What’s Buffett Buying Next
What is the investment guru’s mantra when it comes to purchasing a company? Warren Buffett likes to buy the very best at a huge discount. There’s something else that Buffett looks for in his investments that is crucial: He only bets on a sure thing. Taking those criteria, what are some of the currencies that Buffett would be interested in? Well, the currency would have to be undervalued and a great long-term value. Looking for a currency that is grossly undervalued, we can go ahead and eliminate everything but the Japanese yen and the good ol’ greenback. Why?
The Japanese Yen has been at a rock bottom since what feels like eternity. But, the one thing that is most likely to push the yen higher over the longer run is interest rates, not necessarily growth. Against the USD, the yen will likely only appreciate about 10 full yen.
The US Dollarhas seen better days. The same reason that the U.S. dollar fell back in 2001 are still lingureing today, save for higher interest rates. The trade defi cit is still around, and so is government spending. However, U.S. companies are seeing a ton of profits coming from overseas from the cheaper dollar. In fact, that might be the one saving grace for the U.S. dollar, and certainly one of the reasons that the U.S. equity markets keep pushing higher.
SeekingAlphas pick…The Chinese Yuan. It’s at an artificial low against everything, and climbing. Plus, the upside of the economy is huge. Much bigger potential here than in the U.S. Buffett has already purchased big stakes in at least one Chinese company, PetrolChina (PTR). So, we know he’s open to the idea. I wonder how would he’ll buy RMB since it’s not free trading. Then again, the gov’t may bend backwards like that that billboard in Qinyang, China that wrote “Leaders serve the public; departments serve grass roots; government staff serves taxpayers; entire society serves investors.” Bah!
