* Buffett annual letter strikes optimistic tone
* Heavy investment planned in U.S. businesses
* Experts see boost for markets
By Ben Berkowitz and David Gaffen
NEW YORK, Feb 27 Warren Buffett is going long
on America, and investors are likely to take note when markets
open on Monday.
Buffett's annual letter, released Saturday, is brimming
with references to the strength of the American people, economy
Investors said they were struck by how confident the letter
was, particularly in comparison to his annual missives of
"Money will always flow toward opportunity, and there is an
abundance of that in America," said Buffett, who has run Omaha,
Nebraska-based Berkshire Hathaway (BRKa.N) since 1965 and is
now one of the world's richest men.
"The prophets of doom have overlooked the all-important
factor that is certain: Human potential is far from exhausted,
and the American system for unleashing that potential ...
remains alive and effective."
He also forecast a recovery in the housing market "within a
year or so" and that "America's best days lie ahead."
Given that Buffett owns the entirety or a large share of
the country's largest railroads, insurers, banks, consumer
products makers and distributors, his optimism could be seen as
an endorsement of the economy in 2011 and beyond.
ORACLE, IN LONG TERM
Buffett's comments have helped markets in the past, even
though his calls were not always perfectly timed.
In an Oct. 17, 2008 article in The New York Times, he said
that he was "buying American stocks." The S&P 500 closed at
946.43 a day before that editorial, and his comments helped
boost shares the following week. But his call was early as the
S&P was on its way to losing another 300 points before
bottoming out in March 2009.
Still, Buffett's latest enthusiasm, coming at a time when
many believe the market is ready for a pullback, was a good
sign for some investors.
"They're certainly encouraging, especially for U.S.
investing. I was struck by the level of capital investing he
cited," said Jack Ablin, chief investment officer at Harris
Private Bank in Chicago.
"Whether or not his remarks result in a Monday (rally)
remains to be seen. Buffett is a long-term investor, not a
timer. He tends to be early."
Buffett is likely aware of the impact of his comments. In
last year's letter he lamented at some length how too much had
been made in the media of comments the year before on the state
of the economy.
EYES MORE DEALS
It is also possible Buffett could boost the market on his
own through an acquisition.
Berkshire owns about 80 businesses and a huge portfolio of
stocks valued in the tens of billions of dollars. While its
portfolio is varied -- from railroads to ice cream, insurance
is its largest and best-known business.
He made it clear in Saturday's letter Berkshire would need
to buy assets to increase earnings in its non-insurance
"We're prepared. Our elephant gun has been reloaded, and my
trigger finger is itchy," he said, emphasizing a need for
With a war chest of $38 billion in cash, even with a
commitment to keep $10 billion on hand for contingents, Buffett
is more than capable of big deals.
"I think what was so telling was he is looking to make a
big purchase. Cash generation is huge at Berkshire. I expect
something significant," said Michael Yoshikami, president of
wealth manager YCMNET Advisors and a Berkshire shareholder.
(Reporting by Ben Berkowitz and David Gaffen, Additional
writing by Ritsuko Ando; Editing by Bernard Orr)