Buffett Buffet

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kcowan
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Post by kcowan »

Since all three guys are spokemen for investments tied to their name, which one do you think is doing the best corporate job for their funds/shares?
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Post by ghariton »

Buffett is famously quoted as comparing derivatives to weapons of mass destruction. So I was surprised to learn that Berkshire Hathawy is heavily involved in derivatives.

But apparently there are good derivatives and bad derivatives. Presumably, the good ones are the ones on which you make money. (But wouldn't those be bad derivatives from the point of view of the counter-party?)
Berkshire at year end had 251 derivatives contracts, most of which are essentially bets on the long-term direction of stocks and junk bonds. They has accumulated billions of dollars of paper losses because stock prices have fallen, but Buffett has said these contracts differ from other derivatives he has called "financial weapons of mass destruction" in part because of the billions of dollars of premiums he collects upfront.

"I personally think that the odds are extremely good that on the equity put options, we will make money," Buffett said at Berkshire's annual meeting.

But he added that "we have run into far more bankruptcies in the last year than is normal," and that on contracts tied to credit defaults, Berkshire will probably "lose money." He added: "I would expect those contracts to show a loss before investment income, and perhaps after investment income."
Apparently Buffett is one of the largest sellers of derivatives:
He sold more than $2.5 billion worth of credit default swaps in 2008—the same notorious derivative contracts that had brought AIG to its knees—and more than $6.7 billion worth of another type of derivatives, called “index put option contracts,” which essentially bet stock prices would not fall here and abroad. These contracts have a duration of as long as 20 years, and, as the disclosure notes, “generally may not be terminated or fully settled before the expiration dates and therefore the ultimate amount of cash basis gains or losses may not be known for years.” In the first nine months of 2008 alone, Berkshire’s losses from these derivative amounted to $2.2 billion.
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Post by zaman »

IIRC the derivatives that Buffett has been selling from 2000-2008 were part of an insurance company that he bought, General Re I think. The new derivatives are his own making.
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Post by kcowan »

And I am pretty sure that when they bought General Re, they were unaware of the extent of the exposure that they were buying. So his comments on derivatives still ring true (although their DD on acquisitions is suspect).
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Post by Bylo Selhi »

The GenRe situation, including the mea culpas, are discussed (and discussed and discussed...) upthread.

IIRC the derivatives based on S&P500 that he entered into subsequently don't come due until the end of the next decade so the jury will be out and doing a Rip van Winkle for some time. A lot can happen between now and then.

It's also important to note that even if the S&P500 derivatives head south in the next decade, BuffettBRK has the deep pocketsfinancial resources to cover them. That wasn't the case with last year's batch of WMD victims.
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Post by randomwalker »

Buffett’s Berkshire Hathaway Discloses Becton Dickinson Stake
By Erik Holm and Linda Shen Bloomberg.com

"Aug. 15 (Bloomberg) -- Billionaire investor Warren Buffett’s Berkshire Hathaway Inc. took a stake in Becton Dickinson & Co., as shares of the syringe and laboratory equipment maker advanced in the second quarter."

http://www.bloomberg.com/apps/news?pid= ... F3xC0AfiKU
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Post by Peculiar_Investor »

Another NY Times Op-Ed piece from yesterday.

The Greenback Effect
Warren Buffett wrote:The butterfly effect reaches into the financial world as well. Here, the United States is spewing a potentially damaging substance into our economy — greenback emissions.
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Post by Taggart »

Business September 2009 Atlantic

What Would Warren Do?

The Sage of Omaha has redefined the idea of value investing. But will its principles survive his inevitable passing?

by Megan McArdle
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Post by zaman »

Found some great video's on BBC, there's one of Charlie Munger, Suzy Buffet and Warren

http://news.bbc.co.uk/2/hi/business/8326369.stm
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Post by Bylo Selhi »

See also the full one-hour The World's Greatest Money Maker: Evan Davis meets Warren Buffett. Available for a few more days on the Beeb website (if you know how to hack it) or via BitTorrent forever.
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Post by Gus »

Do people object to paying tax or do they just object to the way their money is spent?

Buffett thinks we should pay more tax. Is he right?
On tax too, I wonder whether he really believes in what he says, for it is not the paying of tax as such that rich people find objectionable (OK, so maybe just a little bit), as the uses to which the taxes are put. If we could be sure that it was spent effectively on those who have drawn the short straws in life, then nobody could seriously object. But it is the spectacle of tax being squandered on inappropriate causes and political aggrandisement that so infuriates people, and leads them to believe, not unreasonably, that they might be able to spend the money better themselves.

If Mr Buffett really believed his own rhetoric, he would give all his money to the taxman, but he’s not going to do that. After the taxman has had his take, the rest is going to the Bill and Melinda Gates Foundation, because in Warren’s view, though he may be good at making money, others are better at spending it. The taxman, it might be said, is very good at taking your money, but not at all effective when spending it. Personally, I would trust Bill and Melinda to spend it better too.
There's also mention of the way Buffett made money on derivatives, while at the same time denouncing them (as Georges alluded to earlier).
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Post by Peculiar_Investor »

Taggart wrote:Larry MacDonald

Special to The Globe and Mail, Wednesday, May. 27, 2009 10:01AM EDT

Buffett’s latest best idea

Investing legend Warren Buffett has stated that he would be happy if he and his partner, Charlie Munger, could come up with one good investment idea every year. That one good idea currently appears to be Burlington Northern Santa Fe Corp. (BNI-N69.00-1.80-2.54%), a Fort Worth, Texas-based railway company that hauls freight.

Of the investments disclosed in recent 13F filings with the U.S. Securities and Exchange Commission by Berkshire Hathaway Inc. (BRK.B-N2,987.00-2.00-0.07%), it’s by far the biggest purchase.*
Good call, Berkshire Hathaway Inc. to Acquire Burlington Northern Santa Fe Corporation (BNSF) for $100 Per Share in Cash and Stock. I love this quote from the press release,
“Most important of all, however, it’s an all-in wager on the economic future of the United States,” said Mr. Buffett. “I love these bets.”
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Post by Peculiar_Investor »

Warren has been busy today, Berkshire Hathaway Inc. Board of Directors Approves 50-for-1 Split of Its Class B Common Stock. They are not splitting the "A" shares. The rationale for the split is,
The great majority of the stock issued by Berkshire in the BNSF acquisition announced today will be “A” shares. “B” shares, however, will also be needed to accommodate holders of smaller amounts of BNSF shares who opt for a share exchange rather than a cash payment.

By splitting Berkshire “B” shares 50-for-1, we can accommodate even the smallest holdings of BNSF shares that elect a tax-free exchange.
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Post by augustabound »

Um.....Wow. Uncle Warren's been busy.
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Post by Taggart »

Wall Street Journal

NOVEMBER 5, 2009

Channeling Your Inner Warren Buffett

"It's possible to invest like the Oracle, but not everyone can get his terms."
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Post by kcowan »

The Big Picture wrote:they take pride at Goldman in not just being whores, but in being the highest paid callgirls in town — it is stunning to see such behavior from the usually politically astute Oracle Tentacles of Omaha. For Warren Buffett’s Berkshire Hathaway to team up with Goldman Sachs (which he now owns a healthy chunk of) is a bit of a revelation: We have been spun by his genteel manner, his aw shucks down-home-isms, his off Wall Street, less bloodthirsty approach to investing, into somehow believing he was different.

We have been duped.

We should not have been. Buffett has been the biggest shareholder in Moody’s — a collection of filthy whores and pederasts who were one of the main contributors to the economic collapse — should have raised serious questions as to his judgment in our minds. That he sat by silently as they did their worst, sodomizing the nations credit system for fun and profit was a powerful indictment of Buffett as someone far different than his public persona. In retrospect, as Moody’s was helping to destroy America’s financial system, his merely spouting off aphorisms about about Financial WMDs now looks too cute by half.

Those of you who used to respect Warren Buffett might consider moving him off your increasingly short list of participants in the marketplace who behave ethically.
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Post by agraham »

Buffet tried to blow the whistle years ago. He constantly calls for higher taxes on the rich. He's giving away his fortune. Now because he's not leaving bailout money on the table he's a bastard. That's a bit rich.
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Post by Taggart »

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Warren Buffett: The financial panic is over
Separately, Buffett advised the government not to coddle companies that need federal bailouts to survive or to preserve sufficient capital. "More sticks are called for," he said.
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Post by Spidey »

A great video on Warren:

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Post by Dejavu »

Thank you very much for the link. I think this is very important viewing for everyone, investor or not. I have forwarded on to my brothers for their viewing pleasure. Total of 6 segments takes almost an hour in total.
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Post by Peculiar_Investor »

Warren is doing the New York tour. Tonight he was on Charlie Rose, but the video is not yet available. Check out http://www.charlierose.com/guest/view/402
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Post by George$ »

Warren Buffett & Bill Gates Speak at Columbia Business School
Recently, legendary investor Warren Buffett and Microsoft founder Bill Gates sat down with CNBC's Becky Quick for a town hall type event at Columbia Business School on November 12th, 2009.
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Re: Buffett Buffet

Post by Taggart »

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Re: Buffett Buffet

Post by couponstrip »

Thanks for that Taggart. The Snowball... is easily the best and most candid biography I have ever read, and this interview provides a lot of insight into why.
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