TonyC-SA

38 Comments

    • Why Is Everybody Selling as Buffett Is Loading Up? [view article]
      birder: BRK-B is $4650 a share. Plebian shareholders can get such a good deal. Half my portfolio is BRK-B, and it is on track or ahead of schedule for a compounded 10.7% annual return for the last five years.

      Buffett takes a mere $100,000 annual salary and no stock options or anything else. 99.99999% of his billions comes from his share of Berkshire. BRK-B is directly tied to the price of BRK-A (1/30th of a share of BRK-A). That means his interests are directly aligned with those of his shareholders, he doesn't make any money unless you do.

      So the average shareholder can indeed get exactly the same deal as Buffett, he uses the power of bulk buying and big deals to benefit all of us. I think it is hilarious how many pundits out there are constantly telling us how to invest like Buffett, or what the next Berkshire Hathaway is, when the original is still available and still delivering exactly what he has always delivered; the best business analysis, investment and negotiation brain on the planet.       Oct 06 09:04 AM
    • Did Buffett Kill the (First) Wells Fargo-Wachovia Deal? [view article]
      I own BRK-B, and it is a safe haven. Currently half my entire holdings! Yes, WB invests in the stock market, but in solid companies that will prosper in recession or not.

      As for Wachovia, if we could get it for 60 cents on the dollar, I presume WB would okay it; if it isn't a good deal I expect him to advise against it.

      I see no conflict of interest; what is a bad deal for a 9% investor is probably a bad deal for the other 91%. I don't want to attribute any super human powers to Buffett and he has made mistakes in the past, but let us recall that he is in his current position of influence (and in my portfolio) because he is provably the best stock and business analyst on the planet. IF he advised against the Wachovia deal, maybe this is just a chairman listening to the opinion of a proven expert with skin in the game, in a time of uncertainty, when prudence is the better part of investing.

      There is no conflict of interest in telling somebody using YOUR money that in your opinion he is about to make a bad mistake. A conflict of interest is when somebody abuses official power. WB has no official power in WFargo. Should chairmen ignore their stockholders concerns altogether? Of course not, especially if they have relevant expertise.       Oct 02 09:51 AM
    • Buffett's Battery Buy [view article]
      Like Clueless Wonder, my commute is 6 miles each way, with grocery about 4 miles from my house. About once a month I visit family across town (22 miles). That works out to 316 miles per month, which in my Honda is a tank a month; and that matches my fillup schedule. It costs $55 for gas, where 9c/KWH for electric would cost about $28.44, about half as much with less emissions and greater price stability.

      If I can get 50 miles on a charge, I can be completely electric. If only 25 miles, 93% electric. I am glad to own BRK.B.       Oct 01 08:12 AM
    • Buffett's Big Bet: The Real Value of the Berkshire Investment in Goldman Sachs [view article]
      Half my portfolio is BRK.B. It has been on a 10.7% annualized, compounded growth rate for the last 5 years, and that is what I and other holders are looking for. Sloppy math like this overstates the case, but there is no question in my mind that Goldman Sachs, Constellation Energy, and Buffett's recent $500M in many "smaller" real estate buys are all great investments that fit his model. If BRK.B does better than 10.7% I am of course happy, but I am not disappointed if it does not. As for buying like Buffett: Why not just buy BRK-B? At $4400 it isn't terrible, and you get 100% of the benefit of Buffett's leverage and negotiating power. Remember, Buffett's salary is only $100K, he has engineered Berkshire so he doesn't make money unless the stock price goes up. That's how it should be.
      Sep 29 08:49 AM
    • There Are Still Good Investments Out There [view article]
      Buffett got the same terms as anybody with $5B to invest, $20B in reserves and a triple A+ credit rating.

      I am not being facetious; Buffett's bargaining position includes the ability to completely solve the $5B cash crunch problem GS has, in a way a guy with $1M or $100M or even $1B cannot.

      The rules weren't different for Buffett; there are a spectrum of deals to be made at each level, including his, and he has made good deals at every level for 50 years and advanced to new levels.

      A guy with $10K can't build a factory, a guy with a $1M factory can't really go public, a guy with $10M can't really dictate to his suppliers, because he isn't buying enough from them to completely solve any problem of theirs. Walmart dictates to THEIR suppliers because they can completely solve the problem of sales and distribution. Buffett is not playing by any different rules than Microsoft, Walmart, P&G or even Goldman Sachs.

      The rule is simple, the bigger the problem you solve, the more power you have. Ultimately, this is just the discount for purchasing in bulk quantities; I guarantee you if I pay cash up front for an entire year's output from any factory, I am going to get a far, far more favorable unit price than buying one off the shelf at Sears. Because I eliminated a hundred costs, man-years of effort and all uncertainty, not to mention creating efficiency through planned purchases of raw materials, simplified product handling, etc.
      Sep 26 09:11 AM
    • Nothing Brave About This New World [view article]
      If I may be so bold as to state the obvious solution; the government should simply reverse auction the securities; i.e. "Here is the first billion dollars, make us an offer on it. Whatever we regard as best offer gets it."

      they are buyers in a buyers market. Anybody on the brink of failure and collapse will provide the deepest discount. The securities may be hard to value, but the Fed can buy the ones that are easiest to value and let the bogus crap slide.

      Under all that foam is some real beer, actual real estate and actual people willing to pay their mortgages, insurance, whatever. There is real income there, and real money to be made by servicing mortgages. Mine is with Countrywide and I've never missed a payment in 20 years; they may be in trouble but they have actual revenue.

      The obvious answer is making the desperate suckers compete for whatever bailout they can get; that will minimize the amount of crap we buy and maximize the eventual resale value, so the only thing we lose is opportunity cost (interest).

      Reverse auction. We auction off the money for the securities, and the best offered exchange wins.       Sep 22 08:27 AM
    • Buffett Warned Us in 2003 [view article]
      Nicky: No, a country should NOT be run like a company. The job of government is to do what the private sector WILL NOT DO, or those things that we worry would be corrupted by an explicit profit motive (like law enforcement, the military, licensing of professionals, etc.) This means that the hallmark of a good government program is unprofitability; they build infrastructure, conduct basic research, stop disease, educate children, prevent criminals from committing violent crimes and frauds, run the courts, collect the trash, maintain the sewer system, and prevent employers from enslaving their workers or sacrificing their health and safety for profits.

      No business is going to profit from stopping a disease before anybody catches it. We don't want courts or law enforcement to be a pay to play proposition, this creates a caste system where the wealthy are protected by private armies and the poor get screwed. We don't want the sewer and trash to be a profit-oriented operation, or the poor catch and spread disease to all of us.

      We don't want schools privatized as profit operations, because we can't hold them accountable until a decade later, after they have taken the money and run.

      Businesses engage in short-term R&D that shows a promise of profit; if all research is privatized as for profit operations, basic research grinds to a halt, because the hallmark of **basic** research is we don't know whether it will lead to anything or not, we just want to answer an open question or explore a mystery.

      We don't want for-profit enterprises certifying or food is safe, licensing our doctors or lawyers, inspecting our buildings and restaurants or even certifying our drivers, because business would simply be driven to the lowest cost, most corrupt operators imaginable. (Can you spell your name? Okay good, here is your driver's license, and for today's special, here is your license to practice medicine.)

      Government is the polar opposite of business. Businesses are psychopathically focused on profit, government is there to provide the counterbalance that keeps businesses from enslaving the population for their own gain.

      That in turn is the reason for taxes, you must force businesses to give up a share of the profit to provide this counterbalance, because 95% of them are amoral or immoral and don't give a crap about anything or anyone that doesn't produce a profit.

      As for Buffett, half my assets are in BRK.B, there was a brief bubble in it at the beginning of this year but it has returned to its 5 year track of 10.7% return and is undervalued by a few $100 as I write. But I don't think anybody should run the country like a business. That is what got us into the current meltdown.

      I don't think the government should be anti-business, we need a balance of for-profit and not-for-profit thinking, and there is a fair level of taxes that isn't socialism. The role of the government is to promote common good, provide security and safety, and ensure businesses aren't exploitive, fraudulent, cooking the books or lying to customers and investors.       Sep 18 10:20 AM
    • Buffett Holdings Doing Okay [view article]
      Yeah, when the market dropped 500 points, my BRK.B was steady as a rock (actually, went up!). I think it is undervalued right now; I don't know why. But I am holding it and may add to it, I think the current blood bath is Buffett's bread and butter, now is the time to buy good assets from desperate sellers for dimes on the dollar, and he has the money to do it. AIG may have to sell some good going concerns to raise capital for their more idiotic moves. This market should be a goldmine for Warren and Charlie. Sep 17 08:57 AM
    • The U.S. on the Precipice [view article]
      huangjin: Programs such as Social Security and Medicare do exactly the opposite of what you claim, they force people TO "save". Yes, I know they are not actually saving and their contributions are redistributed to the elderly. But historically, the problem was that *nobody* saved for retirement. If they did anything, they relied on lifelong employers to fund their retirement, and when those all went under in the Depression everybody was screwed.

      We have already tried the alternative to SS, it fails miserably and creates poverty, disease, homelessness and crime. When it comes to planning for retirement, people are no smarter now than they were a century ago. They won't do it! They ignore their financial future and bet on schemes and wild chances and lose all their money! If you completely eliminate their taxes they will bet and lose that, too.

      Politicians and corporations are just as bad as individuals, short term thinking is inherent human nature. There is absolutely no evidence that people are "discouraged"... from saving by SS, in fact among people under 35 that firmly believe SS will be gone before they retire and they will have to fund their own retirement, they still do not save or invest anywhere close to what that would cost. Education is not the answer either, this same thing holds true for professors and college graduates. THEY JUST DON'T CARE ENOUGH to sacrifice this year's comfort for their future comfort, and NEVER WILL.

      Some sort of mandatory, inescapable long term investment combined with a social safety net is the answer, and SS and Medicare taxes are the closest we can come. The big problem with SS and Medicare is they are managed by appointees and politicians that never have to face any consequences for their own short term thinking. But something must be done and this is as close as we get.       Sep 15 09:26 AM
    • The Fannie/Freddie Heist [view article]
      I'm on the author's side. Capitalism encourages the whole spectrum of risky trades; some pay off and some lose. But the risk must be real! If you can count on the government to force taxpayers to foot the bill for the losses, why judge risk at all? This is what happened at FM&FM and throughout big corporate America. The result is not a free market at all, it is just free money for the penthouse suite of offices. The CEO's of FM&FM will get their parachutes funded at taxpayer expense.

      As for whether the numbers appear on the balance sheets, who cares? Does anybody think the problem will be corrected for nothing? No. It is going to cost tens of billions at minimum, and that money is going to come from the only player with pockets so deep they have zero regard for profit and no concern for losses: The US Government. As long as they protect their cronies and retain power, and project the *image* of caring for the middle class while raiding our wallets they are golden.

      We should have let nature take its course and let them collapse. Actually we never should have deregulated them in the first place! That is water over the dam, but the dam should be repaired and the Enron loophole closed.

      And Jimbo, if you think you don't gamble, you should take a clear-eyed look at the current market, because with the current state of deregulation and law enforcement by the SEC and government in general, the US market is worse than any casino. At least in a casino they aren't allowed to tell blatant lies to you, cook the books, steal your money under false pretenses and then walk away with impunity. At least in a casino they play by the frikkin' RULES, the dealer can't help his buddy by arbitrarily declaring a pair of threes a full house, or a busted flush "close enough".

      To me, these bailouts are proof of lies. If the bailout was a good idea, let Warren Buffett or Bill Gates or Steve Jobs do it, or any of the other thousands of billionaires. They don't step up because they aren't stupid, the bailouts are going to produce staggering losses that the government will never recover, it will just sweep them under the rug and declare they saved America while destroying it.

      We should let these things fail, institute regulations to prevent similar irresponsible greed from happening again, and use taxpayer money to aid those driven into poverty and homelessness as a result. Financially speaking, the stupid, the irresponsible, the criminals liars and frauds must lose everything. Bailouts don't just fail to punish them, they reward them! That positive feedback creates ever more of the same, and will destroy the market altogether.       Sep 15 08:51 AM
    • Buying Berkshire: The Ultimate No-Brainer [view article]
      I am long BRK-B, and unconcerned by the downturn. Buffett is doing now exactly what I would do if I had hundreds of millions to play with; he is buying brokerages for 20 cents on the dollar because their only option is to go bankrupt and lose everything.

      Buffett (his R.E. manager Peltier, actually) has bought $200 million worth of quality brokerages. So what if earnings are down 7% for a quarter, or a year? They can drop 25% and the stock can drop by 50% and I will remain unconcerned as long as Berkshire's strategy remains sound.

      I am unconcerned because recessions kill everybody's profits, and what separates the winners from the losers in 2012 is whether, in 2008, they were being forced by the recession into selling their hard-earned hard assets at 20 cents on the dollar, or buying somebody else's hard-earned hard assets AT 20 cents on the dollar. Guess which side I am on.

      Buffett said from the beginning the sub-prime market was B.S. and would come to tears. Well, those tears turn out to be an opportunity, there is real value to be found in the debris of the sub-prime hurricane. It might not become apparent for years, until real estate skies are clear and sunny again, but I am glad Berkshire has all the cash, expertise, and corporate wherewithal to be first in line to cherry pick the bargains.       Sep 08 09:08 AM
    • Global Stock Markets: We All Fall Down! [view article]
      Thanks, that's a lot of useful information. So when can we start saying "recession"? Sep 07 08:58 AM
    • Friday's Employment Report: A Sobering Dose of Reality [view article]
      We HAVE been in a recession, the current administration has used threats, power and outright lies to rewrite every governmental economic report that might tell the truth, and distort statistics with new rules about what data should be discarded, weighted, or just invented to make things look one edge away from recession.

      Then they dismiss all third party reports of the obvious as "partisan". This administration has redefined Republican as wildly fraudulent, and has made a fine art of lying, and then when somebody points out the facts, saying that person is lying, partisan, unpatriotic and soft on terrorism!

      I used to respect the Republican position of controlled spending, small government, low debt and free markets while enforcing anti-trust. I cheered Reagan's deregulation of the airlines. Too bad they are gone, replaced by plutocrats bent on robbing the country and pandering to a thoroughly duped religious right.       Sep 07 08:38 AM
    • 'The Pie's Getting Larger' - What Warren Buffett Means [view article]
      The author seems to forget that we baby boomers, born 1945 - 1959 or so, have been living off the future since we were born, meaning our businesses, fuel, houses, schools, and investments have concentrated on the short term while ignoring the consequences of our choices. I am just as guilty as the average one of us, but chickens come home to roost. The price advantages of sending manufacturing offshore are compelling and I have done it, but reduce *domestic* production here at home, cutting jobs.

      You don't have to be an economist to realize that if jobs are getting done for $3/hour in India or Mexico or half that in China, we will inevitably have a lower domestic production here in the USA.

      You don't have to be a financial genius to realize that if you can reduce corporate taxes to near-zero by relocating your corporate headquarters to a PO Box in a tax-friendly country, and still operate exactly as before with offices in the USA, the CBO is forced to count out any economic contribution you have made.

      Speaking of the CBO, weren't they projecting trillion dollar surpluses right before Bush took office? By what magical justification do we suddenly trust their predictions out to 2040? They couldn't even predict what T. Boone Pickens was predicting in 2002, that peak oil would be achieved within five years. Pickens made $4 BILLION dollars being right, the CBO was laughably wrong. I wouldn't bet spit on CBO predictions.

      The way to grow GDP is to close all corporate tax breaks and loopholes which will add taxes with zero official increases, and for government to perform its two primary functions.

      First, provide physical security by closing the borders, neutralizing terrorists, and stopping crime.

      Second, invest in research and infrastructure that will not be undertaken by private companies because there is no immediate profit potential. The government must get us off of Middle Eastern oil first (48% of our consumption) and foreign oil in general after that (another 48% of our consumption). Al Gore is right, thermal solar, wind and geothermal can provide 100% of our energy within 10 years, and are inexhaustible green sources of energy.

      Government should be leveling the playing field on companies and not tilting the advantage to non-domestic production and non-domestic corporations. That can be done through tariffs and trade regulations. You can't make US workers compete against $3/hour jobs that have zero benefits forever and expect GDP to grow.

      To save the economic future of the next generation, our government must do the job it has let slide for the last 30 years. It is thankless and unprofitable, but that is the hallmark of government: If it carried prestige or profit, plenty of wealthy private individuals would do it.       Aug 31 08:44 AM
    • The Bedrock Case for the Return of the Gold Bull [view article]
      It is funny how many ideologues rail against fiat currency. Well, guess what? You are wasting your time, and anything you want you can buy with that currency. Wake up, dudes. Thomas Jefferson was wrong, I own clear title to real property, stocks, bonds, gold, diamonds, cars, electronics and more, all bought with my "fiat currency", funny money, whatever you want to call it. The fact is that stores take twenties in exchange for their goods without question. So what's the point of all this conspiracy theory that is never going to lead to anything important?

      Aug 19 05:35 PM
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