WARREN BUFFETT BLOG
Unofficial blog tracking Warren Buffett's investment decisions, commentary and wisdom
Friday, February 12, 2010
Thursday, February 11, 2010
Tuesday, February 9, 2010
Taxpayers Will Get Bailout Money Back
The staunch Democrat investor and the Treasury secretary under President George W. Bush spoke onstage Tuesday before 2,400 at the Greater Omaha Chamber of Commerce's annual meeting.
Paulson in his recently released book defended the government which scrambled to prevent failing U.S. banks from dragging down the global economy with them.
"As bad as this is, when we look back it's not as bad as it could have been," Paulson said.
And he said the United States is better off today than most countries.
"Every other major economy has many more significant challenges than we do," Paulson said. But he said several significant challenges remain.
Paulson said he thinks compensation is normally out of whack on Wall Street, but now in the wake of all the government bailouts, many executive pay packages are excessive.
"I think today restraint is very much in order for the top people," Paulson said.
Paulson's 500-page book, "On the Brink: Inside the Race to Stop the Collapse of the Global Financial System," offers a chronological account of the rush to prevent an economic disaster as Lehman Brothers and American International Group spun toward collapse in September 2008. Paulson served as treasury secretary from June 2006 to January 2009.
Buffett led the talk by asking Paulson about the book but didn't make many comments himself.
Buffett said Paulson's book gave him an appreciation of how well former President George W. Bush understood the economy and events during the crisis.
"Through the book, I gained more appreciation for what he did in this situation," Buffett said.
But Buffett, the longtime Democrat, also pointed out Paulson's positive statements about President Barack Obama.
Buffett praised the actions of Paulson, Federal Reserve Chairman Ben Bernanke and Paulson's successor, Treasury Secretary Timothy Geithner.
Paulson also thanked Buffett, an icon to thousands of investors, who advised the former Treasury chief during the worst days of the economic downturn.
"He was a real source of strength during the financial crisis," Paulson said.
source: associated press
Dairy Queen To Expand
International Dairy Queen, the ice cream retailer owned by Warren Buffett's Berkshire Hathaway Inc (BRKa.N) (BRKb.N), said on Tuesday that it planned in 2010 to open its first stores in Egypt and Macau.
Dairy Queen said Egyptian-run Boraie Development would open the first DQ Grill & Chill restaurant in Cairo this summer. It said there was "potential" to open 40 to 50 restaurants in four or five additional Egyptian cities.
The company also said the Hon Hoi Group (International) Co planned to open a Dairy Queen in Macau this spring and a second location in the region later this year. It said Hon Hoi operates restaurants in Macau, China and Canada.
Based in Minneapolis, Dairy Queen said it had more than 5,700 stores in 19 countries, including 652 locations outside the United States and Canada.
Berkshire bought Dairy Queen in 1998. Buffett, 79, is the world's second-richest person, and habitually snacks on a $1 Dairy Queen dessert prior to Berkshire's annual meetings on Saturday mornings in its Omaha, Nebraska, hometown.
source: reuters
Monday, February 8, 2010
Sunday, February 7, 2010
The Tao of Buffett
Mary Buffett, who was married to Warren's son Peter for 12 years, has captured the essence of the Omaha native in several books, which she's written with co-author David Clark. Their latest, The Tao of Buffett, includes 125 Buffettesque quotes along with brief explanations. Alas, these quotes offer no sure route to billionaire-dom. Warren advises wannabes to understand their investments and find great deals. But if his words of wisdom often sound suspiciously like common sense, at least they are delivered in his trademark style.
Mary Buffett spoke to Forbes.com about patience, discipline and Warren Buffett's pleasure dome.
Forbes.com: What's the most important lesson you've learned from Warren Buffett?
Mary Buffett: Patience and discipline. And doing something you love. So many people--and Warren has said this--are doing it for the money. That's really not the right reason. If you're doing something you love, you're more likely to put your all into it, and that generally equates to making money. He always says when he gets up in the morning he goes to his pleasure dome, which is his office.
A lot of people read books like this because they want to learn from gurus. But they ignore the fact that smart investing really requires a lot of hard work and research. Just absorbing The Tao Of Buffett won't make you a good investor.
Yes and no. I think if you follow the principles of the Tao of Buffet you can be a good investor. But investors don't necessarily have the patience to wait for the great company with the great underlying economics at the right price. When Warren bought Dairy Queen, I joked, "He probably wanted to buy it when he was eight years old, but it wasn't the right price." So he waited 50 years or so.
Can you recommend any investing-related New Year's resolutions?
I wouldn't recommend anything. Of course, I'd always recommend Berkshire Hathaway as a great investment because it's an unbelievably diversified company. I guess I would just say if you're investing in something, invest in it as if you were buying the whole company. Look at historically what its earnings have been. And have a fair amount of ability to predict what that company will do in the future.
Let's talk about the words of wisdom in your book. I like No. 44: The smarter the journalists are, the better off society is.
It's true. I mean, all of our information that we get now, whether it's for investment ideas or just the morality of life comes from the media. So we're really dependent on journalists for accuracy, and for the analysis of what's going on. You want intelligent people doing the job.
You say that investors shouldn't take risks when they're young. That seems counterintuitive. When should you take risks?
Never. I would say people that are young generally take more risks than people who are experienced. But that's something that even Warren as a child really started to evaluate. Predictable products equal predictable earnings. So you know, for instance, that if the stock market dropped tomorrow people would still be drinking Coca-Cola, people would still be shaving, people would still be chewing gum. Warren says, "I don't think the Internet is going to change how people chew gum." He looks for businesses that he can predict where they'll be in 10 or 15 years.
You also quote Warren saying he never gets good ideas talking to people. So where do they come from? Thin air?
He says, "My idea of a group decision is to look in the mirror." He has a history of standing alone that dates back to the early days of his investments. Living in Omaha instead of New York, I think he has less influence from Wall Street than other people. Most of the stocks of the companies he's bought, he bought when no one wanted them. If he had taken advice from Wall Street, he would have missed some of the greatest investments.
He also says, "If we can't find things within our circle of competence, we don't expand the circle. We wait."
Warren believes that if he doesn't understand a business, it's not worth looking at it, even if the business is popular at the time. If he can't find an investment that's selling at an attractive price, he'll wait and wait and wait. In the late 1960s he wrote to his investing partners that he couldn't find any investments that he understood at attractive prices. He waited until 1973 when the stock market collapsed and some of the best companies were selling at bargain prices. Pick the wrong company at the right price and you lose. Pick the right company at the wrong price and you lose. You have to pick the right company at the right price and to do that you have to wait and wait--patiently.
Saturday, February 6, 2010
Buffett Tells Hog-Product Staff They’re on Farming Superhighway
“CTB has been moving ahead every year since we bought it,” Buffett said in a video posted on the Web site of CTB Inc., Omaha, Nebraska-based Berkshire’s agriculture-equipment unit. “We’ll hit a bump in the road every now and then but we’re looking at a superhighway out there in front of us.”
Buffett became the second-richest American by investing in businesses he expects to grow for decades. He’s said his $26 billion takeover of railroad Burlington Northern Santa Fe Corp., announced in November, will benefit Berkshire “over the next century.” CTB, which Berkshire bought in 2002, may produce profits beyond the year 2200, Buffett, 79, said in the video.
“Most years are going to be good, a few years will be standouts, and there will be a few that are bummers,” Buffett said. “But that’s the way we look at everything here at Berkshire Hathaway. We’re going to be in these businesses for 100 years or 200 years.”
CTB, which sells feeders and stalls under the PigTek and Chore-Time Hog brands, has expanded abroad by buying businesses in Israel, Germany and the Netherlands. Chief Executive Officer Victor Mancinelli persuaded Buffett to buy his firm. Howard Buffett, a farmer and the billionaire’s son, endorsed the deal.
Good Things
“I checked with Howie; he told me CTB was an absolute first-class company and he’d heard good things about Vic,” Buffett said. “Howie would rather spend an evening on a tractor in the field than a date with Angelina Jolie, which is not true of all members of the family, but that’s true of Howie.”
Howard Buffett has been picked to succeed his father as Berkshire’s chairman when Warren Buffett’s tenure, entering its fifth decade, comes to a close. The elder Buffett, who owns about a quarter of Berkshire and is its CEO, has said settling on his eventual replacement as chief is the No. 1 responsibility of the firm’s board.
In the CTB video, Buffett praised Mancinelli. “Vic is a manager that could run any company in the Fortune 500,” Buffett said. “He’s done a wonderful job for us.”
U.S. hog farmers have shrunk the size of sow herds to the smallest since at least 1976, as feed prices jumped to a record in 2008 and the recession and an outbreak of swine flu sapped pork demand in 2009.
‘Year After Year’
“There will be low prices and there will be high prices,” Buffett said. “But the one thing you can be sure about is that our industry is going to be there year after year after year.”
Berkshire’s acquisition of CTB was valued at $177 million, according to Bloomberg data. Six years later, in 2008, the unit produced pretax earnings of $89 million, Buffett said in the company’s 2009 annual letter. CTB bought six companies in the interim, including Swine Services Specialists Inc. and Porcon group of Deurne, the Netherlands.
“The CTB story is just starting,” Buffett said. “I am 79 so I’ll be 100 in 2030. Stay tuned for a rebroadcast at that time and I’ll be telling you about all kinds of wonderful things that have happened in the company. It’s in the right industry. Farming is as fundamental as things get in this country.”
source: bloomberg, warren buffett
Thursday, February 4, 2010
Selling $8 billion Notes to Finance BNI Purchase
source: wall street journal, warren buffett
Berkshire Hathaway Downgraded
"The rating actions are based on our view that Berkshire's overall capital adequacy, as well as that of its insurance operations, has weakened to levels no longer consistent with a 'AAA' rating and is not expected to return to extremely strong levels in the near term," said John Iten, an S&P credit analyst, in a statement.
Wednesday, February 3, 2010
BYD Auto Invests In Solar
Monday, February 1, 2010
My $650,100 Lunch with Warren Buffett
It was worth every dime. Buffett is the most successful investor in history, yet he has reached that pinnacle while also being supremely ethical. As remarkable for his philanthropy as for his stock-picking, he's giving the bulk of his billions to the Bill & Melinda Gates Foundation; likewise, the fee for our lunch would go to the Glide Foundation, which helps the poor and homeless. Lunch with Buffett, we figured, would be a good way to give to charity, but it would also be the ultimate capitalist master class — a chance to see up close what makes the Sage of Omaha tick and to learn from his wisdom.
And so it was that my wife and I sat down for lunch with Buffett in a cozy, wood-paneled alcove of the Manhattan steakhouse Smith & Wollensky. Mohnish brought along his wife and two daughters, who sat on either side of Buffett. When the menus arrived, Buffett, now 77 years old, joked with the girls that he doesn't eat anything he wouldn't touch when he was less than 5. His order: a medium-rare steak with hash browns and a cherry coke — a fitting choice, given that his company, Berkshire Hathaway, is Coca-Cola's largest shareholder.
Characteristically, Buffett had done his homework: he'd found out in advance, for example, that my wife was born in Salisbury, North Carolina. But after a minimum of small talk to put us at ease, it was down to more serious matters. When I mentioned how difficult I'd recently found it to do the right thing by lowering the fees I charged my fund's shareholders, Buffett nodded sympathetically and observed, "People will always try to stop you doing the right thing if it is unconventional." When I asked if it would get any easier, he replied with a wry smile: "Just a little."
Buffett has made a point of doing business with integrity — and of working only with people who share his values. As we learned, he credits his father with teaching him early on to rely on his own sense of what's right, rather than looking for affirmation from others. "It's very important to live your life by an internal yardstick," he told us, noting that one way to gauge whether or not you do so is to ask the following question: "Would you rather be considered the best lover in the world and know privately that you're the worst — or would you prefer to know privately that you're the best lover in the world, but be considered the worst?"
When it comes to investing, nothing is more important than the ability to think rationally for oneself — and Buffett is unsurpassed on this front. In the late '90s, he was criticized for his refusal to invest in booming tech and Internet stocks — a decision that was vindicated when the bubble burst. Buffett has made a fine art of keeping this kind of distracting noise at bay: he said he even limits his contact with managers of businesses in which he invests, preferring to assess their companies' financial records — a more neutral source of information. Equally vital to his success, Buffett said he focuses only on investments that lie well within his "circle of competence." As a result, he confided, whenever he makes an investment, he has no doubt at all that he's right.
For most people, attaining the intellectual clarity and emotional detachment that investing requires is tough. But Buffett, for all his affability, is shrewd about disengaging himself to avoid any unnecessary distractions that might impair his judgment. People often try to convince him to meet with them so they can pitch investments to him, he said, but he sees through their many ruses — not least their flattery — and is comfortable saying no far more often than he says yes.
One thing Buffett wasn't about to say no to was dessert. He delighted in sampling an array of them, telling the waiter: "Just bring a couple of spoons, and I'll have a little of everyone's." His zest for life is clearly undiminished — indeed, in Berkshire's latest annual report, he wrote that he and his octogenarian partner Charlie Munger "tap-dance to work."
What better role model could you ask for than this? And how do you put a price on the opportunity to spend nearly three hours in his company? Well, two days after our meal, the auction closed on eBay for next year's lunch with Buffett. The winner, a Chinese money manager named Zhao Danyang, bid $2.1 million. So, that proves it: our $650,100 lunch was a total bargain.
Guy Spier is CEO of Aquamarine Capital Management
source: time, warren buffett
Sunday, January 31, 2010
Upbeat About America's Future
source: forbes, warren buffett
Raises stake in Munich Re to 5%
Buffett now owns directly or indirectly more than five percent of the voting rights in Munich Re, after taking options on 1.945 percent of its capital in addition to a previous stake of 3.08 percent.
source: afp, warren buffett