1 of 4

Why Is Everybody Selling as Buffett Is Loading Up?

So I guess Warren was a little bit early on this sale, but he got the market right. It's all about price and no one can predict a top or a bottom. Those who have long term staying power and make wise decisions based on value, always make money.


BUFFETT IS WAY WRONG AT HOME
By SUZANNE MCGEE
PrintEmailDigg ItStory Bottom

November 5, 2006 -- Even Warren Buffett gets it wrong sometimes.

The Oracle of Omaha's take on a real estate deal, for example, was 100 percent wrong, said the buyer of the property, because the billionaire forgot one of his core rules: Invest only in what you understand.

The buyer, Richard Manchester, was ridiculed by Buffett after the billionaire sold Manchester his oceanfront Laguna Beach house last year for $3.5 million.

Buffett, reducing the sale to an absurd term - $60 million an acre - told a Berkshire Hathaway annual meeting that Manchester was foolish to pay such a high price, especially since Buffettt had paid just $1 million for it nine years earlier.

Buffett told the 20,000 shareholders at the meeting that the house, in the exclusive Emerald Bay neighborhood, had a replacement value of $500,000, and that the purchase price reflected a real estate market that has gotten out of whack.

Manchester fell in love with the house and put in a bid even before the "For Sale" sign went up. He invested a "few hundred thousand dollars" to improve the kitchen, bathroom and other areas. Then he sold it nine months later for $5.45 million.

"The fact that he is Warren Buffett doesn't mean he's going to be dead right on everything," said Manchester, speaking expansively about the deal for the first time.

Manchester is a tax lawyer and financial planner who oversees about $50 million in assets.