Monday, March 9, 2009

Warren Buffett officially a marketing sociologist

Anyone who reads this blog regularly knows I idolize Warren Buffett, as well as Bill Gates.

Today Warren Buffett made some outstanding remarks about the economy on CNBC, sounding just like a marketing sociologist!

I have said the economy has bottomed out, but like a fast moving object, it takes time to slow down and reverse its momentum; Newton’s Law of Motion.

I
have a way of looking at stocks that uses a system of where they have been and where they are going. It has proven quite successful for me. If I don’t follow the charts, I lose money. It’s all watching the charts, or as we learned in MBA training, if you can’t measure it, it doesn’t mean… anything.

If you look at the Dow Jones industrial averages for the past 100 years, you will see today's charts are similar to 1929 to 1935. Good luck on that one.

Buffett is 1,000 percent on the mark when he says “the economy has fallen over the cliff.” He’s studying that 100 year chart and seeing the same thing I am – a cliff in 1929 and one in Oct., 2008.

Buffett sounded like a marketing sociologist, not someone attacking Obama. He’s accurate. Roosevelt had two economic stimulus packages fail in the ‘30s. Buffett is looking at Obama’s plan as a marketing sociologist should.

Here’s some of my favorite parts:

“Well, it can't turn around on a dime (he understands Newton’s law - ed). That doesn't happen. I mean, it--a lot of stuff works this way. When 600,000 more people become unemployed last month, that not only affects those 600,000, it affects them terribly, but it affects everybody else. They get scared about losing their jobs.

"
The percentage of people are scared about losing their jobs in this country is way higher than the actual numbers that are going to lose them, but they're behaving in an entirely different manner

"P
eople, they started saving money. for years we told them to save money, and now they're saving money, and that's a double whammy.

"So we've had this great economic machine like nothing the world's ever seen, and it started sputtering a little, and we said, ‘Well, maybe we should kind of slow it down and see what happens.’ And it sputters more. And what we may not realize is that there's interaction, that the slower you run the machine at, the more it sputters. So it's a job to get it working again, and it won't happen fast, Becky, I mean--and unemployment will lag at the end, the actual turn around."

Buffett
was not as bold as me. He did not say the economy has bottomed out. I will and have. Yet, as Buffett noted, it takes time. He likens it to a machine, I liken it to applying the brakes and you still hit another car. Applying brakes doesn't stop the car. Stopping depends upon the velocity and length of that velocity. Go back to the 100 year chart. That is a 60 year run - ten years less than USSR's total existence.

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