Right now I'd be buying the financials that Buffett bought last year, at higher prices... BAC, WFC, USB. He also bought GE shares early in 2007, and I think they're still a decent buy.

Of the ones you mentioned, I like JNJ, PEP, and PG best at today's prices. They're not screaming buys, but certainly ok to accumulate since you have a very long time horizon.

Regards,

Duane

I would agree with all of the above.

In addition, Buffett closed down his original limited partnership because he did not think he could find any stocks to buy at that point. My recollection  is that he has gone the whole year at Berkshire without buying anything, saying at the annual meeting, that nothing was worth buying.

Buffett says that investing is not like baseball. In investing you can wait for a fat pitch. You never strike out or walk, you get to stand at the plate and wait for your pitch. So, if you can't find anything worth buying right now, park the cash and wait.

Bob

Research by S&P has shown that tobacco stocks have traditionally outperformed other consumer product subsectors in a recession (Wintergreen and Mutual Discovery funds have the largest percentages of tobacco stocks). Food & beverage (especially beer and hard liquor), health care, and utility stocks have also tended to hold up better because there is constant demand for the products and services. The problem is that utility stocks had a run up of about 20% in 2007, thanks in part to Warren Buffett's interest in that sector. Early last year, I overweighted utilities (with XLU) and consumer staples (with FDFAX). In this weekend's Wall Street Journal, there is a story headlined "Sometimes, The Best Offense Is A Good Defense" which points out that utilities and Treasurys are no longer cheap; it recommends muni bonds and health care stocks. Vanguard Health Care and T.Rowe Price Health Sciences (my choice) are mentioned as mutual fund options. In other reports, I keep seeing Johnson & Johnson, sometimes Eli Lilly.

Dr. Bob:

My recollection  is that he has gone the whole year at Berkshire without buying anything, saying at the annual meeting, that nothing was worth buying.

I recall Berkshire making several purchases in 2007, based on required SEC filings...

BAC, JNJ, WFC, USB, UPS, GE

I could be wrong, but that's my recollection.

Regards,

Duane

RE Duans,

 I did not mean that Buffett has JUST in 2007 gone a year without any buys, but that in the past when he did not see anything fit to buy, he did not. I do not remember which year(s) this was as I have been to a number of annual meetings and always read the annual reports and letters (so I know I have heard/read it but not the actual time frame).

Bob

Dr. Bob:

I did not mean that Buffett has JUST in 2007 gone a year without any buys, but that in the past when he did not see anything fit to buy, he did not. I do not remember which year(s) this was as I have been to a number of annual meetings and always read the annual reports and letters (so I know I have heard/read it but not the actual time frame).

Got it. I misunderstood your previous post.

Yes, certainly Buffet is very patient, both on the buy side and the sell side. It's worth paying attention in both cases, IMO.

Duane

How about just buying BRK.B when price dips like it is now?

I have very limited brain cells (which are dying fast) and I cant think. So decided to buy BRK.B when the price comes down. Otherwise index funds.

theDumberOne:

How about just buying BRK.B when price dips like it is now?

I have very limited brain cells (which are dying fast) and I cant think. So decided to buy BRK.B when the price comes down. Otherwise index funds.

Not a bad idea. A couple months ago Barrons had an article on Berkshire, saying that the stock was overvalued, and only worth 130,000/share. Well, that's about where it is today. Book value is around $78,000/share, which puts the shares at about 1.6x book. It was a little cheaper than this at one point in 2000, like maybe 1.3x book, but I think it's an okay buy today.

Duane

Even the best companies (defensive or otherwise) only make a good investment at the right price.

Utes I would normally consider "defensive".  But they have held up so long now (barring the last 2 days), I would have to look hard before buying.

PEP, KO would be defensive, but both looke expensive.    The most defensive stock out there is probably not a good investment if you paid too much.  Banks might normally be "defensive" -- but not so much this time, as they are at the epicenter of this particular problem (though may be OK for long-term buyers here, of USB, BBT, and some others -- if you can handle the volatility).

I will make a suggestion though:    GE.      Not typically thought of as a defensive stock, I admit.    But it has some things which provide it with defensive 'attributes'

1. Price. Near 52-wk low.  Its a "Dog of the Dow".

2. Diversity of businesses.

3. Global exposure. 

4.  AAA balance sheet.  Gives them the flexibility to obtain good acquisitions, at a good price (given weakness in the markets).  "Financing concerns" are not a problem that GE has to worry about.

5. Proven management:  Immelt & crew seems to deliver the goods in terms of operating results, quarter in, quarter out. They seem to make a habit of Under-promising and Over-delivering.

6. They just today re-affirmed their 2008 guidance.

Probably the last company I would ever imagine that would need to run over to China, the UAE, or Saudi, with hat in hand, looking for a capital infusion which dilutes current shareholders.

Yeah. I own it.   Added to my position today.  

JMO. Good luck.

GE is one I'd like to own, but...

Ever read one of their annual reports? It's impossible, imo, for me as a small investor to keep up with all their businesses, too diverse, too big, too complicated.

Secondly, it's "enterprise value", that is, net debt plus market value is 800 Billion. If you were to buy it outright at today's market price that is in essence what it would cost you. So, what's your return on that investment? 22 billion.

There are dozens of solid companies out there with earnings yields a lot higher than GE.