Buffett Bear rumor buttresses stocks

Today we received word, via a New York Times report, that Warren Buffett and several interwoven parties probably somewhat dependent on the survival of Bear Stearns (BSC)-- hedge fund in drag, may be about to take a 20-percent stake in the otherwise doomed broker. Markets seemed on the verge of fading into the close until this "rumor" hit the tape which in turn ignited a pretty furious rally, especially among financials. The Times said, “Other investors who have expressed an interest in buying a minority stake include the Bank of America, Wachovia and two Chinese institutions — the Citic Group and China Construction Bank, these people said.” Of course, I remind readers of the Hovnanian (HOV) rumor as it concerned a possible Buffet buyout of that decaying homebuilder last month that never actually materialized. I don't even remember a dismissal of that rumor, it just kind of faded into the background. Buffet was also cited by the bulls on several occasions this summer when his recent investments in railroad stocks this summer seemed to have translated into robust rallies for the entire market as that news had been deemed good for the entire planet, per the bulls. Although, true as it concerned his buying of some railroad stocks, it was certainly not true as far as acting as a proxy for everything else given what later transpired in late July and August. I’ll also note that on or around the news of his railroad buying, it turned out to be a peak for the railroad sector in general. Not to disparage Buffett as being a magnificent investor, he is, but the very act of him spending money on something does not translate into being bullish, necessarily, for anything else. But again, Buffet’s name is used on so many occasions as being the subject in a number of major looming investments or buyouts which is almost always deemed to be good for the entire universe. Yet, so often these rumors turn out to be false or at least misleading. On the other hand, when Buffett throws cold water on the bull’s party as he has done on several occasion in recent years, he is often dismissed as being irrelevant, or out of touch with the "new economy," etc. Its my opinion that Buffett wants to have nothing to do with Bear Stearns as an investment, let alone to be a party to a coordinated bailout of such stupidity. He, of all people, most likely believes that Bear Stearns and its ilk, should reap what they sowed.