Most economic analysis hasn’t been accurate over the last several years, and it’s partially due to the severity of the financial crisis, which almost brought about the complete collapse of the stock market. While history is replete with all kinds of recessions (some more severe than others), memories are short on Wall Street, because that’s what most people are doing there—working for short-term gains.
Imagine if you were a Warren Buffett type of investor; you’ve already made enough money to live comfortably and you’re running a large investment portfolio, the purpose of which is to invest in businesses at good prices for the long term. Your holdings would reflect the general state of the economy, but you would relish the opportunity to buy more companies when prices retreat. That’s your business—to invest in good businesses and good managers. The returns are the returns. They can’t be predicted and that’s why the entry price is so important.
Big investors like Buffett and hedge-fund managers like George Soros invest a lot of money in a lot of different types of securities. They also trade around their positions as market conditions warrant. Soros has been selling gold recently, but still has a very large net long position. My favorite investment analyst, Jim Rogers, makes big, calculated investments based on a theme or trend, and then trades around the position as market valuations change. Before Rogers makes a big investment, however, he waits for the marketplace to achieve extremes in prices. In the absence of market extremes, he just waits. That’s how you have to be as an investor—patient and flexible.
We know we’re in a period of slow economic growth. We know the economy is sputtering, as are employment and the housing market. These are all structural issues that take a good deal of time to correct in the business cycle. So, from my perspective, it’s a hurry-up-and-wait kind of market.
Predicting the stock market is an irrelevant endeavor. Predicting earnings and cash flow from a business—now that’s a different story. I think we’re likely to see share prices continue to drift until second-quarter earnings season begins. Once again, the market will expect its numbers to be met and, more importantly, it will want to see improved corporate visibility for a stock to go up in price.
Predictions are just guesswork, but expectations for returns from stocks are currently being driven down. This makes the near-term outlook weak. But, it also makes outperformance later that much easier. Barring any major new shocks to the system, the market is setting itself up for an earnings rally at some point within the next nine months. That, by the way, is just a guess.
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MEG Financial Comments on Berkshire Hathaway Downgrade by Fitch for “Key Man Risk”
Pensacola, Fla. (PRWEB) April 7, 2009
MEG Financial, founder of www.keypersoninsurance.com , a specialized national provider of key man insurance, is warning businesses of all sizes to hedge against “key man risk”. Successful companies that are dependent upon one or more key people need to seriously consider key man insurance to protect against the potential loss of an indispensable executive.
The recent Fitch Ratings downgrade of Berkshire Hathaway (NYSE: BRK-A)(NYSE:BRK-B), one of the nation’s best run and most respected investment holding companies, emphasizes how important one individual can be to the success or perceived success of an organization. In fact, one of the main reasons Fitch provided for cutting the financial ratings of Berkshire Hathaway was the “key man risk” linked to Warren Buffett’s ability to continue to negotiate deals and make investments on behalf of the company.
The Ultimate “Key Man”
Warren Buffett, the 78 year old “Oracle of Omaha”, is the Chairman and CEO of Berkshire Hathaway and its largest shareholder. He is known the world over for his ultimately successful value investing strategies and as of 2009 ranks second on the Forbes list for richest people in the world. His significance to Berkshire cannot be overstated which is why Fitch emphasized “key man risk” as a reason for the downgrade.
Losing a Key Executive Would Seriously Impact Most Companies!
Key employee exposure is not exclusive to large publicly traded organizations like Berkshire Hathaway. In fact, small and medium sized businesses are even more reliant on the talents and experience of a select few. In these cases, it is even more crucial to protect the company from the untimely death or disability of a significant bottom line contributor. In fact, in smaller organizations, one individual can be so vital to the overall success of a business that if they leave the company, become disabled or die, the company dies as well. However, the good news is that there is an easy and inexpensive way to protect against the risk of the loss of a key employee or executive.
Key Person Insurance is the Best Solution to “Key Man Risk”
Key man insurance, commonly referred to as key person insurance, is the most effective and efficient tool a business can use to guard against the death or disability of a highly valued employee or business owner. For years, companies both large and small have purchased and owned both key man life and key man disability insurance policies on the lives of their strategic people so that business continuity can be maintained in the unforeseen circumstances of a death or disability.
Don’t Be Shortsighted When It Comes to Buying Key Person Insurance!
The recent downgrade by Fitch of Berkshire Hathaway, one of the largest and most highly respected companies in the world clearly emphasizes the need for businesses of all sizes to consider key man insurance. If Berkshire Hathaway can be downgraded for its exposure what company is immune to the “key man risk” of losing a master technician, top salesperson or CEO?
For additional information on key man insurance, contact Michael E. Gray, Jr., Independent Insurance Agent and President of MEG Financial or visit our website keypersoninsurance.com
MEG Financial:
For the past 15 years, MEG Financial of Pensacola, Florida, a nationally known key man insurance specialized brokerage firm, has worked with businesses to secure key man insurance and to promote it as an intelligent and inexpensive way to protect against “key man risk”. MEG Financial’s key man website offers instant key man insurance quotes for companies of all sizes across the country.
Contact:
Michael E. Gray, Jr., Independent Insurance Agent and President
MEG Financial
(877) 583-3955
www.keypersoninsurance.com
CA 0C39049
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