Warren Buffet - A Modern Captain AhabHere's the scene from a 1956 movie, 'Moby Dick' starring Gregory Peck as Captain Ahab. Obsessed with revenge to slaughter the White Whale, Captain Ahab was drowned while entangled in ropes around the Whale. As the Whale moved off, diving and rising again, the dead Captain's arm rose and fell again, seeming to beckon his fellow sailors to follow. They did follow and all but one perished.
Warren Buffet's bullish comments appeared in an editorial last Friday in the New York Times, urging the public to buy Common Stocks. There was a time that Warren Buffet was secretive, but he came out of the closet some years ago with advice that he bought 100 Million ozs. of Silver, after the fact. Very quickly, Silver hit $11.00 per oz. and retreated into a long consolidation. In a long early morning interview recently with MSNBC, he used the time wisely to support his interests and investment positions.
Since when does Warren Buffet tell the public that he is buying before he is finished? He knows the risks in the U.S. economy and the impact that a debt implosion across corporate, consumer, municipal & Federal levels will have upon his Net Worth. Berkshire Hathaway is the equivalent White Whale stuffed with multiple issues and Warren Buffet is the 'Modern Day Captain Ahab' beckoning the public to follow him.
If Warren Buffet is incorrect that 'Stocks Aways Rise In The Long Term', then he is doomed. That is his greatest fear - A prolonged and sharp downturn in Common Stock prices that would wreck his lifelong plan of long term accumulation. Thus, he beckons to the public to support the markets and turn the trend up.
So on the subject of waves and the stock market, so far the decline dating from October 2007 seems to be unfolding in a classic five wave decline.
Waves counts will differ, but I chart my course on the general stock market with a compass that is reading 'The End Of The Third Wave Of The Third Wave'. There is still the declines of the 'Fifth Wave Of The Third Wave' ahead of us and then the entire 'Fifth Wave'. Short term, the market should bottom for general equities by next week, maybe sooner . This is where Resources may seperate in a divergence. We have to see.
We're somewhat more than 1/2 way through the decline and if we hold true to course of a classical five wave decline, it should finish up somewhere around 4,500 D.J.I.A. in the July to October 2009 area.
Expect volatility to continue after the decline ends near 4,500 D.J.I.A. with a strong contra trend rally retracing perhaps 50% of the decline. Someday, traditional equities will stay flat for a prolonged depression like period abhorred by the public who will returned to banks. It wouldn't surprise me to see a D.J.I.A of 2,000 or less.
The only life boats from the carnage will be Gold, Silver, Major Mining Shares and a barrel of Oil. Explorers? Resource prices have to demonstrate resilience and there will be another cycle to drag them up. Get as close as you can to these sectors and hang on through the waves with SOUND FINANCIAL PLANNING and diversification.
Maybe by this weekend I'll have the time to post - DAWN OF A NEW RESOURCE CYCLE. It's already written and entirely fundamental. One missive at a time but the title is clear - Prices now falling below the cost of production will usher in a new cycle. Maybe we can have some input and discussion from professional sources to snap investors out of 'Shock and Awe'. If he could be interested, Peter Grandich is capable of doing a better cost analysis of different resources than myself. Then again, we're in a stampede of liquidation that may have to run the course.
Very Bullish on Precious Metals and Oil.