At the start of the week, in comments made at
magazine's Most Powerful Women Summit, Buffett reiterated his optimism, pointing to the impressive performances of
notables like Burlington Northern Santa Fe Rail Railroad.
Looking ahead to final months of 2011, Buffett's foresees continued strength. Excluding Berkshire's housing branch, which the investor feels is still facing steep hurdles, Buffett expects many of the largest businesses under his watch will see record, or near-record earnings this year.
Given this rosy forecast, it will be interesting to see how Buffett intends to position himself to benefit in the months ahead. With nearly $50 billion in cash sitting on the sidelines, the investor's elephant gun is loaded and ready to fire. Analysts, commentators and Buffet fans have been itching to see when and where he intends to pull the trigger.
Although, on a number of occasions Buffett has provided clues as to what he looks for in attractive acquisition targets, attempting to actually pinpoint where he will eventually spend his cash is a difficult task.
In a recent report from
, over 30 companies were found to share the qualities Buffett has historically looked for in attractive opportunities. These firms run the sector gamut, ranging from spice giant
, to oil and gas driller
, to entertainment retailer
Companies comprising this list are not confined to U.S. borders, either. Indonesia's Bumi Resources and Norway's Yara International are some of the international names scoring spots as well.
Speculating over which company will receive a blessing from Buffett can be a fun exercise. However, when it comes to investing, I encourage those investors looking to mimic the Oracle of Omaha to avoid trying to pick out his next big purchase.
ETFs offer a better alternative for fans of the Nebraska native. Using these products, investors can not only attempt to gain exposure to possible Berkshire acquisition targets, they can also construct a strong, stable portfolio that will perform well in the event that the investor's optimistic forecast plays out.
Given his prior deals, his company's current portfolio, and the list of possible targets that has been compiled by
and others in recent months, the consumer goods, energy, and industrials sectors appear to be strong possible candidates for where Buffett's next big purchase will hail from.
Products like the
iShares Dow Jones U.S. Oil Equipment & Services Index Fund
iShares Dow Jones U.S. Consumer Goods Index Fund
Industrial Select Sector SPDR
are a few options investors can turn to in order to target these three sectors.
Although it may be tempting to dive headfirst into these funds to take advantage of Buffett's optimistic outlook, investors should use discretion. The macroeconomic factors that have plagued the global markets in recent months continue to be in play and will likely steer performance in the near future. By keeping exposure small and contained investors can benefit from strength in the future, while protecting from present weakness.
How has Buffett's optimistic forecast affected your view of the global economy? Have the investor's previous acquisitions impacted your own investing preferences? Feel free to leave a comment below.
Written by Don Dion in Williamstown, Mass.
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At the time of publication, Dion Money Management owned the iShares Dow Jones U.S. Consumer Goods Index Fund.