-- Posted Tuesday, 23 December 2008 | Digg This Article | | Source: GoldSeek.com

You know I think Warren Buffett was wrong when he called he market bottom in late November. As this blog argued yesterday there are the hedge fund redemptions from the year-end to fuel a big Q1 sell-off. Marc Faber thinks the US economy will implode early next year.

Indeed, with the S&P down 40 per cent this year there is quite a lot of downside to play with. Q-theory posits another 55 per cent fall to the bottom but we are all groping in the dark on this.

Auto deadline

It could be that the March deadline for the big auto US firms to come up with a viable recovery strategy will mark the bottom if these companies all end up in bankruptcy. It is perfectly possible that this might be the only way to restructure the US auto sector but the stock market would clearly take fright, with much justification.

Certainly anybody sitting on cash and thinking about venturing back into the market might like to think again. Even great companies at great stock prices can get cheaper in a sell-down, and they are not about to get more expensive in that environment.

Second-guessing Buffett

Now Buffett’s famous letter to the Wall Street Journal did have an escape clause, in that he said now was a good time to buy but he could by no means be sure that the market was at the bottom or when it might get there. But the world’s most successful investor said he was buying himself, though not who or how much.

Personally I feel extremely cautious going into the New Year, and am prepared to wait this one out in cash and precious metals. If that means missing the bottom then fine, I am not Warren Buffett. But if things take a really nasty turn then I will be in there buying, and throw some caution to the wind. I just do not feel the moment is right just yet.

-- Posted Tuesday, 23 December 2008 | Digg This Article

About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in 1999 to complete his first book, a history of the Bovis construction group.

Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.

Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.

He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.

Order my book online from this link

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