On July 9, the Tuesday following the Independence Day holiday weekend, Warren Buffett (Trades, Portfolio)’s market indicator reached 146.1%. Based on this market valuation level, the implied annual market return is -2.2%.
Dow falls from July 3’s all-time high
While the Dow Jones Industrial Average languished at an intraday low of 26,675.55, pressured by 3M Co. (MMM, Financial), the 30-stock index closed at 26,783.83, approximately 22 points lower than Monday’s close of 26,806.14 and 160 points lower than July 3’s all-time high of 26,943.41. Top Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) holding Apple Inc. (AAPL, Financial) closed at $201.24, up approximately 0.61% from the previous close of $200.02.
CNBC columnist Fred Imbert said investors are awaiting Federal Reserve Chairman Jerome Powell’s next monetary policy move following last Friday’s stronger-than expected job report, which “raised questions” regarding the current rate policy.
Buffett’s Berkshire remains invested in stocks despite significantly overvalued market
Buffett said the ratio between the Wilshire 5000 full-cap index to the gross domestic product is “probably the best single measure of where valuations stand at any given moment.” As of Tuesday, the full-cap index stands at $30.763 trillion, approximately 1.46 times greater than the last-reported U.S. gross domestic product of $20.16 trillion.
Despite the significantly overvalued market, Buffett increased his conglomerate’s exposure in stocks to 60% during the March quarter, up 3% from the December 2018 quarter. Berkshire’s top six holdings as of the latest portfolio report are Apple, Bank of America Corp. (BAC, Financial), Wells Fargo & Co. (WFC, Financial), Coca-Cola Co. (KO, Financial), American Express Co. (AXP, Financial) and The Kraft Heinz Co. (KHC, Financial). The conglomerate’s top 10 holdings represent 79.56% of the total equity portfolio.
Value screeners identify opportunities for second half of year
Several GuruFocus strategies continue outperforming the index, including the most broadly held portfolio, the undervalued-predictable portfolio and the Buffett-Munger portfolio. Table 1 illustrates the value screener record as of July 9.
| Screener | USA | Asia | Europe | Canada | UK/Ireland | Oceania | Latin America | Africa | India |
| Graham Net-Net | 224 | 587 | 245 | 56 | 60 | 14 | 7 | 14 | 55 |
| Undervalued Predictable | 55 | 72 | 119 | 8 | 57 | 5 | 48 | 6 | 10 |
| Buffett-Munger | 32 | 109 | 69 | 3 | 31 | 0 | 23 | 5 | 42 |
| Greenblatt Magic Formula | 4422 | 13335 | 6722 | 526 | 2373 | 568 | 1071 | 332 | 3436 |
| Historical Low Price-Sales | 45 | 128 | 58 | 0 | 24 | 1 | 25 | 8 | 34 |
| Historical Low Price-Book | 48 | 133 | 62 | 1 | 30 | 3 | 27 | 11 | 24 |
| Peter Lynch Screen | 32 | 62 | 45 | 1 | 21 | 0 | 5 | 2 | 17 |
| 52-week Lows | 1295 | 3461 | 1824 | 148 | 863 | 86 | 464 | 181 | 1785 |
| 52-week Highs | 1986 | 2020 | 3208 | 246 | 1354 | 225 | 673 | 127 | 409 |
Table 1
Disclosure: Long 3M.
Read more here:
- Leon Cooperman’s Top 5 Holdings
- Joel Greenblatt’s Top 5 Holdings
- 6 Chinese Stocks Gurus Broadly Own in June
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