Wednesday, November 19, 2008

World's Smartest Investor

It is easy to swoop down on the injured. For that I apologize. In my defense I've been critical of Buffet's insurance and banking decisions for a long time. What happened today?

Buffet has been very wrong for two years and in the last few months have burst the cult of personality bubble.

Banks are bad investments.
Re-insurers are bad investments.
Home builders are bad investments.

Remember however; the unspoken caveat. "Just now."


Santa Flipper Clause said...

Ho Ho Ho - It's Santa Flipper Clause

Deflation has arrived, at least for the near term future.


Santa F. Clause

Property Flopper said...

I still think the underlying assets of BRK-A are sound. It's all going to drop... but I believe BERK-A will drop less than most of the stock market.

BTW: Humor!!!

The three auto CEOs all flew private jets to DC to beg for money. Not all together, three separate jets. The Congress Critters noticed and called them on it.

Not the brightest move.

Lou Minatti said...

Remember however; the unspoken caveat. "Just now."

Yep. Buffett seems to be a chump right now.

Right now.

I think if we assume America has a future, Buffett's investments are the right ones. If America is toast, as so many people think, then Buffett is a fool.

Me personally, I don't think Buffett is a fool. But that's just me.

I don't want to live like Aladinsane, the pretentious dickweed who walks around with gold coins shoved up his ass. If the SHTF I'd rather have some pallets of canned food, plus some crates of whiskey.

Rob Dawg said...

Maybe someday the $5b of GS at $125 will be back in the black but it will never be as successful as if he waited until this week at $55.

H Simpson said...

I am with Lou on this one.

There is a large heap of people who didn't understand Warren's logic at one time or another. In the end they lost big time.

Disagree at your own peril Dawg.

People who invest on fundimentals always beat the fools looking at today's shiny trinkets pronouncing "this is different".

Casey <----------------> Warren
ends of the spectrum

Disclosure: Warren is my hero now that Malcom Fobres has passed on to the big motorcycle rally in the sky.

w said...

My theory on Buffet is that he pulled a Rockafeller/Durant and is merely trying to keep Americans from panicking. If he is seen going around all folksy and telling people there is a future many people will relax and keep working to get us out of this mess. Besides, what does he care if his fortune shrinks. He has made it clear he is giving it away.

w said...

Wow, this suckers going down! Straight down!

Not much longer to get to the 6933 the Vixen has foretold.

Mr. Outspoken said...

ou're supposed to buy when there is blood in the streets... There's so much blood now, it's overflowed the streets and is creeping into the shops. What rule applies now?

w said...

Investing now is more like avoiding the plague than worrying about blood in the streets. Get the hell out of town and come back next year when half the population is gone.

Entertained said...

There are no rules to catching a falling knife. You simply make a guess and the winner is hailed as brilliant and followed until the next downturn when everyone realizes he can't catch knives and was lucky not to lose his hand last time.

I'll throw my dart at Thanksgiving. Retail sales will be down yoy for the not-the-biggest-day-in-retail-but-close, but expectations will be so low after a day with in-laws that even bad numbers will start to look good. For not being worse.

I will personally be taking no action based on this guess of course. I invest in economic principals, not guesses (not even my own).

Peripheral Visionary said...

Warren Buffett has placed a bet on the American economy, and it's hard to disagree with that. He bet too much too soon, but I'm not sure he bet in the wrong direction. You're looking at financials and insurance, but he also has furniture, retail, food service, etc., and much of it oriented toward the middle class and the working class, as opposed to the crowd chasing the aspirational class.

The stock has been, and will be, hammered, but the dividends will continue to flow, and he has always focused on good old-fashioned cash flow. His Goldman warrants may never move into the black, but that's why he asked for a fat preferred dividend in the first place.

Rob Dawg said...

We are all right.
• We all make mistakes. People like Buffet make fewer.

• The future of the American economy is not bleak.

• Buffet downplays "timing" but nonetheless practices it for good and ill.

• Buffet absolutely tells the truth when he says he doesn't invest in businesses he doesn't understand.

• Buffet is likely smarter than any two of us and understands stuff that would baffle a rocket scientist. That means despite the 'homey' persona he engages in sophisticated investing strategies.

• Buffet talks his book. He says he talks his book. There's no problem here.

• Buffet made a big mistake. Don't get me wrong here. He wasn't reckless and he wasn't gambling.

• 10% preferred at $135 for GS is still a long term winner at $50. Think about it. $13/yr forever. Let it go to 1¢. It will still pay $13/yr otherwise known as paying you back versus t-bills in less than 5 years.

All that said you can be sure ole Warren id shock to see Goldman's at $55. It just isn't in his makeup to accept the new world of gambling being more important than investing.

Quillian said...

Remember Warren also dipped his toe into the banking pool previously, with an investment in Salomon. He ended up having to take it over and run it for a while to get his money back. That cured his taste for financials for a while, but GS with 10% must have been too tempting. He might end up running GS to get his money back. That would be interesting.

Property Flopper said...

So I was off a bit. Figured it'd be a 300pt. day, up or down. Looks like 400+ down.

Rob Dawg said...

Come on. come on. Where's my sugar?

BRK-A $77,500.00

Any more and I may buy a share. [not kidding]

Property Flopper said...

Holy Cow... Never thought I'd see it go that low. I was debating a share a bit back (now glad I didn't). Not sure I can resist at this price.

Peripheral Visionary said...

Dow 7500 . . . wow. Never thought it would hit this low. And what's more, it just doesn't even feel like capitulation. No panic, just "another down day" . . . to record lows not seen for years. S&P is miles away from 1000. Now even American stocks are starting to tempt me . . . but then, I got burned very badly on my ill-timed Japanese stock purchase. There will be plenty of time for a bottom to form, plenty of time to rebuild the equity side of my portfolio.

Son of Brock Landers said...

after dipping my toe in a few weeks ago and the run up after those lows, i am now a bit down. i'm willing to bargain hunt here. I'm actually looking for decent companies with healthy cash positions that could be taken private.

w said...

Ouch PV,

I got bit by Japanese stocks badly too.

Lost Cause said...

It's a bad time to be a filthy rich bastard. For everyone else, you might get your chance now.

Akubi said...

We are soooo f-d.

Akubi said...

Bonds for kidz!

Lost Cause said...

We are soooo f-d.

Who is this royal "we" of which you speak? No, we have a wide open road, with the few dead, festering carcases of giants out of our way.

Akubi said...

@Lost Cause,
That has been my general opinion, but the stats and charts and such look pretty f-ing scary.
P.S. I am nothing but an idiot among the astute minds of EN

Akubi said...

Who is this royal "we" of which you speak? No, we have a wide open road, with the few dead, festering carcases of giants out of our way
They are killing stray dogs in Iraq now - the only thing that kept many troops alive.
W.Bush is hoping to end his term with the death of Wolves and Bears.
I hope the asshat crawls away to Texas.
I will be happy when this decade of hell and loss is over.

Akubi said...

Oh BTW, I'm sure you guyz checked this list out.
An Idiot.

Lost Cause said...

You guys don't see where you fit into the scheme of things. You are essentially paupers already -- the worker bees in an industrial hive -- despite whatever your 401k or your plasma screen or your vacation cabins might indicate to you. You should be cheering as the curtain falls away, in flames. A new landscape is revealed.

Lou Minatti said...

They are killing stray dogs in Iraq now - the only thing that kept many troops alive.

Yer losing it.

W.Bush is hoping to end his term with the death of Wolves and Bears.

Next you'll be saying Bush made you constipated.

Bush is an idiot. So how does he do all of these amazing evil things? I mean, it's obvious that Bush FORCED these millions of people to commit mortgage fraud.

w said...

Akubi, you are fun to have around. But come on, death of wolves and bears? What about Moose?

I think you will apreciate this:

This card is classic Akubi. So angry on the outside, but missing GWB on the inside.

w said...

Rob, Do you have any thoughts on the Edison transmission line project in TO? Do they really need a new line if building has stopped completely? Could home solar actually reduce transmission needs to a point that fewer lines are necessary? Is this line just for future expansion with the idea that needs will be higher in 10-20 years?

Lost Cause said...

Way to go Citibank! Many of your former customers/victims are waiting for you demise. I have brought marshmellows.

Akubi said...

Yer losing it.
Exhibit A:
Killing stray dogs in Iraq
Exhibit B:
Bush's "midnight regulations"
And, yes, Bush *does* make me constipated.

Those "preciously devilish" Japanese children and puppies are cute.

Akubi said...

According to the Typealyzer Dawg is an ISTJ - the Duty Fulfillers:
The responsible and hardworking type. They are especially attuned to the details of life and are careful about getting the facts right. Conservative by nature they are often reluctant to take any risks whatsoever.

w said...

"Conservative by nature they are often reluctant to take any risks whatsoever."

Come on, we know he slips a little bacon cheeseburger in there once in a while.

Rob Dawg said...

LOL! B@st@rds! ;-)

Lost Cause said...

Fear not another lost decade, you just lived though it.

Rob Dawg said...

Truth be told I have fallen off the wagon several times. I haven't actually snuck a burger but I did grill a small 6 oz. steak last month for lunch. Mrs. Dawg didn't see it in the back of the freezer.

I take risks it's just that I have a different idea of what constitutes risk.