Buffett Buffet

[Norbert Schlenker]

No idea whether this is real or not. It sure sounds like Buffett.

[adrian2]

Some controversial thoughts on The Oracle from Omaha.

[Bylo Selhi]

More vintage Buffett (thanks to NormR), Warren Buffett Q&A [Motley Fool, 13Jul05]

I know more about business and investing today, but my returns have continued to decline since the 50's. Money gets to be an anchor on performance. At Berkshire's size, there would be no more than 200 common stocks in the world that we could invest in if we were running a mutual fund or some other kind of investment business.

You should do the job you love whether or not you are getting paid for it. Do the job you love. Know that the money you will follow. I travel distances better than you do. The plane is nicer. But that is about the only thing that I do a whole lot different.

I was lucky. I had a terrific set of parents. My father was an enormous inspiration for me. The job when you are a parent is to teach them. Be a natural hero. They are learning from you every moment you are around. There is no rewind button. If your parents do what they say and their values match what they teach you, you are lucky. What I observed in the world was consistent with what my parents taught me. That was important. If you are sarcastic, and use it as a teaching tool to kids, they'll never learn to get over it. Those first few years they are very impressionable.

I was lucky. I had a terrific set of parents. My father was an enormous inspiration for me. The job when you are a parent is to teach them. Be a natural hero. They are learning from you every moment you are around. There is no rewind button. If your parents do what they say and their values match what they teach you, you are lucky. What I observed in the world was consistent with what my parents taught me. That was important. If you are sarcastic, and use it as a teaching tool to kids, they'll never learn to get over it. Those first few years they are very impressionable.

And for the libertarians in the audience

It really reflects my views on how a rich society should behave. If it weren't for this society, I wouldn't be rich. It wasn't all me. Imagine if you were one of a pair of identical twins and a genie came along and allowed you to bid on where you could be born. The money that you bid is how much you had to agree to give back to society, and the one who bids the most gets to be born in the US and the other in Bangladesh. You would bid a lot. It is a huge advantage to be born here.

There should be no divine right of the womb. My kids wouldn't go off and do nothing if I give them a lot of money, but if they did, that would be a tragedy. $30 billion will be generated from estate taxes, which will go to help pay for the war in Iraq and other things. If you take away the estate tax, that money will have to come from somewhere else. If not from estate taxes then you inherently get it from poorer citizens. Less than 2% of estates will pay the estate tax. They would still have $50 million left over on average. I think those that get the lucky tickets should pay the most to the common causes of society. I believe in a big redistribution. Wealth is a bunch of claim checks that I can turn in for houses, etc. To pass those claim checks down to the next generation is the wrong approach. But for those that think I am perpetuating the welfare state, consider if you are born to a rich parent. You get a whole bunch of stocks right at the beginning of your life, and thus you are sort of on a welfare state of support from your rich parents from the beginning. What's the difference?

[Brix]

You get a whole bunch of stocks right at the beginning of your life, and thus you are sort of on a welfare state of support from your rich parents from the beginning. What's the difference?

The difference is that your parents chose to have you and chose to name you in their wills. Libertarians live in dread of being forced to do something they haven't chosen to do. And worse, by and for people to whom they haven't even been introduced. And worse still, with money.

[NormR]

More vintage Buffett (thanks to NormR),

Even more Buffett Links

[nadreck]

The difference is that your parents chose to have you and chose to name you in their wills. Libertarians live in dread of being forced to do something they haven't chosen to do. And worse, by and for people to whom they haven't even been introduced. And worse still, with money.

I want to make choices in my life, and I am willing to sacrifice some wealth and comfort to add to the twin illusions of freedom and control in my life. But, I know that even while I am alive they are naught but illusions. My freedom stops as soon as a stronger and better equiped ego gets in the way of mine. As for control, well that is always an ilusion. I am just reading a book called "Fooled by Randomness" - it is amazing how many people think they are in control of randomess in one form or another.

However, it would be hubris in the extreme to think that I could freely make choices and control things beyond the span of my life. Libertarianism is about living a life that interferes with others as little as possible. It eschews excessive legislation, excessive litigation and excessive social service. It is a couple of steps this side of anarchy, but only because those of us who are rational about it can't trust everyone else, we each know we can trust ourselves. I live in deadly fear of people who feel they can't trust themselves, they want some of the most offensive rules imposed on everyone.

[Ron Mann]

I note that Warren Buffet hsa now dramatically decreased his speculation against the US dollar having lost hunders of millions of US$ due to the strength of the US$ in the last three months.

BUT the fundamentals - the "twin U.S. deficits" (budget and trade) - that made him bet against the US$ have not changed - indeed they have increased. So he should have "doubled down".

But like so many of us - myself included - he was unnerved by his losses. I guess he needs an investment adviser to hold his hand.

[unicef01]

From weekend WSJ

http://makeashorterlink.com/?M20C13D2C

cheers

[Taggart]

Buffett: U.S. Trade Deficit Is a Threat

By SCOTT SONNER

The Associated Press

Wednesday, January 18, 2006; 11:41 AM

RENO, Nev. -- The U.S. trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to "political turmoil," billionaire investor Warren Buffett warned.

"Right now, the rest of the world owns $3 trillion more of us than we own of them," Buffett told business students and faculty Tuesday at the University of Nevada, Reno. "In my view, it will create political turmoil at some point. ... Pretty soon, I think there will be a big adjustment," he said without elaborating.

The U.S. trade deficit for the first 11 months of 2005 totaled $661.8 billion, surpassing the previous annual record of $617.6 billion set in 2004. Economists say when December figures are included, the final deficit for 2005 will top $710 billion. Buffett said he expects it to top $700 billion this year.

"That's $2 billion a day. We are like a super rich family that owns a farm the size of Texas. You sell off a little bit of the farm and you don't see it," he said.

Fifteen years ago, the U.S. had no trade deficit with China, he said.

"Now it's $200 billion. If we don't change the course, the rest of the world could own $15 trillion of us. That's pretty substantial. That's equal to the value of all American stock," Buffett said.

LINK

[Taggart]

Dealers make a meal out of Buffett link

Geoff Foster, Daily Mail

20 January 2006

LEGENDARY billionaire investor Warren Buffett stirred up the banking sector when dealers heard whispers that he was building a minority stake in Lloyds TSB via his Berkshire Hathaway investment company.

Earlier in the week he bolted on Business Wire, a leading global distributor of corporate news, to his burgeoning empire. Responding to the speculation, shares of the UK's fifth largest bank jumped sharply in active trading to touch 522p before closing 13¼p higher at 516p on hefty turnover of 63m.

Buffett's guiding principle for investing is to buy stakes in businesses he understands. He also loves to buy undervalued assets and Lloyds TSB is deemed the cheapest and the weakest of the big banks.

He already holds a sizeable shareholding in American Express and last year acquired small stakes in Kingfisher (4p better at 239¼p) and DIY giant Home Depot.

Lloyds TSB is forever being mentioned as a possible takeover target of US bank Wells Fargo. Conspiracy theorists suggested that Buffett was nibbling away hoping that the longrumoured corporate attack by a US bank materialises.

Others pooh-poohed the Buffett tale and said that institutions were just piling in for the juicy 7% yield ahead of the bank's annual results on February 24. Word is profits will come at the top of market expectations.

LINK

[Taggart]

NEVADA FOCUS: Buffett tells students to find durable, competitive advantage

By Scott Sonner

ASSOCIATED PRESS

12:35 p.m. January 19, 2006

LINK

[Taggart]

I don't know how I missed this one, but I did. A terrific interview in Kiplinger's with Charlie Munger.

The World According to "Poor Charlie"

Charlie Munger, Warren Buffet's number two speaks to Kiplinger's about investing, Berkshire and more.

December 2005

[Taggart]

The Standard
China's Business Newspaper

Buffett letter just the job for graduate

Richard B Wright is seeking a job as a stock analyst in New York. He has a recommendation letter from Warren Buffett that may do the trick.

Thursday, February 09, 2006

Richard B Wright is seeking a job as a stock analyst in New York. He has a recommendation letter from Warren Buffett that may do the trick.

Wright, as a member of a finance club at the University of Tennessee, helped set in motion Buffett's US$1.7 billion (HK$13.26 billion) purchase of Clayton Homes in 2003. He wants to work for a hedge fund or asset manager that follows the billionaire's value- investing approach, favoring stocks at low prices relative to companies' earnings and assets.

"He's got a letter from God," said Brian Sullivan, chief executive officer of Christian & Timbers, an executive- search firm in New York.

"Anyone's going to be inquisitive enough to consider him."

LINK

[Taggart]

Warren Buffett to play investor in kids show

Posted 2/8/2006 8:51 AM Updated 2/8/2006 10:11 AM

LONDON (Reuters) — British brand management company DIC Entertainment said on Wednesday it had signed up Warren Buffett to create an animated DVD series featuring the billionaire investor as a financial mentor for children.

LINK

[Taggart]

Heard on the Street: Years into filing for Chapter 11, USG is smiling

Wednesday, February 15, 2006
By Karen Richardson, The Wall Street Journal

Just three years ago, Warren Buffett's Berkshire Hathaway Inc. was lending its shares of USG Corp. to short sellers, who were betting the $4 stock of the building-materials company, under bankruptcy-court protection, had further to fall.

http://www.post-gazette.com/pg/06046/655707.stm

[NormR]

Berkshire Hathaway report for 2005

[bubbalouie]

Sub-par performance from the World's Smartest Investor

[Taggart]

bubbalouie said:

>>>Sub-par performance from the World's Smartest Investor<<<

----------------------------------------

Sorry, I posted this before, but looks like I have to post it again.

If You Give an Investor a Cookie...
By Chris Mayer

http://www.howestreet.com/articles/inde ... le_id=2019

"That's to be expected, says Biggs. In his new book, Hedgehogging, he examines the track-records of the "superinvestors" that Warren Buffett's mentions in his famous essay "The Superinvestors of Graham-and-Doddsville." Biggs notes that these superinvestors produced returns that lagged the S&P 500 about 30–40% of the time. John Templeton, another legend — but not included in Buffett's essay — lagged the big index about 40% of the time.

"None in the group always beat the S&P 500," Biggs relates, "probably because no one thought that was the primary objective." Even more interesting, some of the greats had relatively long periods of time – three or four consecutive years – where they lagged behind the S&P 500. "Almost invariably, sustained bursts of spectacular returns either preceded and/or followed those bad periods," says the former Morgan Stanley guru."

[bubbalouie]

What's sad is that many believers applaud Buffet for not falling into the tech trap, yet even after the 80% correction in the tech sector, Buffet is still underperforming. The chart below compares Buffet's fund with the tech index on the Amex for the last 10 years.

The article you posted is interesting in that it makes me think of Mal Spooner. He's had only 1 or 2 good years out of 5 but those good years were sensational. I guess what you're saying is it's better to have a fund manager knock a ball out of the park once in a blue moon rather than have someone who can be counted on to give you only a steady supply of base hits time after time.

It's interesting to note that the last decent year Buffet had in comparison to the index was when the tech sector fell out of favor and he avoided the freefall. Maybe this time there'll be a commodity bust/global contraction that will also save him from posting a 4th consecutive year of underperformance. One can only hope.

[scomac]

The article you posted is interesting in that it makes me think of Mal Spooner. He's had only 1 or 2 good years out of 5 but those good years were sensational. I guess what you're saying is it's better to have a fund manager knock a ball out of the park once in a blue moon rather than have someone who can be counted on to give you only a steady supply of base hits time after time.

ISTM that you're endorsing this sort of approach by virtue of comparing BRK.A to the Amex tech. index.

There are a lot of factors impacting the more recent performance of BRK.A. The most notable being the absolutely huge amount of capital they have to deploy vs. a real dearth of investment opportunites. Buffett's simply running into the sort of roadblocks that impact many mutual fund managers as they have to deal with a massive inflow of capital after a period of exceptional performance. Buffett has stated, rather matter-of-fact, that he could earn a return of 50%/annum if he only had to deploy $1M in capital. Unfortunately, he has something in the order of $40B to deploy!

It should be really no surprise to anyone who follows Buffett that the returns of BRK.A have lagged over the last 10 years. They didn't invest in tech. (because he didn't understand it) and they've pretty much avoided cyclical businesses that lacked any kind of pricing power (ie. commodities). If you avoid the two broad sectors that have driven the indexes, both up and down, over the past 10 years, you can't expect to keep up over the period that you've decided to measure.

[bubbalouie]

There are a lot of factors impacting the more recent performance of BRK.A. The most notable being the absolutely huge amount of capital they have to deploy vs. a real dearth of investment opportunites.

Ed Zachary! I think you've hit the nail on the head.

[Taggart]

Fortune Magazine

Buffett: Cut your gains!
In his 2006 letter to Berkshire Hathaway shareholders, Warren Buffett explains how costly it can be to let advisors come between you and your money.

By Warren Buffett
March 6, 2006: 5:54 AM EST

Warren Buffett often uses his annual report to comment on subjects he believes of importance to today's markets. Here, from the report published Saturday, is an allegory about "How to Minimize Investment Returns."

LINK

[hocus]

Finding ideas is a function of cumulative knowledge over time. Something just comes along – usually an event takes place, like a good management team screwing up – that creates the opportunity (WB seems to imply here that his reading isn’t specifically targeted at finding ideas, but rather that ideas jump out at him as a natural consequence of vociferous reading)
· You must be patient…good ideas tend to be clustered together, and may not come at even time intervals…

Fine stuff worthy of inclusion in the For More In-Depth Future Study file. Thanks for posting that, Norbert.

Rob

[Taggart]

The Independent-UK

Buffett is still far from a spent force

By Jonathan Davis

Published: 11 March 2006

LINK

[Bylo Selhi]

Buffett makes $14bn bet on global markets

By David Wighton in New York
Monday, April 03, 2006
Posted: 06:00 PM EDT (23:00 London)

Warren Buffett, whose investment prowess has made him the world's second richest person, is making a long-term bet on global stock markets – which could cost him up to $14bn. Berkshire Hathaway, the insurance and investment giant run by Mr Buffett, has sold clients insurance protection against a drop in four equity indices. If the indices, three of which are non-US, fall by 30 per cent over the 15-20-year life of the contracts, Berkshire would incur a pre-tax loss of about $900m. It has a maximum exposure of $14bn. Mr Buffett is known for taking a long view and for using Berkshire Hathaway's huge balance sheet to offer insurance against large – but very unlikely – risks.

Analysts said the purchasers of the index contracts were probably pension funds that wanted to increase their potential long-term returns by holding more equities but needed protection in case of a stock market meltdown. In the filing, Berkshire Hathaway did not disclose any more detail about the contracts, including the premiums it would receive or the level the indices must fall below before it made a pay-out.

Mr Buffett and Charlie Munger, his long-time associate, are well known for taking big market bets. Mr Buffett has been betting against the dollar in recent years, making profits of more than $2bn as the dollar fell, although Berkshire Hathaway lost $955m last year as the currency strengthened. "I still think 10-20 years ahead – maybe I'm being a bit optimistic," the 75-year-old Mr Buffett said in an interview with the Financial Times last year.