Stock pick: Berkshire Hathaway

There are a lot of uncertainty in the market right now. The economy's growth is slowed. It is difficult to find any attractive equity investments right now. So here is my stock pick of the day: Berkshire Hathaway (BRK-A). The main reason? Trust the world's best investor, especially in a bear market.

• BRK's investment portion make up only around 50% of market capitalization, making the stock less sensitive to general stock market volatility
• it tends to outperform the market by a wider margin during a down market than a bull market (beginning from 1965, every time the S&P 500 went down during a year, BRK outperformed the index by an average of 24.8%)
  
• it had $47 billion of cash in hand as of Sept 31st, 2007. The credit squeeze did not affect BRK at all.
• Warren Buffett can deploy those $47 billion more effectively during a down market

So there you have it. BRK's absolute return in the short run may be uncertain, but I am confident it will outperform the S&P 500 by a wide margin in the coming year or two.

Blame it on the rating agencies

S&P, Moody's and Fitch should stay in rating company's credit worthiness instead of rating all those structured vehicles because they don't have the competence to do so. There wouldn't be a credit problem right now if it wasn't for these rating agencies. How can something rated AAA lost all its value? If you don't know how to do something, don't do it because you are going to cost investors money! With the housing price keeps on dropping, I believe there will be more highly rated bonds performing worse than they should.

Also, how can Ambac and MBIA still able to retain their AAA rating? Only the most financially sound companies deserve those ratings. Even banks like TD don't have a triple A rating, so how can the bond insurers have it? I know the rating agencies are under a lot of pressure to not downgrade those two companies but if they want to regain their tarnished reputation, they need to make the right decision quickly.