U.S. markets will look to test new highs this week with the Dow 100 points away from an all-time closing high. With a Shiller P/E of 22.7, we are still overvalued considering the historical mean of 16.5. But one never knows where the market is headed and so, the search for value continues.
Warren Buffett is getting a lot of media attention after Berkshire’s Annual Report was released and called Berkshire’s performance “subpar.” Despite growing Berkshire Hathaway (BRK.A)(BRK.B)'s book value by 14% (or $24.1 billion), Buffett failed to make any major acquisitions and book value grew less than the S&P 500’s 16% gain. What the media and value investors sometimes forget is how big of a ship Buffett is steering. He faces the problem of cash coming in on a consistent basis and unless he is able to put the money to work, it will earn next to nothing. I wouldn’t be surprised if Berkshire’s streak of never having a five-year period of underperformance come to an end in the near future.
And if that wasn’t enough Warren for your brain, he had a long Q&A session with CNBC’s Beck Quick in which he answered questions on the economy, sequester, J.C. Penney (JCP), stocks, private equity, accounting, etc.