Barron’s Buffett Barometer

Today we launch our new proprietary stock picking system: Barron’s Buffett Barometer, or B-Cubed (B³ for ease of reference). At its heart is one simple statistic: the number of times per week Warren Buffett, or Berkshire Hathaway, is mentioned in Barron’s magazine. We adjust that metric with several secret algorithms developed by the author of this blog. When the adjusted number shows a favorable trend (or "flashes green," as David Einhorn would say), we blindly follow Buffett’s stock purchases as reported to the entire world in the pages of Barron’s.

With The Sage of Omaha on our side, we cannot fail. Armed with this potent stock selection tool, we will beat the market. Stock exchanges will shudder as we  unleash this radical new investment approach upon the world. Billionaire portfolio managers will sit scowling and muttering impotently amidst the smoking ruins of their hedge funds, unable to understand what happened. High-frequency traders and dark pool aficionados will simply surrender the field and find new careers. 

 Some will say our system has no merit, that this information is available to everyone. They would have you believe the stock market is efficient. Nothing could be further from the truth. Our algorithms are proprietary, top-secret and have been back-tested exhaustively. When back-testing shows that the equations don't work, we modify them. As a result, we now have a forecasting system that accurately predicts what has already happened. 

Even more importantly, we have a subscription to Barron's. It arrives in our driveway every Sunday. Clad in our pyjamas, we retrieve it immediately. The market is closed on Sunday, but when it opens on Monday morning, we go into action. Unless there's something good on TV. Or we're feeling tired and decide to sleep late. There's always next week. 

Warren Buffett, Berkshire Hathaway and Barron's

I am weary of reading about Warren Buffett in Barron’s. This week the magazine mentioned him twice. A couple of weeks ago, his company Berkshire Hathaway earned four mentions in the same magazine. And last month, Barron’s cover story was “Berkshire Hathaway’s Bright Future.”

That magazine’s writers love to link their stories to his hallowed name at every opportunity. It must be an editorial tactic: mention Buffett, or Berkshire Hathaway, and it casts a warm golden glow over the entire article. Perhaps it’s a way to comfort readers and sell more copies of the magazine, but this has gone too far.

To see for yourself, watch Barron’s weekly index of companies. Count how many times Berkshire Hathaway’s name appears. Read each of those references. Repeat this process for a few weeks, and you’ll probably agree with me: sometimes their reasons for invoking Saint Warren are just too flimsy.

A few examples from this week’s issue: in “Up From the Bottom,” Andrew Bary wants to make the point that IBM’s valuation is among the lowest in the tech sector. But he first tells us that “Warren Buffett doesn’t often make mistakes,” going on to say he bought the stock two years ago at about $160. Today it’s around $148. Is Bary telling us that if Buffett bought IBM at $160 two years ago, and it’s lower now, it must be an even better value today? That’s very questionable reasoning. Many things change in two years. What about IBM’s fundamentals? The fact that Buffett bought IBM stock in 2012 is almost meaningless without an understanding of the company’s performance, markets, strategy and outlook. You’ll find none of that in Bary’s column, but by God, he hitched his story to a star.

Even more irritating is Randall Forsyth in “Up & DownWall Street.” He wants to tell us about the experience of bond fund manager Dan Fuss. But before he does that, he finds it necessary to style Fuss “The Buffett of Bonds, even though he’s a few years younger than the legendary value investor at the helm of Berkshire Hathaway…” Readers get absolutely nothing out of that gratuitous cross-reference. The rest of the paragraph is all about Fuss’ exposure to foreign currency bonds. There’s nothing else about Buffett or Berkshire in the entire column. 

God help anyone using this sort of information to pick investments. They’d be better off with a good low-cost index fund. 

Judge Parker

To: The Editor 
Las Vegas Review-Journal 

 Sir: 

I wish your comics page included my favorite features: Rex Morgan M.D. and Judge Parker. These beloved characters are authority figures. Personifying the Jungian archetype of The Wise Old Man, their adventures gently teach us important lessons about life, love and happiness. 

Rex Morgan, M.D.

We need these authoritative voices in our lives. Stabilizing us. Guiding us. Driving us mad with their pompous moralizing. For evidence, look no further than one of the most enduring characters in the long-running TV soap opera As The World Turns: grandfatherly old Judge Lowell. That man was an authority figure, a Wise Old Man. 

For gender balance, we also need a Wise Old Woman. You might consider Mary Worth. This strip offers us a double dose of sagacity and sound judgment, as it contains both a Wise Old Woman (Mary herself) and her learned neighbor Professor Ian Cameron. Professors symbolize wisdom and maturity. Therefore, let us also have the Apartment 3-G comic strip, which includes kindly old Professor Aristotle Papagoras. 

I realize that these proposals entail a wholesale restructuring of your comics section, potentially wrecking the lives of those who enjoy current offerings such as Get Fuzzy, Argyle Sweater, Poot Tweet and other tedious fare. But I believe that concern is balanced by the soothing presence of comic strip doctors, judges, professors and grandfathers. They fulfill a profound human need for a strong anchor in turbulent times.