Warren Buffett is buying….should you?

Warren Buffett, the legendary investor has recently publically stated his stance that we are now GO for buying US equities. This seems like good news…right? Well…this is a very unusually move for Buffett. Let me explain. The oracle of Omaha is traditionally very secretive of his buying and the timing of these purchases. In recent years, he has become extremely well known in investment circles and this is really the first large market slump on which he has been able to bring his considerable market influence to bear. Could something else be in the mix here that we aren’t aware of? Why would Buffett make such an announcement if he really is buying? I mean, his hundreds of thousands of fans are probably right this minute emptying every cash account they have and are loading up on stocks. But if Buffett is buying, then it’s the first bear market in history where he is on the record as making such a declaration of confidence, and this makes sense from his point of view.

If he really is buying, it’s a pretty stupid mistake to signal to the billions of dollars sitting on the sidelines that this is a great time to buy, because inevitably, his fans will buy and that will mean Buffett has to pay more for any stocks he wants to get his hands on. This doesn’t sound like the action of a world class investor….to show his hand to the street. No, this smells all wrong…while Buffett may be buying, he’s getting terms on his deals that aren’t available to ordinary investors, so be careful not to fall for the hype on this one. If it really was a great time to buy…Buffet would do as he usually does…he’d buy in dead silence and say not a word to the world. This looks and smells like a bear market trap, set up by the greatest investor of all time.

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Tags: Investment, Investor's Business Daily, Stocks and shares, US Equities, Warren Buffett