Carlos Lam

Berkshire + Burlington = Hypocrisy, Expediency and Full Dose of Ego?

On Nov 05 12:33 PM SamiC wrote:

"Financial weapons of mass destruction for the idiots at AIG, Bear, Lehman, not for people like him who are good at calculating odds and spotting underpricing, and never take positions with unlimited downside risk."

Buffett didn't qualify that derivatives were WMDs of financial mass destruction only for "idiots." He made a general statement. Then, he proceeded to engage in derivative trades. Again, I do not want to invest in a company whose chairman blatantly says one thing and does the opposite. Perhaps you are correct that Buffett isn't as two-faced as I perceive him, perhaps not. Either way, I view the principle-agent risk to be too great.

Berkshire + Burlington = Hypocrisy, Expediency and Full Dose of Ego?

Perhaps he has great insights into investing, but because Warren Buffett is a hypocrite of the greatest magnitude I simply would not trust him with my money. Behold:

* Buffett criticized Pres. Bush's tax cuts and said that Americans should pay more taxes yet had BH bid for Fannie and Freddie's $3 billion in tax credits. If we Americans should pay more taxes, Warren, doesn't that mean BH shareholders as well?

* Buffett begged the US Senate in '03 to NOT eliminate the estate tax. What went unsaid was that BH has an insurance business that BENEFITS from the estate tax by selling a kind of insurance policy that makes sure that heirs have enough money available to pay the estate tax without having to liquidate assets.

* Buffett famously called derivatives "financial weapons of mass destruction" yet BH sold $2.5 billion in credit-default swaps in '08.

Such a duplicitous person may, of course, make money for those who he invests for. It's the agency risk--trusting a person who is two-faced--that would keep me up at night.