moving their operations overseas.

Given that 70% of U.S. economy comes from Internal Consumption by Americans, all these trends means that unlikely for unemployment rate to come down to say healthier levels of 4% to 5% from 9.2% currently. And if americans are out of job, they will NOT be increasing their consumption, and if consumption in U.S. does NOT recover, HOW can U.S. economy recover?

So to me, I'm very curious that a Shrewd and Observant Investor such as Warren Buffett is BLIND to such trends that is even APPARENT to a Non-American like Dennis Ng, who seldom even go to U.S. (so far, I've only gone to U.S. twice in my life)...

Which brings me to the conclusion that:
1. either Warren Buffett is ignorant or he has LOST TOUCH with Reality
2. or he is trying to Talk Up the market, he is trying to say something positive in the face of all the negative news out there.

I personally think it is MORE likely to be 2. than 1.

[TieGe]

Hi All,
The trend that jobs are shifting to china and India and Asia did not start now. It started at least 7 years ago.

When I was hiring for intel, Dell, Ge Money, Gm every new head count are always in Asia. However only when economy is doing well, then jobs count will go back to the us.

Without job there is no growth, period. New jobs in usa will be created only in good time. The customers are in Asia, to compete you stay in the market not far away. For us mnc for them to compete they have better move their hq to Asia. Of cause they can still remain to be listed in USA.

So let us fasten our seat belts before the roller coastal ride.

Tie Ge

[ahvyee]

yup, same as my current company.. the Europe has also stop hiring and all of them are focusing to Asia, increasing the headcount for Asia as well... everyone want to get the market share in China.. this is the current trend now..

[obokchuan]

dear dennis:
do you think global financial crisis may come early than our expectation.thank you

[uris]

Hint: Warren buffet might be the same as Dennis! keep in mind that his assets are so large that timing the market can be very difficult, not to mention that selling stocks in US will incur taxes.

Warren Buffett: The Ultimate Market Timer?

He times the market too according to this article:

The idea seems crazy, but my friend who runs a value oriented RIA pointed it out to me and it seems that Warren Buffett has had some great market timing. My friend does not want to be named but I wanted to share some thoughts on the topic. I was going to do a formal write up but instead decided to leave it as our emails back and forth. The bold is my writing and the regular text is my friend. I also edited parts of the email to make the conversation flow better and took out parts not relevant to this topic. See below:

Does anyone know how Warren Buffett predicted the crashes in 69 (he closed his partnership), 87 (he wasn’t buying for Berkshire) , 00 (the famous speech) and 08 (he was 100% cash in his personal portfolio in 06-07)? In spite of his pretensions that he doesn’t predict these things he seems to have the best record in doing just that. He doesn’t use simple valuation methods by themselves. Benjamin Graham doesn’t have nearly as good of a record as WEB–Graham thought that the market was already overvalued in the 50′s! For example, WEB has said is that the Market cap/GDP ratio is the single best measure of market valuation. But it does not explain why he was not buying in early 1987. This measure does explain why he was so bullish on America in late 2008. I would like to know what else he goes by besides this ratio. He has dropped hints that he combines this ratio with the number of good deals that he finds on the stock market. In other words, when this ratio is on the high side AND there are no bargains then watch out. However, this does not completely explain 1999. There were plenty of bargains in microcaps then. So what is WEB’s system?

me: You make good points about Buffett but you really think he timed the market so well? I know that Berkshire had a huge cash load in the mid 00s while the bubble was building but if he knew a crash was coming it would have even been worth the taxes incurred to sell all or at least a significant amount of Berkshire’s stock portfolio, especially financials. Maybe Coke would be too expensive to sell because of the long holding period and it is less cyclical but why didnt he sell Wells Fargo for example? Buffett said that I think in regards to Market cap to GNP but either way it is very similar. Right now the market cap to GDP is 96 which is modestly overvalued but not super overvalued. Also if Buffett thinks that is the best measure in 87 it was not too high in fact it was low? Warren Buffett in my eyes is super hard to understand, Benjamin Graham is much easier to understand I personally think.

WEB times the market now with his personal portfolio more than with Berkshire’s portfolio. He wrote in one of the letters that he was not planning on selling his big positions even if prices went up out of hand. Also, in his personal portfolio he was 100% cash in 2007 while Berkshire was buying. I don’t know about his personal portfolio in 2000, although he made that famous speech a few months before the bubble burst. He is super careful never to say anything that will embarrass him later on, and therefore that speech was a good indication that he was pretty sure than the bubble would burst before 2009. When I say that Buffett timed the market very well, I don’t mean that he got it right to the day. He himself says that he cannot predict the short term.
Here is WEB record:
1955? Opens partnerships against Ben Graham’s advice.
1969: Closed partnership due to lack of bargains. The market went nowhere and then crashed.
November 1974: Great deals – Forbes interview. The market zoomed up.
November 1979: PUBLIC ARTICLE ANNOUNCING: Stocks on sale! The market did very well starting from 1981/2.
1987: Cash buildup in BRK portfolio. In BRK letter says that there are few good deals. Then came the ’87 crash.
November 1999: PUBLIC WARNING: Don’t expect the market to do well! And then the bubble popped.
2006: 100% cash in personal portfolio. No public warnings.
November 2009: PUBLIC ANNOUNCEMENT: Buy American, I am! Buys derivatives on the stock market index saying it will for sure be worth more in a decade. It has already paid off.
When he makes a public speech or writes a article, that means that he was pretty sure of himself. When he went against the advice of Benjamin Graham (who he highly respected) to open the partnership in spite of Grahams warning to wait for the market to cool down, that meant that he was pretty sure of himself. What were his timing signals? No bargains: 1969, 1987, 2006. Lots of great bargains: 1950′s, 1974, 1979, (2009?). In public he talks about valuation. But his timing device seems to combine valuation with a heavy dose of “# of bargains”.