Warren Buffett Is Confusing
Consider a recent media report:
“During 2002 we entered the foreign currency market for the first time in my life…In 2003, we enlarged our position, as I became increasingly bearish on the dollar.” Buffett made clear that he’s not entirely comfortable — personally or professionally — making currency bets. “The cemetary for seers has a huge section set aside for macro forecasters,” he quipped. He explained that the trade deficit has him spooked. “In recent years our country’s trade deficit has been force-feeding huge amounts of claims on, and ownership in, America to the rest of the world,” he said. “Late in 2002, however, the world started choking on this diet, and the dollar’s value began to slide against major currencies.” He noted that at yearend, Berkshire held approximately $12 billion in foreign exchange contracts, within five (unspecified) currencies. He also said Berkshire owns about $1 billion worth of high-yield bonds denominated in euros.”
CNN/Money
March 8, 2004
Now consider today’s media headline:
“Buffett called hedge funds a “fad” that was more about Wall Street marketing than sound investing. People that are now investing in hedge funds in aggregate are going to be disappointed,” Buffett, who is known as the “Oracle of Omaha,” said. The fees that hedge fund managers charge were unfair, he said.”
Reuters
May 1, 2004
Hedge funds trade currencies. Buffett trades currencies. Contradiction here?
