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Feb 19, 2007 - Issue #046

When Warren Buffett Speaks...

DJ-30: 12767.57 +186.74 +1.48%. In the Real World: 53.12 +0.77 +1.48%.

UP: 27 (+19), Down: 3 (-19).

Trends (weekly): This is the subjective part.

Rising 19 (+3):

AA, BA, C, +*CAT, DD, DIS, GM, +*HD, HON, JPM, KO, +*MCD, MO, PG, T, UTX, VZ, WMT, XOM.

Consolidating 7 (-6):

AIG, AXP, GE, HPQ, IBM, MRK, PFE.

Declining 4 (+3):

-*INTC, -*JNJ, MMM, -*MSFT.

+/- denotes change of direction.

* denotes change of category.

When Warren Buffett Speaks...

A recent report quoting the Oracle of Omaha enumerated several points of interest to investors:

(1) Decline of the U.S. Dollar has encouraged him to invest overseas.

(2) He does not believe the real estate decline is behind us. Far from it.

(3) He does not understand what is meant by the term, "soft landing" in the economy.

(4) Keep liquid in order to be able to buy value at a discount when it becomes available.

Thousands of hedge fund managers operate on a "hair trigger" mentality. What happens when they all press the "enter" key at the same time? A lot of value will suddenly become available at a discount! Be prepared.

Imagine what it would be like to own "puts" just before a major market break, hold them all the way down, cash them in at the bottom, reverse and go "long".

Such a feat would require the ability to understand what was going on, despite what the "expert" guest commentators on CNN or CNBC might be saying. They will never tell you to sell. Quite the contrary, they will engage in that time-honored tradition known as "hand holding". They always have and they always will. They can't help themselves. It's their nature.

It's your job not to be taken in. Are you up to it?