Not for the first time Buffett and I agree

Yes, I know…no blog postings for 5 days and then POW, 5 in a row. Sorry folks, but good stuff is afoot. Fortune is running a story that can be found at http://money.cnn.com/2009/02/04/magazines/fortune/buffett_metric.fortune/index.htm that is saying that a metric of Warren Buffett’s is suggesting it is time to buy U.S. equities. Well, duh! Your’s truly has been saying that now for three weeks. Frankly, this is one of the best opportunities to buy equities since I have been an adult, lo these many years.

So what the heck is Buffett’s metric, Voss? When the total market value of U.S. stocks is less than 70-80% of the Gross National Product (i.e. GNP) then it is time to buy. This is really a very macro way of calculating the old tried and true value investor metric of buying a stock when its price is trading at 70-80% of its book value. Now the accountants among you will quibble with me and say that GNP is a flow, whereas book value is a business’s net worth. Aw shucks, you got me. However, the idea is trying to capture the same essence.

The point is that I am not the only sane one out there who recognizes a bargain. Of course, WB was on record in October as saying that he was buying U.S. equities for the first time in many years, whereas I was not on record until January. However, if you had bought when Buffett bought then you would have suffered the absolutely crushing declines that we saw in November. Those losses were over 20% – yikes! So I am happy to say that your humble little blog writer of limited renown would have made you more money than WB.

[Shameless plug: Pass on the URL for the blog – this really is good stuff. The address is of course easy to remember: http://jasonapollovoss.blogspot.com/ A little growth in the readership would be welcome. Also, I know that some of you have asked me how you can become a follower. The answer is that you have to either have a “gmail” e-mail account, or else start your own blog on “blogger.” I wish that it were easier than that. Followers get an automatic notification of when a posting has been made. Thanks for indulging that interlude.]

Jason