Jolly_Rancher

Explaining the Berkshire Share Price

If BRK is in such bad shape with a high probability of default, then why are large municipal bondholders paying BRK around 3% for insurance on default of their municipal bond holdings??? I mean, would you buy a large life insurance policy right now from AIG? No. New York Life? Yes. I'd say the CDS market is wrong. I'd say large municipal bondholders are right.

Warren Buffett's Berkshire Hathaway's 2008 Annual Letter

It is apparent that we can take Warren Buffett at his word that he does not know what direction the markets are going. Next we can take him at his word that he is human and therefore makes mistakes. One glaring example of this is his purchase of COP at the peak of oil prices. But what is odd about this purchase is COP at the prices he paid is not at all a purchase supported by the methods of Graham-Dodd. Further, the sale of the index puts at the peak of the equity markets again seems to be an error of the same ilk. Same for the Burlington Northern purchase. I can understand errors made where there is an apparent margin of safety when he buys a company whose stock has been cut by 80% but whose business prospects 10 years out are quite good. But I don't understand errors made due to a break with his basic investment philosophy. Does he simply have too much money that has to be put to work within a limited time span? Or is he just getting sloppy? I'm not trying to malign Buffett whom admire.

Buffett Metric Doesn't Say It's Time to Buy

Very incisive article. A similar article appeared recently on Seekingalpha except that author was asserting that 75% is where Buffett is a buyer, and I wrote a response somewhat similar to yours. It makes no sense for Buffett to be a buyer at 75% because that level is still too high according to his standards. 50% - 60% is his range.

The problem with all of this analysis is that we're talking about apples and oranges, i.e. overall market vs. value investing. Buffett will invest in a particular business if he finds the value regardless of the Market-to-GNP number. My guess is that he has found more than a few businesses whose stocks have been decimated and which he would consider to be values. But would he buy the SPY here? Most definitely NOT because it's still too expensive.

BTW, Buffett purchased those preferred shares through Berkshire Hathaway, not his own personal account. No one knows the changes in his personal account.

My Modest Buffett Prediction

Large oil companies have a lot of cash now. Why don't they do the same thing? Same for large drug companies. What makes insurance such a different source of capital that it can fund general market investment? Doesn't Buffett advise stearing clear of conglomerates, but isn't his Berkshire Hathaway a conglomerate? What makes his conglomerate different from say a GE? Didn't GE try the same thing with insurance and banking, that is, use the excess cash flow to fund investment in diverse businesses, including general equity investment? Finance tells us that the cost of capital is the same whether generated internally or through external mechanisms. Why is insurance float cheaper than oil or drug float or simply going to the bank and borrowing?

On Buffett-Back Riding

Can you list a few other shares he has purchased recently? I think ETN is a new position.

Buffett's Gamble: $40 Billion Bet on Volatility

Assuming the seller's still viable to make good on those BRK CDS.


On Nov 21 02:39 PM ThinkRight wrote:

> Buffet got close to 11.25% ($4.5B for $40B)premium for the insurance
> he sold. CDS for Berkshire comes out to be ($440K for $10M) 4.4%.
> Even if Buffest buys CDS for full amount for Berkshire default he
> makes 6.85 and gets off the hook ! :-)

Let Buffet Do the Buying for You

Try the link in the second to last line of the article. If you want to succeed, you need to read everything. :)

Also, I don't believe Buffett will buy shares like those in his BRK. Otherwise, why wouldn't he just buy BRK? Makes the most sense. I think he's going for other fish with higher return.

Let Buffet Do the Buying for You

You're confused. He was not buying American stocks -- or any stocks at all -- in Berkshire Hathaway. According to the link you provided above, he was speaking of his own persoanl investment account which had been soley invested in government bonds.... "So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds."

So an investment in BRK (which primarily is an investment in an insurance holding company) will not produce the same results as investing in Buffett's personal investments. That said, BRK might still do well, though it appears it has not done nearly as well recently as in days of yore.

Here I Go, Criticizing Warren Buffett

You sound a bit like sour grapes. When you can invest 10 billion here and 5 billion there, I'm sure you'll get the same perks and mouthpiece that Buffett has. But you need to earn those.

Does Warren Buffett Think Goldman Is More Creditworthy Than GE?

debtacid, why don't you buy some BRK if you think it's such a good deal?