From a Yahoo article today:
Investors have become markedly more nervous in recent weeks, worried that the stock market has risen too far, too fast. That many of Mr. Buffett’s picks remain around the prices he paid for them certainly suggests that some value remains. It’s also an intriguing contrarian sign: Since early March, the biggest gainers on world stock markets have been riskier stocks, from Sprint to Citigroup to Las Vegas Sands. Mr. Buffett tends to go for more stable blue chips with strong cash flow. Many such stocks have been left on the sidelines in what one wag has called “the dash for trash.” Buying Warren Buffett stocks at Warren Buffett prices, or less, certainly doesn’t guarantee you will make money. But it surely provides an additional level of comfort for anyone willing to risk their capital. The worst that can happen is that you will lose money in good company.
Isn’t that last line comforting? Below the Oracle says the economy is in “shambles”. He sees no “green shoots” yet. Asked how the government is doing in trying to get the economy on track:
“You can’t produce a baby in one month by getting nine women pregnant.”
The video:
June 24th, 2009 at 3:13 pm
Is leverage or lack of margin to blame for banking crisis? Buffet says you can’t make simple rules about leverage such as limiting leverage to 20:1 for example. This is absolutely right. The wrong thing to do is make arbitrary restrictions on leverage. It would be terrible for people trying to hedge because there wouldn’t be enough money in traders pockets to absorb all the risk. This is beside the point and misses the real problem, that the banks never intended to take a loss even if they lost. The problem clearly isn’t leverage but MARGIN. AIG and other banks were in poor financial health and hid the fact from the public, a certain very famous and powerful person with bald spot actually encouraged a CEO to LIE about the health of his bank before Congress. The banks didn’t have any margin to cover their bets if they went bad. If they had won, you could bet your life they would have extracted every dime from the losing side. The banks were using the Fed and the taxpayer as margin.
June 24th, 2009 at 3:18 pm
This is the same Warren Buffet who sold one of the largest put options in history while the DOW was at an all time high. Sucker!
June 24th, 2009 at 4:16 pm
A great line from the video, Buffett says “America’s genius has not been in avoiding problems, it been in surmounting them once they happen.” That’s the essence of a good trading strategy too.
June 24th, 2009 at 4:24 pm
I do love the fact that he says the norm in a market system, where there are profit incentives, is to overshoot. He also notes this won’t be the last bubble to build…and pop. Human nature ain’t changing any time soon.
June 25th, 2009 at 7:54 am
How can he give Mr.Paulson credit for dealing with the financial crisis well? The guy had no plan. Would love to hear what Ritholtz thought when he heard those words.
June 26th, 2009 at 5:23 pm
Speaking of human nature, Michael, it’s been written a few times that the downfall of democracy will occur when the majority realize that they can take out more than they put into the system…With 13% of the country paying 70% of the tax bill, is that not the essential problem?…especially when each of them has a vote that counts just as much as the other?
Give Buffet credit, he states that Obama’s initiatives on healthcare and cap and trade are something to look at, but the economy is #1. You can only re-distrubute wealth when you have wealth to re-distribute.