Why is Warren Buffett Bullish?

I expect stocks will kick off the week by
extending Friday’s rally, and recovering more of the losses from last
week. After all, tomorrow is the first day of March. And stocks tend to
rally on the first day of the month.

There have been 22 months since the stock market
bottomed in March 2009. Stocks have rallied on 18 of them. That’s an 81%
success rate. In fact, the vast majority of stock market gains over the
last couple of years have come on those first of the month
rallies.

What the End of the Bond Bull Market Means for Investors

It’s been a while since I read Bill Gross’ monthly
Investment Outlook.

If you don’t recall Bill Gross is one of the most
influential fund managers in the world. As the founder and CEO of PIMCO,
he oversees around $1 trillion in assets. Ad he personally runs the PIMCO
Total Return Fund, with assets above $500 billion.

Gross is a bond guy. And he’s done quite well over the
years, posting consistent annual returns in the 8%-10% range.

Bearish or Bullish: Reader Comments

In the July 29th issue of Daily Profit we asked what you think about
P/E’s for the S&P 500. Here’s the exact question:

I’m curious to hear whether you’re bullish or bearish on the stock market.
The Wall Street Journal has the current P/E for the S&P 500 at 17 and
the forward P/E based on earnings estimates at 13. Let me know what you
think.

The emails came streaming in…

We’ve posted below some of the more engaging comments (and certainly
excluded the most inflammatory, off topic, or just too long comments). Take a
look and see what investors like you have to say.

Are You Bullish or Bearish?

The parade of positive earnings reports marches on. The
number of companies in the S&P 500 that are beating expectations
continues to run at a better than 70% clip.

It’s interesting how sentiment was so conflicted coming into
2Q earnings season. We discussed at length here in Daily
Profit
how analysts had lowered estimates and investors appeared to
be expecting earnings growth to slow.

At the same time, there were virtually no
pre-announcements that earnings would miss. And investors then, like now, were
having a hard time getting bullish on the stock market.

Bullish on Earnings

*****Oil is pushing past $83 a barrel after China reported a 21% increase in oil imports during the fourth quarter. That’s a huge jump, and serves as a perfect counter-point to the analysts who have been saying that supply and demand fundamentals don’t support the current price for oil.
The problem seems to be that some analysts only look at the supply and demand numbers for the U.S. And even then, they seem to be fixated on inventory numbers. That’s simply not enough information.
Oil is a global commodity. And while the U.S. may be the biggest user, the most growth in oil consumption comes from emerging markets, like China. If you simply ignore China and the fact that global production is falling, it’s easy to come to the mistaken conclusion that oil prices should be lower.
*****As oil prices rise, it makes other energy sources more valuable, too. Alternative energy stocks rise with oil prices. And we’ve seen natural gas prices rally from an important bottom in recent weeks.
Coal is another energy source that’s becoming more valuable as oil prices rise.
With carbon emission caps looming in the U.S. and a global debate on curbing carbon emissions that most recently landed in Copenhagen, many investors have turned their back on coal. But that could be a mistake.