Market timing when ‘clocks have no hand’ – Warren Buffett’s warning is as relevant now as it was in 2000

‘They know that getting ahead of festivals – that is, continuing to speculate in companies that have huge valuations relative to the cash they will generate in the future – will eventually bring pumpkins and mice. But they still hate to remember a hellish one minute party. Therefore, Giddy participants plan to skip a few seconds before midnight. However there is a problem: they are dancing in a room in which clocks have no hand. ‘

This is an excerpt from Warren Buffett’s letter to shareholders back in 2000, but it resurfaced on Reddit on Sunday, with investors comparing it to the current stock market environment.
At that time, Berkshire Hathaway BRK.B,
+ 0.63%
During the frenzy of the dot-com bubble to Cinderella at the ball, the chairman was comparing those cash.

“The line separating investment and speculation, which is never bright and clear, is blurred even when most market participants have recently triumphed,” he wrote. “Nothing sedates rationality like a large dose of money spontaneously.”
Today’s investors know one or two things about spontaneous money, as the difference between the height of the market and the reality of a devastated economy has never been more clear, given the Federal Reserve’s commitment to pumping cash into the system Thanks in large part.

Buffett’s fairy-tale dialect is not the only thing coming back to those heady technical days. The “Buffett Indicator”, which takes the Wilchere 5000 index and divides it by annual US GDP, recently touched its highest level just before the 2000 bubble popup.
Here is what the chart looks like:

“What does that mean for us? It means having long stocks in long-lived accounts, and making sure you have your own assets (such as a house, etc.),” ​​said Tom Essay, founder of Sevens Report Research Recently explained to Yahoo Finance. “But it also means that it is better not to stop this asset inflation cycle, because … if asset inflation stops, it is a long, long way for fundamental support . ”
Meanwhile, the “Giddy contestants” keep dancing, looking for stock to increase Friday’s gains. In the final investigation, futures on the Dow Jones Industrial Average YM00,
+ 0.32%
, Nasdaq Composite NQ00,
+ 0.37%
And the S&P 500 ES00,
+ 0.27%
All were pointing to a positive start to the week.
And if you’re looking for signs of bubble behavior among investors, look no further than Reddit jayjay16022, Who introduced it in the comment section under Buffett’s quote:
“I cannot help but feel that we live in a time when the old rules do not apply. It’s not just the Tesla TSLA,
+ 2.40%
. Apple AAPL,
+ 5.15%
It has about ten times its revenue. The same alphabet goes for AAPL,
+ 5.15%
And many other NASDAQ comps,
+ 0.41%
Companies, ”he wrote. “Is this really just another giant bubble, or is it the new era by low interest rates and massive bond purchases by the FED? Only time will tell.”
So, is it really different this time?


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