With people around the world still nervously watching Greece and Ukraine, today King World News is featuring a piece from one of the greats in the business that includes Warren Buffett, Charlie Munger and a major warning.

"In our early decades, the relationship between book value and intrinsic value was much closer than it is now. That was true because Berkshire's assets were then largely securities whose values were continuously restated to reflect their current market prices." — Warren Buffett, Berkshire's Annual Letter

KWN Saut III 3:3:2015

By Jeffrey Saut, Chief Investment Strategist at Raymond James

March 3 (King World News) – I have a compendium of every annual letter Warren Buffet and Charlie Munger have ever written. Of course Buffett writes the Berkshire Hathaway letter, while Munger writes Westco Financial's. The insights these guys possess are legend. In today's quote I highlighted the first part of a full paragraph. The rest of the quote went on to state:

"In Wall Street parlance, most of the assets involved in the calculation of book value were 'marked to market.' Today, our emphasis has shifted in a major way to owning and operating large businesses. Many of these are worth far more than their cost-based carrying value. But that amount is never revalued upward no matter how much the value of these companies has increased. Consequently, the gap between Berkshire's intrinsic value and its book value has materially widened."

KWN Saut II 3:3:2015

While Wall Street is fixated on Buffett's letter, I have always found Charlie's letter an interesting read as well. One of his great quotes is, "Great investing requires a lot of delayed gratification." He goes on to note, "It's waiting that helps you as an investor, and a lot of people just can't stand to wait. If you didn't get the deferred-gratification gene, you've got to work very hard to overcome that."

"Delayed gratification," indeed, for as often stated in these missives, "Patience is the rarest commodity on the Street of Dreams!" Clearly, patience has been required for the past six years, as this secular "bull market" gets ready to celebrate its sixth birthday on March 9th. That has made many Wall Street wags suggest this rally is very long of tooth. Their mantra is, "The average length of all 11 bulls since 1950 is 4.9 years." 

But, that time measurement depends on your definition of a "bull market." Most of the negative nabobs believe a 20%+ pullback terminates a bull market and represents a bear market. I am not one of those folks. Recall the 1982 to 2000 secular bull market had a number of 20%+ pullbacks, and a 22.6% one-day "hit" in October of 1987, and that did not end the secular bull.

Also of note, NOBODY measures that bull market from its December 1974 "nominal" price low, but rather from the "valuation low" of August 1982. This secular bull market's "nominal low" came in March of 2009, but the "valuation low" occurred on October 4, 2011. Obviously, my "drift" market call for yesterday proved totally wrong-footed, but I did find it interesting that only 6 of the Dow's 30 stocks accounted for 92 of yesterday's 155 point Dow Wow.

Despite Monday's Mash, the rally was still within the confines of the past 10 sessions' sideways consolidation pattern as option traders jumped back into their most bullish stance since early 2000 (see major warning chart below) awaiting Netanyahu's U.N. address.

King World News Saut 3:3:2015

***ALSO JUST RELEASED: Will This Pull The Rug Out From Under Major Markets? CLICK HERE.

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Eric King
KingWorldNews.com

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