Warren Buffett Getting No Respect 23 comments
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When it rains, it pours. After his stellar investment record took a major hit last year, Warren Buffett suddenly finds himself in a situation where Rodney Dangerfield probably gets more respect. For starters, shares of Berkshire Hathaway (BRK.A) are now down for eight straight days, which is something that has only occurred 13 other times in the last twenty years.
click to enlarge
On top of the declining stock price, other events this week suggest that Buffet's stature has, at least temporarily, diminished:
- The annual lunch with Buffett that is auctioned off on eBay each year has a current bid of only $81,000. While it's still early, last year the winning bid was $2.1 million.
- One commentator recently went as far as to say that "Warren Buffett is an idiot."
- Although CNBC normally hypes its regular interviews with Buffett weeks in advance, tomorrow's interview has barely been mentioned.
Although some people think that Buffett has lost his midas touch, we don't have to feel too bad for him.
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This article has 23 comments:
The whole game has changed somewhat and if you are a buy and hold for long term sooner or later something like this catches up to you. The losses he has taken are huge and will take a decade to recoup, minimum.
The trend is down and what worked for him in the 80s and 90s wont work now. Either he has to change his style or his net worth, his shareholders and his reputation will continue to take a beating
If demand for coal dries up, what will happen to Buffett's large holdings in the western railroads? Rail freight is already extremely low, and without coal demand it will go lower. Even the car industry restarting won't help as the number of cars produced will be greatly reduced and stay that way for a long long time.
I think BNI and UNP are both over hyped due to Buffett and Dow Theory. I just don't see any product that can replace rail freight demand if cars and coal drop off. You can have all the energy efficiency advantage in transportation you want but you need something to haul!
Forget about high speed passenger rail, it might work in europe but this country is just too big unless the train runs at least 500mph, airplanes are the way to go to move people around here. High speed rail will only work in the northeast corridor and maybe in california, but coast to coast is a pipe dream.
At any rate, I suspect Buffett's rail holdings won't pay off for a very very long time, if at all. Cap ex is too big for rails, unionized workforce, and a permanent drop in freight will squeeze them.
And lets not forget truckers with electric or nat gas engines will be strong competition.
Joseph
He's supposed to be some kind of paragon of capitalism, the pure Midwest type beyond corruption.
Biggest difference between him and Gartman (and many others) is that he's far richer than they could ever dream of being because of his investing nerve and willingness to hold true to his principles. His principles have survived the test of time; others have not. Once those on this forum and the likes of Gartman reach Buffett's level of wealth then maybe I'll listen. Until then, I'm sticking with the best.
Sorry, but your "rail is dead" analysis is simply wrong. Again, Buffett is smarter than you.
On Jun 23 02:24 PM JosephN wrote:
> I'm no expert, but the push for alternative energy and recently found
> abundance of natural gas should put the nail in the coffin for coal.
>
>
> If demand for coal dries up, what will happen to Buffett's large
> holdings in the western railroads? Rail freight is already extremely
> low, and without coal demand it will go lower. Even the car industry
> restarting won't help as the number of cars produced will be greatly
> reduced and stay that way for a long long time.
>
> I think BNI and UNP are both over hyped due to Buffett and Dow Theory.
> I just don't see any product that can replace rail freight demand
> if cars and coal drop off. You can have all the energy efficiency
> advantage in transportation you want but you need something to haul!
>
>
> Forget about high speed passenger rail, it might work in europe but
> this country is just too big unless the train runs at least 500mph,
> airplanes are the way to go to move people around here. High speed
> rail will only work in the northeast corridor and maybe in california,
> but coast to coast is a pipe dream.
>
> At any rate, I suspect Buffett's rail holdings won't pay off for
> a very very long time, if at all. Cap ex is too big for rails, unionized
> workforce, and a permanent drop in freight will squeeze them.
>
> And lets not forget truckers with electric or nat gas engines will
> be strong competition.
>
> Joseph
Bob
totallyfreemarketanaly...
Freight (including people) gets 10 times the gas mileage of eighteen-wheelers, and is far more amenable to alternative fuel conversion as well. Just as old trains used to carry wood or coal, a train can carry any number of cars of batteries or alternative fuel. Trucks and cars cannot do that. Change one locomotive to alternative fuel and you can have the impact of changing a thousand private cars.
Fuel efficiency will drive increased use of both diesel trains and electric trains (metros and/or street cars). The country needs to move freight and people to sustain the economy. Trains are no-brainer, ten times as fuel efficient and requiring zero new technology and frankly not much besides a track. Plus they can run 50% to 100% faster than private vehicles, both in town and between towns.
On Jun 23 07:33 PM U338129 wrote:
> I wonder how many Buffett doubters/bashers will say the same thing
> when the bets he made over the last year pay off. Face it, he's better
> than all of you else you would be as famous as he is for your "financial
> expertise."
>
> Biggest difference between him and Gartman (and many others) is that
> he's far richer than they could ever dream of being because of his
> investing nerve and willingness to hold true to his principles. His
> principles have survived the test of time; others have not. Once
> those on this forum and the likes of Gartman reach Buffett's level
> of wealth then maybe I'll listen. Until then, I'm sticking with the
> best.
Think about it ?
Get over it, this is the 2nd time that Buffett (& Munger) have screwed up in this century (all of 8yrs+). Ask new BRK buyers how many yachts they own.
I'll take Dennis Gartman over all of the oldies in this business, they want to rest on their laurels, Dennis wants to help his clients to preserve capital & have gains above the S&P 500.
On Jun 23 07:33 PM U338129 wrote:
> I wonder how many Buffett doubters/bashers will say the same thing
> when the bets he made over the last year pay off. Face it, he's
> better than all of you else you would be as famous as he is for your
> "financial expertise."
>
> Biggest difference between him and Gartman (and many others) is that
> he's far richer than they could ever dream of being because of his
> investing nerve and willingness to hold true to his principles.
> His principles have survived the test of time; others have not.
> Once those on this forum and the likes of Gartman reach Buffett's
> level of wealth then maybe I'll listen. Until then, I'm sticking
> with the best.
Focus all you want on Gartman (by the way, I wonder how his commodity stocks did last year -- you know, the things he likes because when they drop on his foot they hurt), but please note that he never disloses just how "short on BRK" he really is. He could be shorting one share of BRK/B for crying out loud. He's a loser that's simply trying to use Buffett's good name to build a name for himself. He's also a jellyfish with no backbone since he doesn't stand behind his words (i.e. calling Buffett an idiot only to retract it them minute someone calls him out on it).
On Jun 24 03:58 PM SageNot wrote:
> Buffett's wealth is not the issue U338129. Owners of either BRK got
> slammed & how many of them have Warren's wealth?
>
> Get over it, this is the 2nd time that Buffett (& Munger) have
> screwed up in this century (all of 8yrs+). Ask new BRK buyers how
> many yachts they own.
>
> I'll take Dennis Gartman over all of the oldies in this business,
> they want to rest on their laurels, Dennis wants to help his clients
> to preserve capital & have gains above the S&P 500.
On Jun 24 06:32 PM U338129 wrote:
> Get over what exactly? Outside of COP, Buffett and Munger will be
> proven right again. People say they took losses but that's not entirely
> true in real terms. They only take losses when they sell out of a
> position and they typically have no intention of doing so. When they
> sold some PG and JNJ they instantly turned that money into 10-15%
> from the likes of Goldman, GE, and Harley. Then, when the market
> when to hell in a hand basket in March, they loaded up on more WFC,
> USB, JNJ, and rails at severely reduced price; whose run-ups in recent
> stock prices were not accounted for in the last quarterly report.
>
>
> Focus all you want on Gartman (by the way, I wonder how his commodity
> stocks did last year -- you know, the things he likes because when
> they drop on his foot they hurt), but please note that he never disloses
> just how "short on BRK" he really is. He could be shorting one share
> of BRK/B for crying out loud. He's a loser that's simply trying to
> use Buffett's good name to build a name for himself. He's also a
> jellyfish with no backbone since he doesn't stand behind his words
> (i.e. calling Buffett an idiot only to retract it them minute someone
> calls him out on it).
Buffett started out with more money than 99% of the population. He has a brilliant financial mind but If he had started out with the same amount of money as the average American possessed in the 1950's, you probably would never have heard of him. If his relatives had been of average affluence, would he have even been able to leave Nebraska and go to Columbia where Benjamin Graham was teaching? Being given $10,000 to invest by an uncle may not sound like much compared to what Howard Hughes or Donald Trump had at their starting line but how many 20 year old men in 1951 had such an opportunity?
Considering the number and tone of your posts, why are you so emotional concerning this man?
On Jun 23 07:33 PM U338129 wrote:
> I wonder how many Buffett doubters/bashers will say the same thing
> when the bets he made over the last year pay off. Face it, he's
> better than all of you else you would be as famous as he is for your
> "financial expertise."
>
> Biggest difference between him and Gartman (and many others) is that
> he's far richer than they could ever dream of being because of his
> investing nerve and willingness to hold true to his principles.
> His principles have survived the test of time; others have not.
> Once those on this forum and the likes of Gartman reach Buffett's
> level of wealth then maybe I'll listen. Until then, I'm sticking
> with the best.
Everyone piled onto it when the first dominoes started to fall in mid-2007. The supply-demand imbalance drove the price of shares up from $110K to nearly $150K in just 5 months. Certainly, the intrinsic value of BRK didn't increase 36% in such a short time.
Another large spike in BRK share price coincided with the market meltdown in Sep 2008. These price spikes were out of line with past company valuations. It shot up 26% in 9 days. Again, share price does not equal intrinsic value.
Later, as market panic ensued, people indiscriminately sold equities. They sold individual shares, they sold funds, and they sold indexes. Due to supply-demand imbalance, all share prices declined, including BRK.
One week, the price of BRK dropped 19% as distressed sellers liquidated over a million shares in unprecedented volume.
The intrinsic value of BRK did not rise dramatically in 2007, just as it did not decline dramatically in 2008/2009.
One could easily argue that the company is worth more now than it was in mid-2007. Since then, it was able to make some incredible investments that would have been unthinkable during normal times. While the benefit of these investments will be realized in coming years, it's not currently reflected in the price of BRK. It's current price is about 21% cheaper than it was before the 2007 financial meltdown started.