Today's Wall Street Journal reports on a rumor of a rumor: perhaps someone might think that someone else might claim that Warren Buffett is going to bail out the mortgage industry. It's cargo cult finance: what contrarians do is unexpected, thus what is unexpected is what contrarians will do.
Not really.
Buffett isn't (yet) betting on subprimes, but lots of people are betting on Buffett: Berkshire Hathaway is up 9% this month, even though the market is down by about 5%. And why? Berkshire hasn't changed extraordinarily since then -- it's just a flight to quality. Or rather, it should be -- but equally solid insurance companies like White Mountain are down as much as the broader market, which makes me suspect that investors aren't just investing.
They're praying: buying Berkshire is evidence that they expect everything to go down, and something to go down more than it should -- and they're outsourcing the details to Warren Buffett. But Berkshire Hathaway has been the same crypto-put for about two decades, so revaluing it on the basis of data older than I am is hardly rational. I hate to say this, and I hate to even think that way, but: if I were a shorter-term trader, I'd be shorting Berkshire Hathaway right now
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1:06 PM
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