Back in 1974-1975 I was living in Lancaster, Pennsylvania. Even though I am now out West, it sure feels like the mid-70s economically.
What was Warren Buffett doing then? I do remember everyone was still scared. Most doubted that the stock rally in the early part of 1975 could be sustained. The market moved sideways for a while. But ultimately moved higher. All the while Buffett was buying good companies.
So what's he buying now? Big Banks! Buffett's Berkshire raised its holdings in US Bancorp (USB) and Wells Fargo (WFC) this past week. Other investors are still scared. But not Warren. He knows those firms will be around ten years from now. With equity prices probably 5 to 10 times better than their beaten down current valuations. Both banks' shares fell to decade lows in the first quarter.
And what's happening in southeastern PA in 2009? Is this time different from the 70s? Thomas Russo is a partner at Gardner Russo & Gardner, a firm from Lancaster with significant holdings in Berkshire. Says Russo, "Buffett has a timeframe that transcends near-term swings."
The stock charts sure look the same.
When all you read is gloom, turn here for a much different perspective.