Billionaire Warren Buffett’s is taking his own advice “to be fearful when others are greedy and to be greedy only when others are fearful.” According to Bloomberg Television, the Oracle of Omaha may be the only investor not panicking about Friday’s dismal jobs report.
“How fast the recovery will come, I don’t know. I see nothing that indicates any kind of a double dip,” he told the news service, adding that he would “bet very heavily against it.”
The jobs report, which showed that U.S. companies only added 18,000 jobs in June, was awful. Economists polled by Bloomberg had forecasted growth of about 105,000. Nonetheless, the greatest investor of his generation may have a point.
Many of those same experts who were decrying the jobs report on Friday were arguing earlier this week that consumer confidence was starting to rebound because of lower gas prices, among other things.
Some consumers were, in fact, feeling great. What else can explain the 17% increase in comparable same-store sales at Limited Brands’ (NYSE:LTD) Victoria’s Secret unit in June? Discounts? Maybe, but it seems unlikely that alone would cause a huge increase in such a discretionary purchase.
Moreover, many other retailers reported better-than-expected sales, including Target (NYSE:TGT) and Kohl’s (NYSE:KSS). IHS Global Insight notes that total consumer credit increased by $5.1 billion in May, its eighth consecutive gain. Revolving debt – which includes credit cards — increased by $3.3 billion in May after falling by $800 million in April. That was its first gain of the year — but that’s not necessary good news because it may indicate that people are charging essential purchases such as food.
“In addition, household income growth is very weak due to extremely poor payroll numbers in May and June. The June unemployment rate stands at 9.2%. The recent decline in gasoline prices did not start until mid-May – so, some relief is on the way,” according to an IHS press release.
Rich people other than Buffett aren’t in much of a panic, either. The New York Times recently reported that there is such a huge demand for paintings by the Old Masters that auction houses are having difficulty finding enough supply to meet it.
Auto sales are a mixed bag. Last month, the Big 3 had double-digit gains while Honda (NYSE:HMC) and Toyota (NYSE:TM) had their worst Junes since 1997. The housing market remains a disaster, though some pundits say that the market is at a bottom now.
Following Buffett’s lead isn’t easy, because his time horizon is infinite — easy for a billionaire to pull off but not so much for regular folks. It’s important to remember is that the economy is so screwed up that no one has all the answers about what to do to fix it. Not even Uncle Warren.
