WARREN BUFFETT INVESTS IN FOREIGN CURRENCIES AND DRUG STOCKS ;bullmarket.com
TODD'S TAKE: Over last weekend, legendary investor and billionaire Warren Buffet commented on the current market and his recent investments. The prevalent theme extracted from Buffett's words is: Patience is a virtue. The mega investor said that for the time being, he has more cash than ideas, and is in no rush to invest any of the company's $24 billion in cash.
So what is Buffett looking at? He does have his eye on two things: Foreign currencies and drug stocks. He commented that he is concerned about the size of the U.S. trade deficit and that he was investing money in foreign currency in response to the problem. He's been investing in foreign money since last spring, something he's never done previously. Buffett wouldn't say what currencies he was investing in, but we have the feeling that it is probably the yen and euro.
Commenting on Drug stocks, Buffet believes the right companies can give a great return on capital. He thinks that even low-tier drug companies have solid sales and hardly ever fail because they have substantial earnings and product longevity because of patent protection.
Buffett also said that he is not buying Treasuries, but in fact, BERKSHIRE HATHAWAY (BRKb, $2,593, up 51) sold $9 billion in long-term Treasuries in the first half of 2003. His take was that it was a good time to sell Treasuries with long-term rates falling to 40 year lows. The sale rewarded Buffett with $2.7 billion in operating profits.
THE BOTTOM LINE: Buffett has a keen eye for investing in undervalued assets. But his track record as a stock market soothsayer is not quite as good as his investment track record. Still, every investor should review their portfolios regularly to see if valuations are out of line with fundamentals. We do it daily for our clients! |
