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Where are we now? May 3, 2010

Posted by shaferfinancial in Finance, Uncategorized.
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There is much noise out there about the economy, much of it disengaged from any facts.  Brad Delong has put together some charts that give us a good view of where we are now here.

As we emerge from the recession there is going to be some upward and downward movement.  I mentioned last week that I wouldn’t be surprised if the stock market pulls back 10-20% at some time.  However, I would not be surprised if good corporate earnings are able to keep that from happening too.  I know that doesn’t predict much, but I really am not very good a short term predictions.  All I know is that increasing earnings will, over the long run, mean higher stock prices.

Much has been made of Buffett’s defense of Goldman Sach’s over the weekend.  I think his comments are not just the result of having a GS investment, like the cynics suggest.  More likely since his business is insurance and bond insurance is at the foundation of the accusations, he might know a little about what he says.  After all he has been on both sides of the financial transaction in the past.  He states that it does not matter who is on the other side of the transaction, since you are responsible for looking at the investment and making your own decision.  Since these were institutional buyers, they were fully aware and capable of doing their due diligence about this investment and should not place the blame on anyone else!

In other words “big boy’s don’t cry.”

Looking forward to the Friday release of 1st quarter financials for Berkshire.  Looks like a great quarter and improving operating income!  Which gets us back to the original question and where we are now?  According to Buffett and the numbers we are emerging from the recession and seeing much improvement across the board!

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