Warren Buffett Sees a US Stock Market Boom

Value investor turned political entrepreneur or crony capitalist Warren Buffett appears to be intensely bullish with the US stock markets as he has aggressively deployed much of the spare cash of his flagship company, Berkshire Hathaway.

Here is Bloomberg,

Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) invested $23.9 billion in the third-quarter, the most in at least 15 years, as he accelerated stock purchases and broadened the portfolio beyond consumer and financial-company holdings.

Berkshire bought almost $7 billion of equity securities in the three months ended Sept. 30, compared with $3.62 billion in the second quarter and $834 million in the first, the Omaha, Nebraska-based company said Nov. 4 in a filing. Stockholdings labeled “commercial, industrial and other” soared 62 percent in the three months to $17.4 billion on a cost basis, surpassing equity investments in financial and consumer-product firms.

“He sees something, and it’s big,” said Thomas Russo, a partner at Berkshire investor Gardner Russo & Gardner.

Buffett, 81, drew down Berkshire’s cash as Europe’s debt crisis and Standard & Poor’s downgrade of the U.S. pushed stocks to their worst quarterly performance since 2008. The investments disclosed Nov. 4 include $6.9 billion of equities, $5 billion for preferred shares and warrants in Bank of America Corp. and the acquisition of Lubrizol Corp. for about $9 billion.

Buffett is expanding a portfolio that for more than 20 years has included equity stakes in Coca-Cola Co. (KO), the world’s largest soft-drink maker, and Wells Fargo & Co. (WFC), now the No. 1 U.S. home lender. The chairman and chief executive officer acquired a power company in 2000 and railroad Burlington Northern Santa Fe last year.

I have still have great respect for Mr. Buffett’s stock picking abilities but am outraged at his political leanings. Anyway, Mr. Buffett’s action only reveals that he foresees a boom in US stock market.

I am bullish too, but perhaps not as aggressive as Mr. Buffett

Nevertheless record growth in US money supply plus all the combined QEs by developed world central banks, compounded by easing of interest rates everywhere is likely to support the new leg of the inflation driven boom phase of this bubble cycle.