Is Obama the investor-in-chief?
In a day filled with pronouncements by Federal Reserve and Treasury officials, the most talked-about statement was President Obama's off-the-cuff investment advice.
In some on-camera banter after a Tuesday meeting with British Prime Minister Gordon Brown, the president made what some people interpreted as a "buy" recommendation on US stocks.
A 'buy' signal?
His words weren't quite that specific. But he did say that corporate "earning ratios are starting to get to the point where buying stocks is a potentially good deal, if you've got a long-term perspective on it."
The comment came as stock markets are hitting new lows, the president's economic team is scrambling to reassure the nation that recovery plans are taking shape, and an overall mood of uncertainty looms large for ordinary Americans. On Monday, the Dow Jones Industrial Average closed at a 12-year low. By 4 p.m. on Tuesday, the Standard & Poor's 500 stock index has posted its first close below 700 since 1996.
President Obama isn’t the only one thinking about the fair value of stocks these days. Plenty of professionals on Wall Street are trying to gauge whether stocks are close to hitting bottom and whether a big rally will come once the clouds of crisis appear to be receding. In past recessions, stocks have often enjoyed a good jump before the economy begins officially growing again.
Barack 'n Buffett
But the president’s words were cautious – not a “go buy stocks” tip. This wasn’t a 401(k) version of President Bush’s “keep shopping” message after the 9/11 terrorist attacks. White House spokesman Robert Gibbs tried to make clear that Obama doesn’t have any special bead on the stock market that Warren Buffett doesn’t.
Mr. Buffett, the billionaire investor from Nebraska, said last weekend in a message to Berkshire Hathaway shareholders that he expects stocks will continue to go up in coming decades, in about three years out of four, just as they have done in the past. He made no promises or forecasts about stock prices in the months just ahead. But he did talk about seeing valuable buying opportunities in the bear-market rubble.
– Staff writer Mark Trumbull contributed this report.
