Shortly after the Dow began its tumble Wednesday, investor Warren Buffett told a packed Long Beach Arena that he has moved 100 percent of his personal portfolio from government securities to stocks.
Buffett, speaking to California first lady Maria Shriver's Women's Conference in Long Beach, said he has no idea what will happen in the coming two years but was confident that over a 10-year span the stock market would outperform cash-based investments, such as certificates of deposits and savings accounts, which can lose value when inflation is subtracted from gains.
Investors have been rushing into the relative security of cash to shield themselves from wild market fluctuations, but the world's most respected investor warned against trying to time the market by pulling out now and jumping back in when indexes begin to rise.
Buffett, whose motto is to be fearful when others are greedy and greedy when others are fearful, said the 20th century saw the Great Depression, two world wars and multiple bear markets, but the Dow still managed to finish more than 10,000 points above where it began.
"This country works," Buffett said to generous applause from an audience of women leaders in government, business, education and other sectors. "It gets gummed up from time to time, the economy, but it works."
Read the full article
Showing posts with label Warren Buffett. Show all posts
Showing posts with label Warren Buffett. Show all posts
Wednesday, October 29, 2008
Buffett says he's buying U.S. stocks
(Reuters) - Billionaire investor Warren Buffett is buying U.S. stocks, he wrote in an opinion column in the New York Times.
"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful," Buffett wrote in the paper.
Buffett acknowledged the economic news was bad, with the financial world in a mess, unemployment rising and business activity faltering.
"What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up," he said. "So if you wait for the robins, spring will be over."
Buffett, who made his money by building his company Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research, Stock Buzz)(BRKb.N: Quote, Profile, Research, Stock Buzz) into a $199 billion conglomerate, wrote that investors were right to be wary of highly leveraged entities or businesses in weak competitive positions.
"But fears regarding the long-term prosperity of the nation's many sound companies make no sense," he said.
Buffett said major companies would suffer earnings hiccups, but added they "will be setting new profit records five, 10 and 20 years from now."
"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful," Buffett wrote in the paper.
Buffett acknowledged the economic news was bad, with the financial world in a mess, unemployment rising and business activity faltering.
"What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up," he said. "So if you wait for the robins, spring will be over."
Buffett, who made his money by building his company Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research, Stock Buzz)(BRKb.N: Quote, Profile, Research, Stock Buzz) into a $199 billion conglomerate, wrote that investors were right to be wary of highly leveraged entities or businesses in weak competitive positions.
"But fears regarding the long-term prosperity of the nation's many sound companies make no sense," he said.
Buffett said major companies would suffer earnings hiccups, but added they "will be setting new profit records five, 10 and 20 years from now."
Tuesday, October 14, 2008
Columbia Business School's Graham and Doddsville Newsletter Summer/Fall 2008
Investors featured in this newsletter include Mohnish Pabrai, Joel Greenblatt, Warren Buffett, Bill Ackman, Bruce Greenwald, etc. A detailed analysis of NutriSystem Inc. by a Columbia studend is also inclued.
Read the newsletter
Read the newsletter
Sunday, October 12, 2008
Buffett-style investing shines
VANDERMIR C.T. SAY started investing when he was 12 years old. That was 22 years ago. He recalls picking stocks the way he would play darts. Not anymore. For the last decade or so, Vandermir has become a Warren Buffett-follower, investing only in good companies at good prices and buying them for the long haul.
In the last couple of months, amid cascading losses in markets all over the world, Buffett’s value investing philosophy has attracted.
The fact that Buffett, the world’s richest man according to Forbes magazine, has emerged as Wall Street’s knight in shining armor after injecting funds into Goldman Sachs and General Electric a week ago has most likely upped the ante significantly on value-style investing.
And if the sale of Buffett’s first and only authorized biography “The Snowball: Warren Buffett and The Business Of Life” written by Alice Schroeder (editor of Berkshire Hathaway’s layman-friendly annual reports) is any indication, the interest is just heating up. Just days after it hit bookstores in Sept. 29, the book has claimed a top spot on Amazon’s best-selling book list.
Read the full article
In the last couple of months, amid cascading losses in markets all over the world, Buffett’s value investing philosophy has attracted.
The fact that Buffett, the world’s richest man according to Forbes magazine, has emerged as Wall Street’s knight in shining armor after injecting funds into Goldman Sachs and General Electric a week ago has most likely upped the ante significantly on value-style investing.
And if the sale of Buffett’s first and only authorized biography “The Snowball: Warren Buffett and The Business Of Life” written by Alice Schroeder (editor of Berkshire Hathaway’s layman-friendly annual reports) is any indication, the interest is just heating up. Just days after it hit bookstores in Sept. 29, the book has claimed a top spot on Amazon’s best-selling book list.
Read the full article
Tuesday, October 7, 2008
Buffett vs. Cramer: Time to Buy or Sell?
From Yahoo Finance
Two of the most storied investors in modern finance are squaring off as the market gyrates.
On the one hand, legendary investor Warren Buffett has invested billions recently with investments in GE, Goldman Sachs and Constellation Energy, among others.
On the other hand, former hedge fund titan and market pundit Jim Cramer made a remarkable "sell stocks if you need the money within the next 5 years" declaration on NBC's "The Today Show" Monday morning.
The question for investors is which guru to follow? At the Value Investing Congress in New York Monday the answer was clear: Buffett. Value investors are licking their chops at opportunities to invest in quality stocks, including Buffett's Berkshire Hathaway, they believe are trading at incredibly attractive levels, as detailed in the accompanying video. (Meanwhile, Henry Blodget sees tremendous value in Apple.)
While it's fun to pair them off, the reality is Buffett might actually agree with Cramer about the next five years; it's unknown but pretty certain Buffett is thinking far beyond that time-frame. The Oracle of Omaha is the ultimate long-term investor, having famously describing his favorite holding period as "forever."
Watch the video
Two of the most storied investors in modern finance are squaring off as the market gyrates.
On the one hand, legendary investor Warren Buffett has invested billions recently with investments in GE, Goldman Sachs and Constellation Energy, among others.
On the other hand, former hedge fund titan and market pundit Jim Cramer made a remarkable "sell stocks if you need the money within the next 5 years" declaration on NBC's "The Today Show" Monday morning.
The question for investors is which guru to follow? At the Value Investing Congress in New York Monday the answer was clear: Buffett. Value investors are licking their chops at opportunities to invest in quality stocks, including Buffett's Berkshire Hathaway, they believe are trading at incredibly attractive levels, as detailed in the accompanying video. (Meanwhile, Henry Blodget sees tremendous value in Apple.)
While it's fun to pair them off, the reality is Buffett might actually agree with Cramer about the next five years; it's unknown but pretty certain Buffett is thinking far beyond that time-frame. The Oracle of Omaha is the ultimate long-term investor, having famously describing his favorite holding period as "forever."
Watch the video
Monday, October 6, 2008
Friday, October 3, 2008
Bargain basement stocks worth buying
In bad markets, always bet on Buffett
In the aftermath of the failed bailout, the markets are still tumultuous, and most of us financial pundits are kept busy providing either commentary about the colossal lack of judgment on behalf of Wall Street and the federal government, or giving people advice on how to weather the financial storm. We’ve already discussed some of the storm-weathering steps you can take, but this time around we’re going to go a step further and discuss how you can take advantage of the market-wide decline in stock prices.
Invest now? Are you crazy?
If you’re like most people, risk-taking is the last thing you want to think about at this time. There’s no guarantee about any stock price or, for that matter, any company. Still, this is the best time to take a risk. The low prices of stocks mean that you can get bargains on companies that have traditionally been strong performers, and once the market recovers you can recognize a profit on these stocks, even if the prices don’t return to pre-marketing collapse highs. On the other hand, if Wall Street and the Dow completely collapse, you’ll have much bigger problems than your stocks not performing. So why not invest?
If you still need some persuading, consider this--Warren Buffett has invested money in Goldman Sachs, even though Berkshire Hathaway share price dropped by over $3,000. One of Buffett’s strategies is to buy shares in otherwise strong businesses that are financially distressed, and it works as well for a Wall Street novice as it does for a power player like Buffett.
A few diamonds caked with mud
In fact, let’s start with Goldman Sachs (NYSE: GS, Stock Forum). Its share price is still $80 short of its high of $200 during the summer, but Buffett’s investment in the company has caused other investors to take note, and the stock jumped by $7 as a result. This is at least partially the result of increased consumer confidence caused by Buffett’s investment, and we’d be willing to bet that Buffett’s support is going to snowball, leading Goldman Sachs to a recovery. At this point, Buffett is regarded as such a financial guru that his picks end up prospering because of increased consumer confidence. So go with the flow on this and take a chance on Buffett. You could put your trust in someone much, much worse.
Read the full article
In the aftermath of the failed bailout, the markets are still tumultuous, and most of us financial pundits are kept busy providing either commentary about the colossal lack of judgment on behalf of Wall Street and the federal government, or giving people advice on how to weather the financial storm. We’ve already discussed some of the storm-weathering steps you can take, but this time around we’re going to go a step further and discuss how you can take advantage of the market-wide decline in stock prices.
Invest now? Are you crazy?
If you’re like most people, risk-taking is the last thing you want to think about at this time. There’s no guarantee about any stock price or, for that matter, any company. Still, this is the best time to take a risk. The low prices of stocks mean that you can get bargains on companies that have traditionally been strong performers, and once the market recovers you can recognize a profit on these stocks, even if the prices don’t return to pre-marketing collapse highs. On the other hand, if Wall Street and the Dow completely collapse, you’ll have much bigger problems than your stocks not performing. So why not invest?
If you still need some persuading, consider this--Warren Buffett has invested money in Goldman Sachs, even though Berkshire Hathaway share price dropped by over $3,000. One of Buffett’s strategies is to buy shares in otherwise strong businesses that are financially distressed, and it works as well for a Wall Street novice as it does for a power player like Buffett.
A few diamonds caked with mud
In fact, let’s start with Goldman Sachs (NYSE: GS, Stock Forum). Its share price is still $80 short of its high of $200 during the summer, but Buffett’s investment in the company has caused other investors to take note, and the stock jumped by $7 as a result. This is at least partially the result of increased consumer confidence caused by Buffett’s investment, and we’d be willing to bet that Buffett’s support is going to snowball, leading Goldman Sachs to a recovery. At this point, Buffett is regarded as such a financial guru that his picks end up prospering because of increased consumer confidence. So go with the flow on this and take a chance on Buffett. You could put your trust in someone much, much worse.
Read the full article
Thursday, October 2, 2008
Buffett's Ferocious Focus
For more than half a century Warren Buffett has shown impeccable timing. So perhaps it should come as no surprise that the first biography he has authorized was published in late September as news of the financial crisis that he had warned about dominated the front pages and just days after he had agreed to inject $5 billion into Goldman Sachs (GS).
Much of the legendary investor's story has been told, notably in Roger Lowenstein's masterful Buffett: The Making of an American Capitalist. But in The Snowball: Warren Buffett and the Business of Life, former Morgan Stanley (MS) insurance analyst Alice Schroeder provides a much more penetrating and personal look at the Oracle of Omaha.
Schroeder's portrait is the product of five years of research that included unprecedented access. She describes an obsessive man emotionally damaged by his mother's rages who nevertheless knew what he wanted and how to get there from an early age. Here readers will again encounter the burger-eating, Cherry Coke-swilling, aphorism-spouting outsider familiar from previous accounts. But The Snowball (to succeed, find wet snow and a really long hill, advises Buffett) is more perceptive than other works, getting deeply inside the head of the man who achieved such amazing long-term investment returns that some academics believe them to be a fluke.
Buffett himself has attributed his success to "focus." Schroeder writes: "He ruled out paying attention to almost anything but business—art, literature, science, travel, architecture—so that he could focus on his passion." As a child, Schroeder relates, Warren carried around a coin-changer as his prized possession, and when his dad offered him a trip at age 10, he asked to go to the New York Stock Exchange (NYX). Not long after, Buffett read a book called One Thousand Ways to Make $1,000 and announced to a friend that he was going to be a millionaire by the time he was 35. "That was an audacious, almost silly-sounding statement for a child to make in the depressed world of 1941," Schroeder writes. "But…he was sure he could do it."
Read the full article
Much of the legendary investor's story has been told, notably in Roger Lowenstein's masterful Buffett: The Making of an American Capitalist. But in The Snowball: Warren Buffett and the Business of Life, former Morgan Stanley (MS) insurance analyst Alice Schroeder provides a much more penetrating and personal look at the Oracle of Omaha.
Schroeder's portrait is the product of five years of research that included unprecedented access. She describes an obsessive man emotionally damaged by his mother's rages who nevertheless knew what he wanted and how to get there from an early age. Here readers will again encounter the burger-eating, Cherry Coke-swilling, aphorism-spouting outsider familiar from previous accounts. But The Snowball (to succeed, find wet snow and a really long hill, advises Buffett) is more perceptive than other works, getting deeply inside the head of the man who achieved such amazing long-term investment returns that some academics believe them to be a fluke.
Buffett himself has attributed his success to "focus." Schroeder writes: "He ruled out paying attention to almost anything but business—art, literature, science, travel, architecture—so that he could focus on his passion." As a child, Schroeder relates, Warren carried around a coin-changer as his prized possession, and when his dad offered him a trip at age 10, he asked to go to the New York Stock Exchange (NYX). Not long after, Buffett read a book called One Thousand Ways to Make $1,000 and announced to a friend that he was going to be a millionaire by the time he was 35. "That was an audacious, almost silly-sounding statement for a child to make in the depressed world of 1941," Schroeder writes. "But…he was sure he could do it."
Read the full article
Warren Buffett: I Haven't Seen As Much Economic Fear In My Adult Lifetime
Here is a complete transcript of last night's Warren Buffett interview with Charlie Rose, airing on PBS. It was provided to CNBC by the Charlie Rose program.
Charlie Rose:
We are in San Diego, California this afternoon for a conversation with Warren Buffett. He is a man congressional leaders, the administration, and the Federal Reserve want to talk and talk to. He is the legendary chairman and CEO of Berkshire Hathaway. Its success has made him the world's richest man. He's admired for his investment results over a long period of time. He is trusted for his common sense and the fact that he's warned over the years, in his annual letter to stockholders, about some of the things that are contributing to the crisis facing America and the global economy. For all those reasons, we have come to see him in San Diego where he is attending the Fortune Magazine's most powerful women's summit. Later, he will be interviewed at a conference by the Fortune reporter and long time friend, Carol Loomis. We come this evening from the studios of our public television affiliate in San Diego, KPBS. I thank my friend, Warren Buffet, for taking time in a busy schedule to talk to us.
Warren Buffett:
My pleasure, Charlie.
Charlie Rose:
Let me talk of the news of today. You have announced an investment of $3 billion in General Electric, along the same terms as the the Goldman Sachs --
Warren Buffett:
Yeah, almost identical.
Charlie Rose:
Why GE?
Warren Buffett:
Well, I got a call this morning from a friend of mine at Goldman Sachs saying they might be interested in such an investment. I'm familiar with the company. I've known the management, the current management, Jack Welch before Jeff Immelt. I've known him for decades. And so I understand their businesses. We do lot of business with him, and GE has been -- I think it's the longest running stock in the Dow Jones industrial average. It will be 100 years now it will be around. I hope I'm around then, too. And it was an attractive investment. And we have had a lot of money around, over the last two years, and we're seeing things that are attractive now.
Read the full transcript
Charlie Rose:
We are in San Diego, California this afternoon for a conversation with Warren Buffett. He is a man congressional leaders, the administration, and the Federal Reserve want to talk and talk to. He is the legendary chairman and CEO of Berkshire Hathaway. Its success has made him the world's richest man. He's admired for his investment results over a long period of time. He is trusted for his common sense and the fact that he's warned over the years, in his annual letter to stockholders, about some of the things that are contributing to the crisis facing America and the global economy. For all those reasons, we have come to see him in San Diego where he is attending the Fortune Magazine's most powerful women's summit. Later, he will be interviewed at a conference by the Fortune reporter and long time friend, Carol Loomis. We come this evening from the studios of our public television affiliate in San Diego, KPBS. I thank my friend, Warren Buffet, for taking time in a busy schedule to talk to us.
Warren Buffett:
My pleasure, Charlie.
Charlie Rose:
Let me talk of the news of today. You have announced an investment of $3 billion in General Electric, along the same terms as the the Goldman Sachs --
Warren Buffett:
Yeah, almost identical.
Charlie Rose:
Why GE?
Warren Buffett:
Well, I got a call this morning from a friend of mine at Goldman Sachs saying they might be interested in such an investment. I'm familiar with the company. I've known the management, the current management, Jack Welch before Jeff Immelt. I've known him for decades. And so I understand their businesses. We do lot of business with him, and GE has been -- I think it's the longest running stock in the Dow Jones industrial average. It will be 100 years now it will be around. I hope I'm around then, too. And it was an attractive investment. And we have had a lot of money around, over the last two years, and we're seeing things that are attractive now.
Read the full transcript
Buffett Buys $3B of GE Preferred
General Electric Co (GE) just announced plans to raise $15 billion, with a little help from Warren Buffett. The company is selling $12 billion of common stock to the public and $3 billion of preferred to Berkshire Hathaway.
The old Oracle of Omaha has cut deal strikingly similar to the deal he cut with Goldman Sachs. Here he is getting perpetual preferred stock with a 10% dividend that is callable after three years at a 10% premium. He’s also snatching up warrants to purchase $3 billion of common stock at $22, which is a two dollar discount from where the stock is trading right now.
How closely is this investment in GE tied to Buffett’s faith in the bailout? GE is currently protected from short-selling under the SEC’s emergency ban, and GE may be eligible to sell assets to the Securitized Housing Investment Trust. He cited the bailout as a key to his investment in Goldman Sachs.
Fascinatingly, in an interview with Becky Quick on CNBC, Buffett said he was sold on this deal by investment bankers at Goldman Sachs. So those guys have talked Warren into parting with $8 billion of his cash in less than a week. Impressive.
CNBC describes Buffett’s investment in GE as “a very expensive advertising campaign.” To be sure, Buffett putting money into GE will make it attractive to many investors. But if you look at the great terms Buffett is demanding for his money, you have to wonder if other investors really should be buying into the common shares without the promised dividend and warrants.
Link to the original article
The old Oracle of Omaha has cut deal strikingly similar to the deal he cut with Goldman Sachs. Here he is getting perpetual preferred stock with a 10% dividend that is callable after three years at a 10% premium. He’s also snatching up warrants to purchase $3 billion of common stock at $22, which is a two dollar discount from where the stock is trading right now.
How closely is this investment in GE tied to Buffett’s faith in the bailout? GE is currently protected from short-selling under the SEC’s emergency ban, and GE may be eligible to sell assets to the Securitized Housing Investment Trust. He cited the bailout as a key to his investment in Goldman Sachs.
Fascinatingly, in an interview with Becky Quick on CNBC, Buffett said he was sold on this deal by investment bankers at Goldman Sachs. So those guys have talked Warren into parting with $8 billion of his cash in less than a week. Impressive.
CNBC describes Buffett’s investment in GE as “a very expensive advertising campaign.” To be sure, Buffett putting money into GE will make it attractive to many investors. But if you look at the great terms Buffett is demanding for his money, you have to wonder if other investors really should be buying into the common shares without the promised dividend and warrants.
Link to the original article
Tuesday, September 30, 2008
Warren Buffett: The Early Years
The Snowball, the first authorized biography of Warren Buffett, has been one of the most eagerly anticipated business books of the year. Published on Monday, the book is particularly timely because of Buffett's role in the credit crisis now roiling Wall Street.
A team of Portfolio.com writers, continuing today with Portfolio.com managing editor Daniel Colarusso, are reviewing the book in sections this week, and will be commenting on each other's reviews (the first part is available here). Readers are invited to add their thoughts in the Comments section.
Part Three of The Snowball: Warren Buffett and the Business of Life takes readers from the early 1950s and his work with Ben Graham and his marriage to Susie through the late 1960s, when he moves to dissolve his own investing partnership. Along the way, his revered father Howard died, he and Susie had three kids of their own, and his wealth grew to $9 million.
Driven by his monastic dedication to the market and amassing wealth, he bought a battered textile maker (Berkshire Hathaway), a troubled retailer, and even dabbled in publishing.
Here are some key passages from the section and our translation and analysis.
On Buffett’s father’s support of William Howard Taft in 1952:
[Howard Buffett] broke with the party by refusing to support Eisenhower. This was an act of political suicide…He was left standing on principle—alone. Warren recognized that his father had “painted himself into a corner.” Now Howard’s struggles branded three principles even deeper into his son: that allies are essential; that commitment are so sacred by nature they should be rare; and that grandstanding rarely gets anything done.”
Uh-oh, sounds like the stage is set for revenge. Will young Warren go to New York, make his fortune, and return to Omaha to get even? Well, no. He does go to New York. He does make his fortune. But he’s too busy counting his money to exact revenge on anyone.
On Susie:
“I needed her like crazy. I was happy in my work but I wasn’t happy with myself. She literally saved my life. She resurrected me. She put me together. It was the same kind of unconditional love you would get from a parent.”
Yeesh. It's always about our mothers, isn't it? Even for Buffett. And we thought he was different.
On going to work for Ben Graham:
Warren was so excited about being hired that he arrived in New York on August 1, 1954, and showed up at his new job at Graham-Newman on August 2, a month before his official starting date. Okay, lemme get this straight. He needed Susie “like crazy” but skipped town a month early to pore over S&P stock guides?
Read the full article
A team of Portfolio.com writers, continuing today with Portfolio.com managing editor Daniel Colarusso, are reviewing the book in sections this week, and will be commenting on each other's reviews (the first part is available here). Readers are invited to add their thoughts in the Comments section.
Part Three of The Snowball: Warren Buffett and the Business of Life takes readers from the early 1950s and his work with Ben Graham and his marriage to Susie through the late 1960s, when he moves to dissolve his own investing partnership. Along the way, his revered father Howard died, he and Susie had three kids of their own, and his wealth grew to $9 million.
Driven by his monastic dedication to the market and amassing wealth, he bought a battered textile maker (Berkshire Hathaway), a troubled retailer, and even dabbled in publishing.
Here are some key passages from the section and our translation and analysis.
On Buffett’s father’s support of William Howard Taft in 1952:
[Howard Buffett] broke with the party by refusing to support Eisenhower. This was an act of political suicide…He was left standing on principle—alone. Warren recognized that his father had “painted himself into a corner.” Now Howard’s struggles branded three principles even deeper into his son: that allies are essential; that commitment are so sacred by nature they should be rare; and that grandstanding rarely gets anything done.”
Uh-oh, sounds like the stage is set for revenge. Will young Warren go to New York, make his fortune, and return to Omaha to get even? Well, no. He does go to New York. He does make his fortune. But he’s too busy counting his money to exact revenge on anyone.
On Susie:
“I needed her like crazy. I was happy in my work but I wasn’t happy with myself. She literally saved my life. She resurrected me. She put me together. It was the same kind of unconditional love you would get from a parent.”
Yeesh. It's always about our mothers, isn't it? Even for Buffett. And we thought he was different.
On going to work for Ben Graham:
Warren was so excited about being hired that he arrived in New York on August 1, 1954, and showed up at his new job at Graham-Newman on August 2, a month before his official starting date. Okay, lemme get this straight. He needed Susie “like crazy” but skipped town a month early to pore over S&P stock guides?
Read the full article
Buffett Buys Stake in Chinese Battery Manufacturer
The investor Warren E. Buffett announced on Monday that he had agreed to buy a 9.89 percent stake in a Chinese battery manufacturer that plans to sell electric cars in the United States by 2010.
The MidAmerican Energy Holdings Company, will pay 1.8 billion Hong Kong dollars — about $230 million — for the stake in the battery maker, the BYD Company. Mr. Buffett’s Berkshire Hathaway owns 87.4 percent of MidAmerican.
Based in Shenzhen, a mainland Chinese city adjacent to Hong Kong, BYD is one of the world’s largest makers of rechargeable batteries for cellphones and other uses. The company also has a fast-growing auto-making unit that accounts for nearly a third of its revenue and makes fuel-efficient compact and subcompact cars for the Chinese market.
The president of BYD, Wang Chuanfu, said that the alliance with Mr. Buffett was not just about raising capital for the manufacturer, which relies heavily on short-term debt.
“If BYD were to enter the North American market, Mr. Buffett’s investment would enhance the BYD brand name,” Mr. Wang said at a news conference in Hong Kong late Monday.
He added that BYD would sell cars in the United States and might even move up its plans for entering the market in 2010, by using Berkshire’s money to accelerate research.
David Sokol, the chairman of MidAmerican, said at the news conference with Mr. Wang that Berkshire Hathaway wanted to address climate change and considered electric cars as a way to do so. “This is a technology that can really be a game changer if we’re serious about reducing” emissions of carbon dioxide, the main gas associated with manmade global warming, Mr. Sokol said.
Read the full article
The MidAmerican Energy Holdings Company, will pay 1.8 billion Hong Kong dollars — about $230 million — for the stake in the battery maker, the BYD Company. Mr. Buffett’s Berkshire Hathaway owns 87.4 percent of MidAmerican.
Based in Shenzhen, a mainland Chinese city adjacent to Hong Kong, BYD is one of the world’s largest makers of rechargeable batteries for cellphones and other uses. The company also has a fast-growing auto-making unit that accounts for nearly a third of its revenue and makes fuel-efficient compact and subcompact cars for the Chinese market.
The president of BYD, Wang Chuanfu, said that the alliance with Mr. Buffett was not just about raising capital for the manufacturer, which relies heavily on short-term debt.
“If BYD were to enter the North American market, Mr. Buffett’s investment would enhance the BYD brand name,” Mr. Wang said at a news conference in Hong Kong late Monday.
He added that BYD would sell cars in the United States and might even move up its plans for entering the market in 2010, by using Berkshire’s money to accelerate research.
David Sokol, the chairman of MidAmerican, said at the news conference with Mr. Wang that Berkshire Hathaway wanted to address climate change and considered electric cars as a way to do so. “This is a technology that can really be a game changer if we’re serious about reducing” emissions of carbon dioxide, the main gas associated with manmade global warming, Mr. Sokol said.
Read the full article
Sunday, September 28, 2008
Warren Buffett lifts the lid on his secrets
The world’s richest man has revealed all to his biographer.
Warren Buffett always had spectacular timing. As Wall Street burns, the billionaire investor is the hero of the hour after predicting the financial meltdown and riding to the rescue — $5 billion (£2.7 billion) in hand — of Goldman Sachs.
Tomorrow marks the release of The Snowball, the first and only, Buffett says, biography to be written with his co-operation. The book’s author is Alice Schroeder, a former analyst who spent “literally thousands” of hours with Buffett and his family.
“Invaluable” hardly describes Schroeder’s access to the world’s richest man when you consider that lunch with Buffett recently fetched $2.1m in a charity auction.
Such is Buffett’s reputation that last week, when he snapped up his stake in Goldman, the bank’s shares rose $8 as investors who had wondered if it would survive the credit crunch reacted positively.
Schroeder said: “Around the time Bear Stearns was being taken over, he talked about the domino effect to me. He said to me first Bear, then Lehman, then Merrill. He saw this coming and he talked about a crisis of a magnitude that we had not seen before.”
Where others saw chaos, Buffett saw opportunity. It has been a busy two weeks for him. The week before, one of his firms, Mid American Energy, made a $4.7 billion offer for Constellation, a rival pushed to the brink of bankruptcy by the credit crisis.
Buffett likes big brand names for his Berkshire Hathaway investment vehicle. And he likes to pay low prices for them.
The purchase of the Goldman stake was classic Buffett, waiting for a top-rated firm to fall to rock-bottom prices. It seems to be a fall he had been predicting for some time.
Read the full article
Warren Buffett always had spectacular timing. As Wall Street burns, the billionaire investor is the hero of the hour after predicting the financial meltdown and riding to the rescue — $5 billion (£2.7 billion) in hand — of Goldman Sachs.
Tomorrow marks the release of The Snowball, the first and only, Buffett says, biography to be written with his co-operation. The book’s author is Alice Schroeder, a former analyst who spent “literally thousands” of hours with Buffett and his family.
“Invaluable” hardly describes Schroeder’s access to the world’s richest man when you consider that lunch with Buffett recently fetched $2.1m in a charity auction.
Such is Buffett’s reputation that last week, when he snapped up his stake in Goldman, the bank’s shares rose $8 as investors who had wondered if it would survive the credit crunch reacted positively.
Schroeder said: “Around the time Bear Stearns was being taken over, he talked about the domino effect to me. He said to me first Bear, then Lehman, then Merrill. He saw this coming and he talked about a crisis of a magnitude that we had not seen before.”
Where others saw chaos, Buffett saw opportunity. It has been a busy two weeks for him. The week before, one of his firms, Mid American Energy, made a $4.7 billion offer for Constellation, a rival pushed to the brink of bankruptcy by the credit crisis.
Buffett likes big brand names for his Berkshire Hathaway investment vehicle. And he likes to pay low prices for them.
The purchase of the Goldman stake was classic Buffett, waiting for a top-rated firm to fall to rock-bottom prices. It seems to be a fall he had been predicting for some time.
Read the full article
Why Warren Buffett is Betting on Banks Now
Bank stocks could be the buy of a lifetime right now. The bailout is moving forward, the markets have stabilized, and Warren Buffett has put up a $5 billion bet on Goldman Sachs (NYSE:GS) this week.
Is it time to follow Buffett’s lead and go “all in” on banks now?
The answer is a simple no.
Buffett got a very sweet deal from Goldman that has reduced his risk, gave him a high degree of income, and didn’t eliminate a single cent of the potential profits from the deal. And there’s a little known way we get all that in our investments too. Let me explain.
There are a lot of reasons to like banks right now. Share values have been pummeled over the last year. If the bailout goes through, they’re about to unload their mistakes onto everyone else. The ones that are left still generate high fees, margins, and profits for the services they provide. And the ones that manage to survive will be some of the biggest winners when the U.S. economy recovers.
Banks are an extreme value play that undoubtedly caught Buffett’s eye. However, even he needed some enticing odds to make a bet this big.
As individual investors, we can’t simply follow his lead here and buy Goldman Sachs. Buffett was afforded a few special advantages that aren’t usually available to the rest of us. But as we’ll see in a moment, occasionally we can get these advantages too.
You see, Warren Buffett didn’t make a simple $5 billion investment into common shares of Goldman Sachs. Anyone can do that with a few mouse clicks or a quick phone call to his or her broker. He got a lot more for his $5 billion.
Berkshire Hathaway acquired special perpetual preferred shares of Goldman Sachs. These aren’t the shares you can buy on the NYSE. The preferred shares Goldman issued to Berkshire have all kinds of special attributes usually reserved for high-net worth individuals.
Read the full article
Is it time to follow Buffett’s lead and go “all in” on banks now?
The answer is a simple no.
Buffett got a very sweet deal from Goldman that has reduced his risk, gave him a high degree of income, and didn’t eliminate a single cent of the potential profits from the deal. And there’s a little known way we get all that in our investments too. Let me explain.
There are a lot of reasons to like banks right now. Share values have been pummeled over the last year. If the bailout goes through, they’re about to unload their mistakes onto everyone else. The ones that are left still generate high fees, margins, and profits for the services they provide. And the ones that manage to survive will be some of the biggest winners when the U.S. economy recovers.
Banks are an extreme value play that undoubtedly caught Buffett’s eye. However, even he needed some enticing odds to make a bet this big.
As individual investors, we can’t simply follow his lead here and buy Goldman Sachs. Buffett was afforded a few special advantages that aren’t usually available to the rest of us. But as we’ll see in a moment, occasionally we can get these advantages too.
You see, Warren Buffett didn’t make a simple $5 billion investment into common shares of Goldman Sachs. Anyone can do that with a few mouse clicks or a quick phone call to his or her broker. He got a lot more for his $5 billion.
Berkshire Hathaway acquired special perpetual preferred shares of Goldman Sachs. These aren’t the shares you can buy on the NYSE. The preferred shares Goldman issued to Berkshire have all kinds of special attributes usually reserved for high-net worth individuals.
Read the full article
Saturday, September 27, 2008
Thursday, September 25, 2008
Buffett: A Better Negotiator for Taxpayers?
Maybe the American taxpayers should be asking Warren Buffett to be negotiating on their behalf, The New York Times’s David Leonhardt muses.
Treasury Secretary Henry Paulson has spent a good part of the last two days on Capitol Hill arguing that the government should not demand a stake in any Wall Street firms it bails out. Demanding such a stake, Mr. Paulson says, could scare away many of those firms from participating in the bailout, leaving the credit markets as hobbled as they are now.
And then Mr. Buffett swooped in on Tuesday evening and announced that his company, Berkshire Hathaway, was investing $5 billion in Goldman Sachs, money that would help the firm — which made far fewer bad investments than most of Wall Street — shore up its balance sheet. What will he receive in exchange for his investment? Something like a 7 percent stake in the firm.
Mr. Paulson, of course, has a different objective than Mr. Buffett. The Treasury secretary is trying to resuscitate the country’s financial system and keep the economy from falling into a deep recession. If he drives too hard a bargain, he won’t solve the problem. Mr. Buffett is merely trying to make some money.
Read the full article
Treasury Secretary Henry Paulson has spent a good part of the last two days on Capitol Hill arguing that the government should not demand a stake in any Wall Street firms it bails out. Demanding such a stake, Mr. Paulson says, could scare away many of those firms from participating in the bailout, leaving the credit markets as hobbled as they are now.
And then Mr. Buffett swooped in on Tuesday evening and announced that his company, Berkshire Hathaway, was investing $5 billion in Goldman Sachs, money that would help the firm — which made far fewer bad investments than most of Wall Street — shore up its balance sheet. What will he receive in exchange for his investment? Something like a 7 percent stake in the firm.
Mr. Paulson, of course, has a different objective than Mr. Buffett. The Treasury secretary is trying to resuscitate the country’s financial system and keep the economy from falling into a deep recession. If he drives too hard a bargain, he won’t solve the problem. Mr. Buffett is merely trying to make some money.
Read the full article
Wednesday, September 24, 2008
Important quote from Buffett's interview today with CNBC
CARL (reporter): A lot of people who are watching us Warren, and even people who have just started watching us over the past week or two, look at the stock market every day and are confused. They want to use it as a metric for how we're doing, or at least the progress we're making on big issues. I'm guessing you don't think it's reflective of anything that's based in reality right now?
BUFFETT: Well, the stock market in the short -- my old boss Ben Graham said that in the short-run the stock market is a voting machine, in the long-run it's a weighing machine. As a voting machine, it responds to people's emotions. There's no literacy test for voting. You vote according to how much money you have, not according to how smart you (are.) So the stock market does some very silly things in the short-run. Over the long-run, it behaves quite rationally. And, you know, five years from now, ten years from now, we'll look back on this period and we'll see that you could have made some extraordinary buys. That doesn't mean it won't get more extraordinary a week or a month from now. I have no idea what the stock market is going to do next month or six months from now. I do know that the American economy, over a period of time, will do very well, and people who own a piece of it will do well. But they shouldn't own it on leverage. That's what people have learned in this period, that you've got to be able to play out your hand and it's a big mistake to let somebody else be in a position where they can sell you out.
BUFFETT: Well, the stock market in the short -- my old boss Ben Graham said that in the short-run the stock market is a voting machine, in the long-run it's a weighing machine. As a voting machine, it responds to people's emotions. There's no literacy test for voting. You vote according to how much money you have, not according to how smart you (are.) So the stock market does some very silly things in the short-run. Over the long-run, it behaves quite rationally. And, you know, five years from now, ten years from now, we'll look back on this period and we'll see that you could have made some extraordinary buys. That doesn't mean it won't get more extraordinary a week or a month from now. I have no idea what the stock market is going to do next month or six months from now. I do know that the American economy, over a period of time, will do very well, and people who own a piece of it will do well. But they shouldn't own it on leverage. That's what people have learned in this period, that you've got to be able to play out your hand and it's a big mistake to let somebody else be in a position where they can sell you out.
CNBC INTERVIEW TRANSCRIPT & VIDEO: Warren Buffett Explains His $5B Goldman Investment
Warren Buffett was interviewed live by telephone on CNBC's Squawk Box this morning about his surprise investment of at least $5 billion in Goldman Sachs.
BECKY QUICK: We know you get all kinds of deals, all kinds of people who come knocking asking you to jump in. You've said no to everything to this point. Why is this the right deal at the right time?
WARREN BUFFETT: Well, I can't tell you it's exactly the right time. I don't try to time things, but I do try to price things. And I've got a formula that says bet on brains, and bet of them when it's the right type of deal. And in this case, there's no better firm on Wall Street. We've done business with them for years, with Goldman, and the price was right, the terms were right, the people were right. I decided to write a check.
BECKY: Does the backdrop of the Federal government potentially getting involved with a massive bailout plan for Wall Street, does that have anything to do with this deal?
BUFFETT: Well, I would say this. If I didn't think the government was going to act, I would not be doing anything this week. I might be trying to undo things this week. I am, to some extent, betting on the fact that the government will do the rational thing here and act promptly. It would be a mistake to be buying anything now if the government was going to walk away from the Paulson proposal.
BECKY: Why would that be a mistake? Because the institutions would collapse, or because you could get a better price?
BUFFETT: Well, there's just no telling what would happen. Last week we were at the brink of something that would have made anything that's happened in financial history look pale. We were very, very close to a system that was totally dysfunctional and would have not only gummed up the financial markets, but gummed up the economy in a way that would take us years and years to repair. We've got enough problems to deal with anyway. I'm not saying the Paulson plan eliminates those problems. But it was absolutely, and is absolutely necessary, in my view, to really avoid going over the precipice.
Read the full transcript and watch the video
BECKY QUICK: We know you get all kinds of deals, all kinds of people who come knocking asking you to jump in. You've said no to everything to this point. Why is this the right deal at the right time?
WARREN BUFFETT: Well, I can't tell you it's exactly the right time. I don't try to time things, but I do try to price things. And I've got a formula that says bet on brains, and bet of them when it's the right type of deal. And in this case, there's no better firm on Wall Street. We've done business with them for years, with Goldman, and the price was right, the terms were right, the people were right. I decided to write a check.
BECKY: Does the backdrop of the Federal government potentially getting involved with a massive bailout plan for Wall Street, does that have anything to do with this deal?
BUFFETT: Well, I would say this. If I didn't think the government was going to act, I would not be doing anything this week. I might be trying to undo things this week. I am, to some extent, betting on the fact that the government will do the rational thing here and act promptly. It would be a mistake to be buying anything now if the government was going to walk away from the Paulson proposal.
BECKY: Why would that be a mistake? Because the institutions would collapse, or because you could get a better price?
BUFFETT: Well, there's just no telling what would happen. Last week we were at the brink of something that would have made anything that's happened in financial history look pale. We were very, very close to a system that was totally dysfunctional and would have not only gummed up the financial markets, but gummed up the economy in a way that would take us years and years to repair. We've got enough problems to deal with anyway. I'm not saying the Paulson plan eliminates those problems. But it was absolutely, and is absolutely necessary, in my view, to really avoid going over the precipice.
Read the full transcript and watch the video
Tuesday, September 23, 2008
It's time to be greedy
As I said before, you should not follow Mr. Market's mood, but explore it. As the market collapsed recently due to credit market crisis, many people got scared and pull market out of the market. They don't even dare to look at the market which they loved and followed everyday just a year ago. But this is the exact time that you should be greedy and look out for opportunities. And that's what Warren Buffet is doing. The news just came out today that Berkshire Hathaway paid $5 billion for a stake in Goldman Sachs. Here are some excerpts from the AP news:
Warren Buffett's Berkshire Hathaway Inc. is investing at least $5 billion in Goldman Sachs, a huge vote of confidence for one of the survivors of the credit crisis that felled two of its investment banking peers.
In addition to buying $5 billion in preferred stock, Berkshire also got warrants to buy another $5 billion in Goldman's common stock. Goldman also said late Tuesday it would raise another $2.5 billion in its own public stock offering.
"Goldman Sachs is an exceptional institution," the chairman and CEO of Berkshire Hathaway said in a news release. "It has an unrivaled global franchise, a proven and deep management team and the intellectual and financial capital to continue its track record of outperformance."
So hopefully we can learn from Warren Buffet: be greedy when others are fearful.
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