Wheeeee – what a ride!
It's been so long since we had even a minor correction that people are acting like this little pullback is the end of the World. If you'll notice, on our Multi-Chart, only the Russell has crossed their -5% line and, globally, only the Hang Seng has even tested it's 10% line – and they've already weak bounced 2%. When did we forget that markets do not go straight up forever? Has the constant Fed meddling left us with nothing but skittish investors, who cut and run at the first inkling of pain?
Warren Buffet has owned KO for 40 years – including the crash of 2009, when it went down $7Bn, for him along with the rest of the market. When the stocks got lower – he bought more – because he KNOWS what the stocks are worth, even when the Retail and even "Professional" investors did not.
WFC is 22% of Berkshire's stock holdings but it was only 14% when the stock dropped from $35 in 2008 to $9 in 2009, wiping out $9.1Bn on Berkshire's balance sheet on 350M shares. What did Buffett do? He bought 175M more shares for $10 and those 525M shares are now worth $26Bn at $51. Buffett didn't panic because he KNEW what WFC was worth and he also knows that investors are, for the most part, fairly irrational people.
I have been complaining all year about how irrational prices were and we essentially sat out the top of the rally and stayed mainly in CASH!!! in our Member Portfolio HOPING for a correction (a bigger on than this, frankly) that would give us some nice entry set-ups for 2015. We don't think the market will collapse, but it would be nice to come back down to our 200 dmas to test the bottoms on some real volume.
As we're down about 5% (average) in our indexes and as we have the Fed Minutes this afternoon, I'm looking for a weak bounce, acccording to our 5% Rule™, of 1% – anything less than that today will be a very bearish sign!
IN PROGRESS
