A Beatles Moment: Anabell is Buffett ~ The Risk Averse Alert

Monday, September 26, 2011

A Beatles Moment: Anabell is Buffett

Speaking of cows being milked, that Buffett is becoming a prize Holstein!

Apparently, he called book value an "understated proxy for intrinsic value." Not mentioned, however, is whether "intrinsic value" has any meaning were, say, the trans-Atlantic banking system to implode.

Yet in lowering the bar in considering repurchasing Berhshire Hathaway shares Buffett plainly is being defensive. Of course, that's not how the news was sold.

A revealed urgency to defend a core equity stake is a tip off that, Buffett might better have spoken about the furniture business for information more relevant to his macro view.

Across the Atlantic pressure is on to lever up. How this is possible when disparate creditors already are demanding collateral be pledged by EMU nations buried in debt, this while being given no hope of escape, is a mystery.

Just as recent years' "liquidity crisis" illusion was put to rest earlier this year with the Fed's Maiden Lane II auction fail, an attempt to leverage Europe's EFSF could meet a similar investor reception were the policy adopted with haste accelerating that with which the proposal presently is being pushed. Such possible outcome would be fitting a market on the verge of crashing over weeks ahead.

Today's advance did nothing to alter the negative technical state in which the market finds itself, as detailed on Friday. Fast Money Traders noting elevated cash positions among hedge funds and suspecting a move to put money to work before month's end apparently failed to notice the work this group likely is responsible for today: squeezing shorts in hopelessly insolvent banks (+5.29%) and financials (+4.45%).

For his part Whitney Tilson loves these dogs, calling them "cheap," and singles out Goldman Sachs as being particularly attractive here. Unfortunately, this is a badly broken stock absent strong hands showing any willingness to support it (the last of these bailed out April-May 2010). Indeed, technically speaking, Goldman Sachs appears on the verge of collapsing.

Fast Money
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