TonyCinTX

Buffett's Recent Portfolio Changes: What's the Message?

A public option isn't reform? It certainly has the potential to massively reform the health insurance industry, it will bomb them back to the stone age (for them, about the 1960's). Personally I find this a good thing.

Because insurance and the health industry are in the same economic whirlpool, there are quite a few floated options that would also reform the health industry specifically, those that prevent insurers from controlling treatments or countermanding doctor's orders by refusing to pay or capping lifetime payments or rejecting people based on existing conditions. I don't know about "reform" but these portend some massive changes to health care per se, putting the white coats back in charge over the gray suits.

Stick with Gold and the Oil Stocks

The USA has four great clean natural resources that could replace oil within ten years. Besides natural gas (which burns cleaner than coal, oil or gasoline), we have wind power and thermal-solar that have both been proven to generate electricity competitive with our dirtier alternatives. We also have proven geothermal electric on hundreds of installations right here in the USA, some are fifty years old and still working. Geothermal is a zero emission solution, perfectly clean, and requires nothing but a drilled hole. We know how to drill! A plant can be built for a few million dollars and pay for itself within five or six years. The energy is free, and a geothermal plant is about the size of a standard warehouse, literally.

We don't need biofuels. We don't need to invent clean coal. A wind turbine pays for itself in three years and lasts for twenty five. All we lack is the political will to actually change gears, because the change would put existing wealth at risk.

Buying Berkshire: The Ultimate No-Brainer

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.