Is iCapital Views Consistent? Is Warren Buffett a Lousy Ecomist?

Got the following screenshot from a reader on the recent iCap commentary.


WOW!

Instead of boring our subscribers with our LONG-HELD and CONSISTENTLY BULLISH VIEWS...!

Well, are these views truly consistent?

If the views are consistent and if iCapital Long-term view of the KLCI is valued at 2000 pts, then tell me WHY DID iCap.Biz sold some rm50 million worth of shares recently? ( Do refer: More Rumblings On Tan Teng Boo's ICapital's Disposal Of Shares )

How?

Truly consistent?

And then more comments were made on Warren Buffett again!

Now this irks me a lot.

Why the need to use Warren Buffett as reference?

Has Warren Buffett ever claimed to be an economist? Did Warren Buffett ever claim to be a good economist? And what has Warren Buffet known to have said all his life? Who has been quoted too many times saying "I don't read economic forecasts. I don't read the funny papers." Wasn't it Warren Buffett?

And yes in Berkshire Annual Meeting, Warren Buffett has fielded questions on this issue. ( see previous posting here! )

• Q3: Sam from Fort Lee. Recession, stock market up in April. What next?
  
  WB: I could expand on that question, but I couldn’t answer it. Charlie and I haven’t the faintest idea where it goes next week, next month or next year. We are not in that business. It isn’t our game. We see 1,000s of companies priced every day. We ignore 99% of what we see. Every now and then, we find an attractive price for a business. When we buy it, we would be happy if market was closed for a few years. Wouldn’t get a price quote daily on a farm. We look at expected yield, cost of taxes. If you buy a farm, you would look at cost of fertilizers, what a farm produces relative to purchase price, price per acre, production per acre, etc.. We make judgments.

And the following article was published on CNBC: Buffett Says US in Recession, Banks to Face Pain

"Warren Buffett, the world's richest person, said on Sunday the U.S. economy is in recession, putting him at odds with a government report that showed weak growth.

Buffett offered his assessment during a wide-ranging news conference, a day after a record 31,000 shareholders of Berkshire Hathaway attended the insurance and investment company's annual meeting in Omaha."

• Last Wednesday, the Commerce Department said the economy grew at a 0.6 percent annual rate in the first quarter. But Buffett said the nation's population also grew, making the real growth rate lower. He also said that, even if the data do not show the economy retracting, people feel as though it is.
  
  "The U.S. is in recession as I define it," Buffett said. "I would define that as a situation where people are doing less well than they were three months, six months or eight months earlier and most businesses find themselves in that position too.
  
  "If were are in a non-recession, I don't think people want to see it going in the same direction as it is and saying it's wonderful."
  
  Weakness at Berkshire units that sell bricks, carpets and other products dependent on a healthy housing market contributed to a 64 percent decline in overall first-quarter profit.
  
  Housing remains a critical problem, he said, as hundreds of thousands of homeowners find their mortgage payments heading higher, or that their homes are worth less than they owe.

Note what Buffett is saying and addressing here. It's a fact that the US national population also grew.

So does Warren Buffett knows what he's talking about?

Here are some other articles.

Take this other editorial by FinancialSense market commentator, Frank Barbera, Mad Cow & Economics Mumbo-Jumbo Media Babble, who focuses on the job loss issue.

• All of this sounds very mild, nothing to be concerned about, but unfortunately, all of this is just a statistical mirage. In the official release from AP, the total job losses of 240K were obtained by adding up the prior reported figures for March –81K, Feb –83K, and Jan –76K. However, what the media are not reporting, and what is not getting sufficient attention is the BLS Birth-Death Model. Yes, we have written about this in the past, and perhaps it is asking too much of reporters to actually look for the ‘numbers behind the numbers,’ but the end run effect is disingenuous at best, and an outright lie at worst. In the case of the BLS Birth-Death Model, this is a complex ARIMA Model that seeks to extrapolate prior cycle job gains and losses for the current cycle on the premise that prior history can be used to impute/refine today’s data. Unfortunately, this is not the case as the American economy has undergone traumatic fundamental changes in the last two decades, with the rise of Corporate Capitalism and the exportation of the US Manufacturing base. Call it the 'Return to the Guilded Age,' or more euphemistically, a ‘Transnational Restructuring of the American Economy,’ or simply, ‘The Rise of Globalism;’ any way you slice the baloney, today’s US economy does not resemble anything seen in the 40’s, 50’s, 60’s, 70’s or 80’s. (Well, OK. I’d have to concede that we do have a revival of the late 1970’s stagflation, except, before we are done, this is likely to prove an even stronger brand, but that’s a story for another day).

And here is John Mauldin's editorial on this job stats issue, Lies and Other Statistics

• Without that addition from the birth/death number, total private employment would have dropped by 296,000. Now, if that had been the headline number, the market would have tanked. Now, I have no doubt that the economy did create a lot of new jobs last month. But when the final revisions are in, we will see that job losses were well south of 100,000. If memory serves me correctly, the BLS had to add about 800,000 jobs that they missed during the recovery in 2003-4. (The birth/death model misses job growth during recoveries, the opposite result of the miss in slowing periods.) They did this just last year, in a major revision of the data. We will see the same type of revisions in 2010, only this time it will be downward.
  
  And even the BLS says that the birth/death numbers have little statistical meaning. The following is from their own website (courtesy of Dennis Gartman) [emphasis obviously mine]:
  
  "Birth/death factors are a component of the not seasonally adjusted estimate and therefore are not directly comparable to the seasonally adjusted monthly changes. Instead, the birth/death factor should be assessed in the context of its effect on the not seasonally adjusted estimate... The components are not seasonally adjusted separately because they do not have particular economic meaning in and of themselves."
  

Or how about this other editorial, Yes Virginia, This Is A Recession, who address the US Economy growth of 0.6% as stated by iCapital.

As quoted by the US Statistics:

• Real GDP growth from Q1 2007 to Q1 2008 was therefore (in the neighborhood) of .57%. Or to put it another way, although “Real” GDP growth in the first quarter of 2008 was very weak, the American economy is not in a recession.

As argued by Mr. Cooke:

• People are not buying more. They are just paying more for what they buy.
• Tell that to a mother struggling to find enough money to buy food for her family and suddenly realizing she also has to buy gas with the little bit of cash that’s left in her purse.
  
  Farm prices are up. We can get an indication of the world-wide competition for available agricultural products by looking at the prices American farmers received in February 2008 versus February 2007, and Q4 2007 versus all of 2006. We can also make a projection of average annual prices in 2008 versus the actual prices farmers received in 2006. Higher consumer demand, coupled with decreased production due to crop failures and increasing production costs, have increased the competition for available food grains, sending projected prices up by more than 123%. Higher fertilizer, herbicide, insecticide and fuel costs will push up the price of commercial vegetables, and fruits and nuts. Higher feed costs mean higher prices for meat animals, dairy products, and poultry and eggs.

And how about this news posted on APress last Friday, Federal regulators close Arkansas bank ANB Financial

• BENTONVILLE, Ark. (AP) — Federal regulators says they've closed ANB Financial National Association banks after discovering "unsafe and unsound" business practices there.
  
  David Barr, a spokesman for the Federal Deposit Insurance Corp. says many customers served by the bank's nine locations had accounts under $100,000, which will be fully insured by the government. Barr says customers can continue to write checks and draw money from ATMs through the weekend.
  
  Barr says Pulaski Bank and Trust Co. agreed to assume control over ANB Financial's bank locations, which will be open Monday.
  
  As of Jan. 31, federal regulators say ANB Financial had about $2.1 billion in assets and $1.8 billion in total deposits.
  
  It was the third closure this year of an FDIC-insured bank. Douglass National Bank, a Missouri bank with $58.5 million in assets, was shut in January; another Missouri institution with assets of $18.7 million, Hume Bank, was shut down in March.
  
  Both were dwarfed in size of ANB Financial, where regulators found lax lending standards, mostly for construction and development loans for projects in Utah, Idaho and Wyoming, as well as Arkansas.
  
  Observers have been watching for signs of bank distress resulting from the mortgage crisis. Profits at federally insured U.S. banks and thrifts plunged to a 16-year low in the fourth quarter as institutions set aside a record-high amount to cover losses from sour mortgages

Is this end of this mortgage crisis? Third FDIC bank to be shut down this year. And this ANB is no smal bank. It has US$2.1 billion in asset and US$1.8 billion in total deposits.

Everything ok?

How?