Follow the leader

When you do not have a fundamental source of information, it will be better to follow the leaders.

When you see some steps from Buffett, Soros or Icahn, you can imagine what will be the next steps.

Look to this:

• Berkshire Hathaway, run by billionaire investor Warren Buffett, said in an SEC filing that it had almost doubled its stake in Dow stock Johnson & Johnson.
• Berkshire has also taken stakes in railroads Norfolk Southern and Union Pacific, as well as insurer Wellpoint.
• George Soros has more than doubled his holdings in Dow stock Microsoft.
• Carl Icahn's Icahn Management bought a large stake in Anadarko Petroleum.

All this news in a day, with an additional private equity business: Bausch & Lomb agreed to be taken private by Warburg Pincus for nearly $3.7 billion in cash and stock.

We are in May. Statistics show that, you have to sell in May!

Recession, definitely

Master Greenspan has warned recently, about the incoming recession.

King Buffett has mentioned several times, some dirty pieces of the American economy: twin deficits, too much dependence on consumer spending, and a public budget unmanageable.

Right now, Bernanke says something that we think is not a doubt, it is real: Federal Reserve Chairman Ben Bernanke said Wednesday uncertainties surrounding the U.S. economic outlook have increased somewhat recently.

We prefer to listen to Mr. Greenspan and to Mr. Buffett.

Signs to buy

We have learned from Buffett that we start to buy, sound businesses, in tough times.

Definitely, we are in a rocky surface. Look to this: The biggest drop in home building in 15 years weighed on growth last quarter. And this: Residential construction declined in the fourth quarter at an annual rate of 19.1 percent, the most since 1991, after an 18.7 percent decrease the previous quarter, Commerce estimated last month. The drop subtracted 1.16 percentage points from GDP.

But: Purchases rose to an annual pace of 990,000, up 5.7 percent from January, according to the median estimate of economists surveyed by Bloomberg News ahead of a Commerce Department report tomorrow.

It is time to buy some selected stocks. In the opposite side of Buffett, we enjoy Internet stocks, because the net is the future. The challenge is to find the best and the next leaders.

Lessons from Omaha

Every year, The Oracle of Omaha, launch some stress on market watchers. This year, Warren Buffett main topic was "The 'investment income' account of our country—positive in every previous year since 1915—turned negative in 2006. Foreigners now earn more on their U.S. investments than we do on our investments abroad. In effect, we've used up our bank account and turned to our credit card".

The "twin deficits" is making America poorer, because America is living according to the credit card rules!

Two more issues from Berkshire Hathaway: 1) Buffett announced that Yahoo's chief financial officer, Susan Decker, will join Berkshire's board in May; 2) the U.S. dollar will continue its gradual weakening—and he continues to hold that position, basing his view on the country's large trade imbalances.

S&P: -3.44%

Imagine 3.44% less in major economy on Earth! It is too much.

Could this mean a near bear market? Or could this mean the next day rebound? If you compare 1.300 points one year ago, with +100 points today, the S&P is making 7.5% return.

In days like this, we want to be a small fly around Warren Buffett: who last year generated a 24 percent return for Berkshire Hathaway Inc. shareholders, may this week tell investors and followers to lower their sights for 2007.

Energy: a bounce back

Yesterday, the "major oil and gas index" have increased 1,52%. OPEC is trying to reduce production. New energies are not yet available. Exxon-Mobil says that oil will continue to be the major energy, even 20 years from now.

Look to: Conoco-Phillips, Petrochina (where Buffett has a stake), Total and ENI.

Like it or not, we will continue to need oil!

Airline stocks: take a look

Warren Buffett have regretted for investing in US Airways. Airline business is a good business for pilots and managers, not for investors.

The oil costs, the huge number of Companies in the business and the terror threat, have been a major weapon against airline business.

But, Southwest Airlines have been a good case for more than a decade. Today, we have also a new top manager, US Air CEO Doug Parker, which is leading a new way in the business.

After the attack on Delta, from US Airways, United Airlines is attacking Continental. And as far as last Wednesday, the Amex Airline Index jumped 3%.

Probably, we are in a new step of the airline business, after low-cost carriers, we have a merger trend in the next months.