Buffett Buffet

[kcowan]

There have been several "Warren Buffett's";

There was the early Buffett who tried running all sorts of businesses himself, there was the Buffett who discovered Ben Graham and became a cigar butt investor, then there's the one who met Charles Munger and started buying truly great companies at a reasonable prices. ISTM that now we have a Buffett that realizes that his time is short and is trying his very best to prevent the next guy from screwing up his baby (Berkshire) after he dies. Quite a record if you ask me.

Actually, Buffett has evolved to be a rent-seeker as a result of his investment in Goldman Sachs. This might be motivated by his trying to prevent big losses from his "weapons of mass financial destruction".

In economics, rent seeking occurs when an individual, organization or firm seeks to earn income by capturing economic rent through manipulation or exploitation of the economic or political environment, rather than by earning profits through economic transactions and the production of added wealth.

[FinEcon]

Reflections on Value Investing, there's a ton of great stuff here.

http://valueinvestingresource.blogspot. ... ation.html
18MB pdf of Buffet articles from Forbes over the decades.

The Intelligent Investor - audio book on YouTube
http://www.youtube.com/watch?v=02_kWrNO ... re=related

[Taggart]

Bloomberg Businessweek

July 09, 2010, 4:11 PM EDT

Berkshire ‘Double Whammy’ May Cost Firm $800 Million

Warren Buffett’s Berkshire Hathaway Inc. may record an $800 million writedown tied to asset declines in the second quarter, said Meyer Shields, the Stifel Nicolaus & Co. analyst who cut the stock to “sell” yesterday.

“Because of Berkshire’s derivatives portfolio, it’s sort of a double-whammy,” he said in a Bloomberg Television interview today. “When the economy weakens and the markets trail down they have to take a mark-to-market hit on their balance sheet. Right now, we’re estimating a hit of $800 million for the second quarter.”

[kcowan]

Now that Buffett has been proven wrong on the GS suit:

Investor Warren Buffett fiercely defended Wall Street giant Goldman Sachs Saturday, saying the much-maligned bank did not engage in fraudulent activities.

will he be doing some damage control or just go into hiding?

[adrian2]

Now that Buffett has been proven wrong on the GS suit

The settlement did not include any admission of wrongdoing by Goldman, it has been characterized by our fellow poster Mr. Hymas as regulatory extortion.

[kcowan]

Now that Buffett has been proven wrong on the GS suit

The settlement did not include any admission of wrongdoing by Goldman, it has been characterized by our fellow poster Mr. Hymas as regulatory extortion.

Yes if they had admitted wrongdoing , they might have settled for $250K but then the subsequent cases would have been tougher to defend. Probably a good decision by GS.

[deaddog]

Buffett gets in a bind over options;
http://finance.yahoo.com/news/Buffett-g ... et=&ccode=

[FinEcon]

Buffett gets in a bind over options;
http://finance.yahoo.com/news/Buffett-g ... et=&ccode=

IMO, he has a legitimate beef on retroactive rule changes, on existing deals, for posting collateral. If one believes that retroactive changes to collateral posting are necessary, should one not also believe that retroactive premium changes are necessary? Of course, assuming there has been no violation of terms of the original deal by either party.

[Clock Watcher]

Is Warren Buffet really a buy-and-hold investor? For example, in the last 10 years, what is the average holding period of his investments?

[zinfit]

He has stuck with his big holdings such as Coke and his insurance companies. In fact he increased his positions in these holdings. He is always sitting on a big pile of cash which he does use for some short term investments. He is patient when it comes to his long term investments.

[augustabound]

Is Warren Buffet really a buy-and-hold investor?

He's both long and short term, always has been. His "our favourite holding period is forever" refers to his permanent holdings.
He still buys small positions from time to time.

You also need to know which are his picks and which are Lou Simpson's. Simpson holdings are generally under a billion.

[Peculiar_Investor]

Interesting news, the original article Lou Simpson retiring from Geico - chicagotribune.com and then CNBC picks up the story, Warren Buffett's Semi-Secret Stock Picker Lou Simpson Set to Retire - CNBC

[augustabound]

After 3 years, I just got where your avatar is from P.I.

[Peculiar_Investor]

Happy belated 80th birthday to the Oracle of Ohama. It's Warren Buffet's birthday and everyone's calculating when he will die. Well not everybody, cause I'm not

[George$]

Why Warren Buffett plays bridge - by John Hussman

Why Warren Buffett plays bridge

Aside from an affection for cheeseburgers and cherry Coke, one of the personal facts commonly known about Warren Buffett is his love of bridge, which he periodically plays online with Bill Gates.

Why bridge? Though Graham wasn't talking about Buffett at the time, he offers a clue:

“I recall to those of you who are bridge players the emphasis that bridge experts place on playing a hand right rather than on playing it successfully. Because, as you know, if you play it right you are going to make money and if you play it wrong you lose money – in the long run. There is a beautiful little story about the man who was the weaker bridge player of the husband-and-wife team. It seems he bid a grand slam, and at the end he said very triumphantly to his wife ‘I saw you making faces at me all the time, but you notice I not only bid this grand slam but I made it. What can you say about that?' And his wife replied very dourly, ‘If you had played it right you would have lost it.'”

It seems to me (and it has certainly been my experience) that it takes an enormous amount of restraint to focus on playing every investment hand “right,” according to an established discipline, allowing the law of averages to work in your favor, rather than trying to win every hand. I would guess that this is exactly what appeals to Warren Buffett's temperament. Over the long-term, good investing requires it.

[chiaroscuro]

That was the hardest lesson to learn when I first started investing, being right but losing money. As the wife in the story said, he bumbled to victory. It's not so much winning as it is starting out playing it right but not being dogmatic and taking advantage when the situation arises. It is also very important to know when to do so.

I'm not sure if I just stated the opposite point of the story.

[DavidR]

Why Warren Buffett plays bridge - by John Hussman

“I recall to those of you who are bridge players the emphasis that bridge experts place on playing a hand right rather than on playing it successfully. Because, as you know, if you play it right you are going to make money and if you play it wrong you lose money – in the long run. There is a beautiful little story about the man who was the weaker bridge player of the husband-and-wife team. It seems he bid a grand slam, and at the end he said very triumphantly to his wife ‘I saw you making faces at me all the time, but you notice I not only bid this grand slam but I made it. What can you say about that?' And his wife replied very dourly, ‘If you had played it right you would have lost it.'”

What a great analogy.

I used to play contract bridge in my undergrad days. One week my partner and I were greeted as follows by a dour competitor: "I heard you won last week. You didn't deserve it..." We had a pretty unorthodox style back then, to say the least. I hope to play my investment hands more correctly

[FinEcon]

If you agree with the Buffett on bridge line of thinking, the Montier quote my signature is worth knowing and committing to memory. Likely preaching to the converted here but life, including investing, is about pot odds. In three months no doubt we will still see a thread where people are tabulating and posting by taking a time difference of of two weighted averages and again I will lose the argument that the standard mark to market performance calculations (for individual equity investors) are about as useful as yield on cost. IMO, we need to think more deeply and more qualitatively about many aspects of investing.

[Peculiar_Investor]

Another Op-Ed piece in the NY Times, Pretty Good for Government Work - NYTimes.com. Not sure the purpose of the piece or what, if any, investment education or knowledge, can be gained from reading it, but he does command an audience.

[couponstrip]

Could it be, in part, reaction to the recently released and positively reviewed Hollywood Flick Inside Job which portrays many of the names in the Buffett NYT article negatively? I saw the movie, and I'm not sure why the critics are giving it such rave reviews. It's sort of average overall. It misses the mark on a lot of situations, levels responsibility for the crisis on individuals and groups who could not possibly be blamed, and is frankly condescending at many junctures. Sadly, the condescension seems to be founded on ignorance, although I am by no means an expert in the intricacies of the financial crisis of '08-'09. The movies suffers heavily from hindsight bias. Probably of greatest importance, the movie fails to give credit to those who may well have saved the world from a second great depression and perhaps this is where Buffett feels he needs to set the record straight?

[chiaroscuro]

The take home lesson from Buffett is that without the government we would have been toast.

When the crisis struck, I felt you would understand the role you had to play. But you’ve never been known for speed, and in a meltdown minutes matter. I worried whether the barrage of shattering surprises would disorient you. You would have to improvise solutions on the run, stretch legal boundaries and avoid slowdowns, like Congressional hearings and studies. You would also need to get turf-conscious departments to work together in mounting your counterattack. The challenge was huge, and many people thought you were not up to it.

Well, Uncle Sam, you delivered. People will second-guess your specific decisions; you can always count on that. But just as there is a fog of war, there is a fog of panic — and, overall, your actions were remarkably effective.

Now the US government has another responsibility which it has neglected. Thousands and thousands of people were involved in widespread fraud so that they could defraud investors of trillions of dollars.

You have to not only fix what is broken but fix the things that caused the system to break down in the first place. Put the white collared criminals in jail, fire those in the government who didn't do their job.

[kcowan]

You have to not only fix what is broken but fix the things that caused the system to break down in the first place. Put the white collared criminals in jail, fire those in the government who didn't do their job.

Now they just have to maintain the illusion that they are looking after you.

[Norbert Schlenker]

Another Op-Ed piece in the NY Times, Pretty Good for Government Work - NYTimes.com. Not sure the purpose of the piece or what, if any, investment education or knowledge, can be gained from reading it, but he does command an audience.

If Warren Buffett wants to tarnish his golden years emitting the gushing drivel that appears in today’s New York Times, he has undoubtedly earned the privilege. But even ex cathedra pronouncements by the Oracle of Omaha are not exempt from the test of factual accuracy. Specifically, his claim that “many of our largest industrial companies, dependent upon commercial paper financing that had disappeared, were weeks away from exhausting their cash resources” is unadulterated urban legend. Nothing remotely close to this ever happened...

But no taxpayer can be grateful. There never was a crisis on Main Street. The panic was in the US Treasury Department where the clueless Hank Paulson was swamped with calls from his crony capitalist buddies like Immelt and his counterparts up and down Wall Street, but especially at Goldman Sachs (GS). When Goldman’s stock price ticked $65 in the days after Lehman, Mr. Market was desperately trying to purge the reckless speculation and leveraged rot that had been building up in the nation’s financial system ever since the Fed discovered in the 1990s that it could print endless dollars and that they would be obligingly accumulated by the mercantilist overlords of China and East Asia.

Thanks to the Geithner/ Paulson/ Bernanke claque, the needed financial cleansing and purge never happened. Instead, we've just drifted deeper into a statist regime in which Uncle Sam backstops, stimulates, underwrites, and meddles with every aspect of our broken capitalist machine. Uncle Sam wasn't our savior in September 2008. By the panicked actions of a few desperate men occupying high offices, he was empowered to become our destroyer. Thanking Uncle Sam is fatuous under any circumstance. But to thank the men who brought on TARP, bailouts, and the lunacy of ZIRP and QE is pure humbug.

http://www.minyanville.com/businessmark ... 0/id/31189

[chiaroscuro]

Another Op-Ed piece in the NY Times, Pretty Good for Government Work - NYTimes.com. Not sure the purpose of the piece or what, if any, investment education or knowledge, can be gained from reading it, but he does command an audience.

If Warren Buffett wants to tarnish his golden years emitting the gushing drivel....Thanks to the Geithner/ Paulson/ Bernanke claque, the needed financial cleansing and purge never happened....

I remember those days well. I would ask myself what does it mean for the future that LB went bankrupt with all of the derivatives on it's books? What does it mean for the future that money markets froze up? What does it mean for the future that TARP was rejected? Each unique piece of news was met by major swoons in the stock market. As for the purge...? Southern Libertarians Republicans had their hands on that lever. It was their rejection of TARP that allowed us to see what nonintervention would look like. They stared into the abyss and crapped their pants because enough of these idealists changed their mind and voted for TARP the second time around.

[kcowan]

Buffett wants an exemption to financial regulations of derivatives.

Anything of this size left to its own devices can, and eventually will, start wreaking havoc. Ironically, it was Charlie Munger, Buffett's sidekick, who once warned that the staggering notional value of interest rate swaps makes them inherently dangerous, even if they give off a relatively safe facade.

Another self-serving position.