wobatus

2 Concerns with Michael Lewis's Review of Buffett Book 'The Snowball'

Other People's Money was the DeVito movie. The buggywhip line is the best. Even the best damn buggywhipmaker went out of business and was better off selling off his stock then continuing as a going concern.


On May 20 03:28 AM andydee wrote:

> Here's my guess...the author of this piece on Michael Lewis' review
> of Alice Schroeder's book read the review by Lewis BUT did not read
> the book by Schroeder!!
>
> This quote ""felt confident of being able to predict what it would
> be worth in a few years. ... A less Graham-like analysis could hardly
> be imagined. Graham's 1920s bubble and Depression experiences had
> made him suspicious of earnings projections. But Warren was betting
> three-quarters of his patiently acquired money on the numbers he
> had calculated." is an excerpt from Ms Schroeder's book(pg 138).
>
>
> That page starts with this sentence..."This was especially true because,
> at its current price, GEICO was an investment that Ben Graham would
> not have approved of, even thought Graham-Newman had only recently
> become its largest shareholder."
>
> However, I am reading the book - and don't care for it by the way...(fortunately,
> like Warren, I'm cheap and I didn't pay for it - I've got it for
> 21 days from the public library...), and this IS NOT when Warren
> broke with his mentor...IF this was the time, (the incident in question
> concerned Warren dumping 3/4's of his then meager portfolio and buying
> 350 shares of GEICO - in 1951!!), he would not have continued to
> buy "cigar butts" for 20+ more years.
>
> No, as the author points out his metamorphosis into the Warren we
> know came after he began his relationship with Charlie Munger.<br/>
>
> Although Alice doesn't point this out in her book, I believe it was
> Charlie that got Warren interested in Phillip Fisher's book, "Common
> Stocks and Uncommon Profits", which I think was where Warren may
> have borrowed his notion that every serious investor ought to get
> a ticket with only 20 "chances" on it - representing the limit of
> his/her lifetime investments. If that was so, each choice would
> be thoroughly investigated...of course, that's not how Warren did
> it - or how Charlie did it.
>
> BTW, I don't mean to imply that Charlie "taught" Warren how to invest,
> or that he changed Warren's mind about what he had learned at the
> "foot of Ben Graham". Clearly Warren was his own man - he has simply
> "boosted himself up onto the shoulders" of those investors he admired.
>
>
> I can't count the number of book I've read about Warren - though
> I find them interesting - they haven't been influential...unfortun...
> - but this is the first one I've come across that makes Warren seem
> a bit closer to Gordon Gecko and a character played by Danny DeVito
> in a movie whose name I've forgotten...including the tendency towards
> lecherous behavior - especially involving Katherine Graham...
>
> It isn't a book you can sit down and read for long stretches...or
> at least I can't...BTW what's amusing to me, as skim through the
> pages describing Warren's support of liberals such as Eugene McCarthy!!
> and his strange relationship with his wife - I keep recalling the
> advice Jack Palance, as Curly, in "City Slickers" gives to Billy
> Crystal's character...when he holds up his index finger and says
> that's the secret to life..."Your index finger?" says Billy, "No",
> says Jack, "ONE". "Do one thing well, and everything else falls
> into place". That's advice Warren understood before he saw the movie.
> His success at making money has opened up vistas he never conceived
> of...
>
> Now I make a great Gumbo Soup...but...

Top 5 Quotes from Berkshire's Annual Meeting

My bad. Of course, berkshire went public years before buffett got involved. He ws running his fund before he bought berkshire.

This may be wrong, but he ws buying berkshire shares before he took control, and I saw somewhere that when he took over it was trading at about $15. This is 1965 I think, but I am not going for absolute accuracy here.

The return to today from $15 would be 6276. MSFT would have to go up about 25x over the next 20 some odd years to match. And of course, it is now paying a dividend. BRK doesn't.

Thankfully, no one is putting a gun to your head and saying you can't own both, or you can't ignore both.

Has msft added more to the world? well, some techies would say emphatically no.


On May 05 10:26 AM wobatus wrote:

> Well, I hate to be picayune, but msft actually returned 251x since
> the close of its first trading day, 3/13/1986, berkshire "only" 29x.
> You did say more than twice, so technically correct. Quite a bit
> more.
>
> Of course, as I stated above, since 1979, berkshire has returned
> 290x. Boy, if you went back to ITS ipo...nevermind.
>
> No one is claiming Berkshire is a philanthropy. Mr. Buffett is philanthropic
> with his money that he gains thereby. You can quibble with his choices
> for bestowing his largesse, or his politics.
>
> The point raised was whether he "makes" anything. Well, the maker
> of bobble-head dolls makes something, and i imagine the net utiles
> of pleasure in the world may increase thereby. Buffett et al allocate
> capital and in general has done it well, and he has done it well
> apart from inflation or some grand supercycle. You may not like paying
> for his geico car insurance, drinking his brown sugar water or reading
> a sanborn map to get from here to there, but there ya go...he would
> be poor if the products he invested in were not bought by people
> who have made their own decisions about whether they are worth their
> dollars, inflated or otherwise.
>
> There are likely benefits to his capital allocation aside from just
> shunting money from one billionaire to another, although Andy Kessler
> might agree with you.
>
>

Top 5 Quotes from Berkshire's Annual Meeting

Well, I hate to be picayune, but msft actually returned 251x since the close of its first trading day, 3/13/1986, berkshire "only" 29x. You did say more than twice, so technically correct. Quite a bit more.

Of course, as I stated above, since 1979, berkshire has returned 290x. Boy, if you went back to ITS ipo...nevermind.

No one is claiming Berkshire is a philanthropy. Mr. Buffett is philanthropic with his money that he gains thereby. You can quibble with his choices for bestowing his largesse, or his politics.

The point raised was whether he "makes" anything. Well, the maker of bobble-head dolls makes something, and i imagine the net utiles of pleasure in the world may increase thereby. Buffett et al allocate capital and in general has done it well, and he has done it well apart from inflation or some grand supercycle. You may not like paying for his geico car insurance, drinking his brown sugar water or reading a sanborn map to get from here to there, but there ya go...he would be poor if the products he invested in were not bought by people who have made their own decisions about whether they are worth their dollars, inflated or otherwise.

There are likely benefits to his capital allocation aside from just shunting money from one billionaire to another, although Andy Kessler might agree with you.




On May 05 04:31 AM Yoon Kim wrote:

> If you had invested in MSFT in the 1980s you'd be up more than twice
> that of Berkshire.
>
> Also, there is nothing philanthropic about transfer of wealth from
> one billionaire to another billionare monopolist.

Top 5 Quotes from Berkshire's Annual Meeting

Ha ha. Bravo, yellowhoard. Now, I am off to dance the little Walter Huston jig from Treasure Of The Sierra Madres.

All the best.


On May 04 03:23 PM yellowhoard wrote:

> Tell Kernen that he needs to dress more flamboyantly. That small
> town Ohio look is so last year.
>
> I'm thinking Brady Bunch orange jump suit with a lime green cowboy
> hat.
>
> We right wing knuckle draggers need to raise the bar, style wise,
> for the maoist zombies running about these days.
>
> IMHO

Top 5 Quotes from Berkshire's Annual Meeting

All depends on your time frame and when you buy. If you bought during prior bears, like 1975, 1982, 1990, you do ok. And dollar cost averaging. I am sure DGI can speak for himself, but I don't believe he said stocks don't ever go down, even dividend growers.

Best of luck, Salvador.


On May 04 12:32 PM Salvador wrote:

> A lot of my dividend paying stocks have taken a monumental tumble,
> and the dividend pay outs don't even begin to make up for the total
> loss.
>
> Pepsi and Union Pacific are two stocks that I own that come to immediate
> mind.
>
> Mr Dividend, can you please inform us on what dividend paying stocks
> you have purchased that haven't tumbled. I'm so very curious.

Top 5 Quotes from Berkshire's Annual Meeting

Whoever negative rec'd me, fair enough, but that is the actual performance of berkshire versus gold since 1980. I understand, the date was cherry-picked. Same as in the post to which I replied.

Perhaps gold will do better than BRK over the next 5-10-15 or 20 years. I am sure yellow hoard thinks so.

Disclosure: No position in either. Ever. Although I don't think having some gold or other precious metal as an inflation hedge is necessarily a bad idea.

On May 04 10:41 AM wobatus wrote:

> Hey, it's fun with cherry picking dates time.
>
> Let's try January 1980. Berkshire is up from 300s to 93,000 even
> after a big dip, up about 290x. Does that beat inflation?
>
> Gold has gone from $850 at its all-time high back then, to, hey,
> $904. Does that beat inflation?
>
> So, if you had invested $85,000 in gold back in 1980, you'd have
> $90,400 today (forgive my math skills). You'd have been better off
> in treasuries (not that I'd be buying treasuries these days per se-well,
> maybe for a brief pull back in the stock market return of some fear
> trade). If you had invested $85,000 in berkshire back then you'd
> have $24,722,515.00. Give or take.
>
> Past isn't necessarily prologue, do your own dd, future results may
> vary, this is not an offer to sell, nor a solicitaion of an offer
> to buy, the offer is only made by prospectus...
>
> Love the avatar by the way. So does Joe Kernen.
>
> And best of luck, ole yeller horde.

Is Buffett a 'Buy and Hold' Investor?

Concur. For most folks, he would likely suggest buy and hold. After all, he says his ideal holding time is forever. Ideal. PTR grew faster than he thought. But also, it is right to say he buys if the price is low and will sell if his fair value estimate is reached and he doesn't see future growth, or he sees better allocating opportunities elsewhere.

But one must not just look at his public equity purchases. Look at Sees candy, for example. He buys it, and skims off the capital generated in excess of the busineeses needs for growth to allocate somewhere else.

Top 5 Quotes from Berkshire's Annual Meeting

Hey, it's fun with cherry picking dates time.

Let's try January 1980. Berkshire is up from 300s to 93,000 even after a big dip, up about 290x. Does that beat inflation?

Gold has gone from $850 at its all-time high back then, to, hey, $904. Does that beat inflation?

So, if you had invested $85,000 in gold back in 1980, you'd have $90,400 today (forgive my math skills). You'd have been better off in treasuries (not that I'd be buying treasuries these days per se-well, maybe for a brief pull back in the stock market return of some fear trade). If you had invested $85,000 in berkshire back then you'd have $24,722,515.00. Give or take.

Past isn't necessarily prologue, do your own dd, future results may vary, this is not an offer to sell, nor a solicitaion of an offer to buy, the offer is only made by prospectus...

Love the avatar by the way. So does Joe Kernen.

And best of luck, ole yeller horde.


On May 03 08:29 PM yellowhoard wrote:

> Buffet, like most people his age, don't want to admit that they prospered
> from this massive ponzi scheme that is collapsing around us.
>
> Sure, buy and hold works great when money is cheap and credit is
> expanding. But, had you bought one share of Berkshire ten years ago
> you would be about even today. That is only because the dollar has
> fallen so much that inflation has "kept you even".
>
> Had you invested the same $90,000 in 1999 in gold, today you would
> have over $300,000.
>

Goldman Sachs Seeks a TARP-Free Future

Good work.