Contrarian Marc Faber wonders why he is seeing analysts with rose-colored glasses appear on CNBC. He points to a "persistent weakness (pdf file)" in U.S. financials and retailers, and questions the quality of corporate earnings.
Manufacturing accounted for about 40% of corporate earnings in the early 80s; today it accounts for about 10%. Financials used to account for about 10%, and today they have surged above 40%. So Faber concludes that a lot of U.S. corporate earnings are from financial shuffling.
Additionally, Faber points to a chart in a recent column by Eric Fry that shows how aggressively legendary investor Warren Buffet has been cashing out of his portfolio. Fry asks, tongue-in-cheek, whether Buffet is losing his touch.
Is Warren Buffett lazy? Or foolish? Why else would he allow more than $40 billion dollars to pile up on the balance sheet of Berkshire Hathaway? Why else would he refuse to buy any of the stocks that Wall Street’s finest minds recommend? It’s possible, of course, that the Oracle of Omaha is still as shrewd as ever.
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