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U.S. stocks pulled back from their all-time high on Monday, with the S&P 500 down 0.15%, while the narrower, price-weighted Dow Jones Industrial Average lost 0.2%.

Despite this, the CBOE Volatility Index (VIX), Wall Street’s “fear index,” continued its descent, shedding 1.17% to close at 11.84. (The VIX is calculated from S&P 500 option prices and reflects investor expectations for stock market volatility over the coming 30 days.) Inc. (AMZN)That’s unusual for two reasons: First, daily movements in the VIX and the S&P 500 are highly negatively correlated, with a correlation of minus 0.70, i.e., when the S&P 500 declines, the VIX usually rises (correlation indicates the degree to which two variables move together and takes values between -1.00 and +1.00, the former indicates two variables are perfectly negatively correlated). Second, the VIX was already at a very low level on Friday — well within the bottom 10% of the entire series going back to the inception of the index in January 1990.

“Get your Post here! Just $250 million.”, Inc. (NASDAQ:AMZN)
CEO Jeff Bezos is acquiring The Washington Post Company (NYSE:WPO)‘s newspaper publishing business, including its flagship daily, for $250 million. It bears emphasizing that Bezos is acquiring it as a private citizen — this is not a case of, Inc. (NASDAQ:AMZN) swallowing the Post.

Rather than speculate on Bezos’ motives or what it means for the future of media, I thought it would be an opportune time to examine how well Berkshire Hathaway — the The Washington Post Company (NYSE:WPO)’s largest investor – has done on its investment. In his 1993 Chairman’s Letter, Warren Buffett wrote:

In 1973, we purchased our stock in her company for about $10 million. Our holding now garners $7 million a year in dividends and is worth over $400 million. At the time of our purchase, we knew that the economic prospects of the company were good.

At that time, his investment in the The Washington Post Company (NYSE:WPO) had proved spectacular, producing an annualized return in the region of 20% over a 20-year period — and that’s before you include dividends. But note that the 14.8% stake Berkshire owned in the company at the end of 1993 was then worth 60% more than the sum Bezos is now paying for all the newspaper publishing assets.

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