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Buffett Says Recession Is Here
By JD Bluefield | April 28, 2008
Skip all the fluff in the news. There’s no baby-bumps, steroid controversy or Hannah Montana’s here, only what’s really important in the news today.
Buffett, the only one calling a spade, a spade: In the CNBC article, Buffett says that the traditional model for a recession, two consecutive quarters of negative GDP growth, is out the window right now. Buffett put it very simply,
“This is not a field of specialty for me, but my general feeling is that the recession will be longer and deeper than most people think, this will not be short and shallow. I think consumers are feeling gas and food prices, and not feeling they’ve got a lot of money for other things.”
I must agree and have been telling people this for months. Things are bad and will get worse before they get better. The sentiment in the US right now is pretty gloomy, people are still losing jobs, airlines are folding, gas is at an all time high and the credit/housing crunch will keep the pressure on growth.
He goes on to later praise the Fed for its quick action in saving Bears-Stern. See my quick explanation on this bailout in Ten Biggest Stock Market Crashes.
Check out my earlier post on Buffett’s gum buy and how to Engineer your investments like him. With the market pushed down, other opportunities will present themselves. Look for great companies and buy at good prices.
Topics: Investing |
2 Responses to “Buffett Says Recession Is Here”
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April 28th, 2008 at 9:44 pm
Have you wondered why the Wrigleys sold their company? True there was a large premium, but what was the advantage?
You have said that 1) They are major players in its field with a dominating position; 2) They have very strong consumer driven brands. 3) They have high/stable profit margins; 4) And they are very constant and predictable businesses.
Very interesting…
April 29th, 2008 at 3:45 pm
Well, one can only speculate. Buffett has a history of leaving the previous guard intact after a take over, so the current and CEO’s and board members will still have their jobs.
William Wrigley Jr. II was the last Wrigley to head the company, and I don’t see any other family members in the managment. So to me if your kids don’t want or are unqualified to take over the family business, a massive payout for you and a little (read: Billions of dollars) for them works just as well.
Also, in an industry like chewing gum there is no surprise growth or burgeoning expansion, so if someone comes along and offers you 25% premium, that’s nothing to sneeze at.