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You must not be familiar with who Buffett is. He is basically the antithesis of a trader with "analytics power at his fingertips" (by which I assume you mean c

You must not be familiar with who Buffett is. He is basically the antithesis of a trader with "analytics power at his fingertips" (by which I assume you mean computing power). He prefers to make exactly one trade per company: buy a great company and own it forever, preferably by buying 100% of the company in cash. He is a tireless advocate of stock prices reflecting actual value of the company (and his modus operendi is to know the actual value and buy great companies when they are at a substantial discount to it). He split BERK into BERK.A and BERK.B when the stock price got so high that people were speculating on it and it no longer reflected the intrinsic value. He doesn't say what the intrinsic value of BERK is, but he reports book value every year and has a standing order to buy if it is 1.2X book value or below, which puts a floor on what he thinks the intrinsic value is. He also strongly believes in management thinking long-term instead of short-term, and frequently says so in his shareholder letters. This is entirely consistent with his philosophy. If you want vested interest, his buy-and-hold strategy does best when management considers long-term growth rather than short-term manipulation. However, he thinks it is better for shareholders in general, not just himself. Given that he's giving away all his stock after he dies, which can't be that many years from now, he isn't doing this for monetary gain.

perl4ever 8y ago
"He prefers to make exactly one trade per company: buy a great company and own it forever, preferably by buying 100% of the company in cash." I don't think you've paid attention to what Buffett does to make money in the last decade or two. He targets companies that are or may be desperate, and tries to exchange his endorsement for things like preferred stock and warrants at unbelievably favorable terms. He did this with Goldman Sachs during the financial crisis. He tried to make a deal with Uber recently. He is absolutely nothing like the folksy myth you reference.
- adventured 8y ago
  You're factually mistaken. The extreme majority of his activity the last 15 years has not been taking advantage of weak companies and lending his reputation. He lent several massive financial entities money and his reputation during the fallout from the great recession, which helped those companies a lot and he made money, a great win for both parties. Bank of America and Goldman Sachs came out of it in stellar condition. Both are printing record profits. Like I said, a win all around. Uber isn't in a desperate position, thus they turned Buffett down. They're loaded with immense amounts of cash, and have no problem raising more. So your sole examples to claim an outsized pattern of behavior, come from the great recession. Otherwise, we have: the acquisition of Precision Cast Parts for $37 billion, buying Pilot Flying J, buying out Iscar, acquiring Duracell, acquiring Van Tuyl, acquiring NV Energy, funding the merger of Kraft Heinz and holding a huge position, Lubrizol for $9.7 billion, and Burlington Northern (2009). A hundred billion dollars worth of acquisitions over a decade. On the investment side: a massive investment into Apple, on a bet that they're a strong company and will continue to spit off vast profits for a long time to come. A large investment into IBM (sold). Investments into Southwest Airlines and other airlines. And so on, without another single example of your premise.
  - perl4ever 8y ago
    I think you're ignoring the subtlety of what he does. Profit is what counts. He doesn't make profit proportional to his investment on everything alike. I wasn't debating his ethics, just saying he does not make money by simply buying solid businesses and holding them forever. He has a collection of solid businesses that provide cash and allow him to collect large amounts of money on rare occasions in special situations because he's the last resort. It even has a name: "The Buffett Premium". He made $3 billion on GS, $12 billion on BOA, some 70% on HCG...he's been called a loan shark, and that is enabled and complemented by the solid companies owned by Berkshire Hathaway. Article about his investments in banks: https://www.fool.com/investing/2017/07/05/a-timeline-of-warren-buffetts-bank-stock-buys.aspx https://www.fool.com/investing/2017/07/05/a-timeline-of-warr...
    - jonhendry18 8y ago
      "He made $3 billion on GS" Which is less than this year's $4.1 billion bonus pool at GS. So hardly a "loan shark". Furthermore he made the $3 billion by converting warrants to common stock, so it's actually not like GS paid out of capital or profits. Perhaps GS stock was diluted somewhat by issuing new shares? (Not sure.)
- oceanman888 8y ago
  But how is this not ethical? I think we are talking about how speculating is bad here. buying low have don't have much to do with short/long term investment. I don't know if Buffet did anything that is considered fraud but I would love to read about it.
thisisit 8y ago
By "analytics power at his fingertips" I meant someone who can crunch the data and find the required financial numbers faster than an average investor. It can be both computing as well as by hand using an army of analysts. > He is a tireless advocate of stock prices reflecting actual value of the company (and his modus operendi is to know the actual value and buy great companies when they are at a substantial discount to it) Both sentences don't go together. If his modus operandi is what you describe then it is in his vested interest to ensure markets don't price the actual value of large number of companies. For one moment let's assume Buffett's intentions are pure but can we say the same thing about Dimon?
- anoncoward111 8y ago
  I agree with you that these multi billionaires have undisclosed motives here. But I would like to offer a counterpoint to one of your claims. You say that Buffet has a vested interest in having the ability to buy a $20 stock for $13. He does have this interest, but all of us do too. Additionally, he doesn't really have the ability to influence this change any more than we do. If a public company is selling at $13 when it should be $20, then anyone has the ability to buy as much of that stock as they want. There's no secret back channel. For example, last year, Sears was trading at $10. Now it's at $3. I shorted it and made money, because I was betting that Sears would continue to decline. If it was such a sure bet, why didn't Buffet use his magical manipulation powers to short the stock with me?

perl4ever 8y ago

"He prefers to make exactly one trade per company: buy a great company and own it forever, preferably by buying 100% of the company in cash." I don't think you've paid attention to what Buffett does to make money in the last decade or two. He targets companies that are or may be desperate, and tries to exchange his endorsement for things like preferred stock and warrants at unbelievably favorable terms. He did this with Goldman Sachs during the financial crisis. He tried to make a deal with Uber recently. He is absolutely nothing like the folksy myth you reference.

adventured 8y ago
You're factually mistaken. The extreme majority of his activity the last 15 years has not been taking advantage of weak companies and lending his reputation. He lent several massive financial entities money and his reputation during the fallout from the great recession, which helped those companies a lot and he made money, a great win for both parties. Bank of America and Goldman Sachs came out of it in stellar condition. Both are printing record profits. Like I said, a win all around. Uber isn't in a desperate position, thus they turned Buffett down. They're loaded with immense amounts of cash, and have no problem raising more. So your sole examples to claim an outsized pattern of behavior, come from the great recession. Otherwise, we have: the acquisition of Precision Cast Parts for $37 billion, buying Pilot Flying J, buying out Iscar, acquiring Duracell, acquiring Van Tuyl, acquiring NV Energy, funding the merger of Kraft Heinz and holding a huge position, Lubrizol for $9.7 billion, and Burlington Northern (2009). A hundred billion dollars worth of acquisitions over a decade. On the investment side: a massive investment into Apple, on a bet that they're a strong company and will continue to spit off vast profits for a long time to come. A large investment into IBM (sold). Investments into Southwest Airlines and other airlines. And so on, without another single example of your premise.
- perl4ever 8y ago
  I think you're ignoring the subtlety of what he does. Profit is what counts. He doesn't make profit proportional to his investment on everything alike. I wasn't debating his ethics, just saying he does not make money by simply buying solid businesses and holding them forever. He has a collection of solid businesses that provide cash and allow him to collect large amounts of money on rare occasions in special situations because he's the last resort. It even has a name: "The Buffett Premium". He made $3 billion on GS, $12 billion on BOA, some 70% on HCG...he's been called a loan shark, and that is enabled and complemented by the solid companies owned by Berkshire Hathaway. Article about his investments in banks: https://www.fool.com/investing/2017/07/05/a-timeline-of-warren-buffetts-bank-stock-buys.aspx https://www.fool.com/investing/2017/07/05/a-timeline-of-warr...
  - jonhendry18 8y ago
    "He made $3 billion on GS" Which is less than this year's $4.1 billion bonus pool at GS. So hardly a "loan shark". Furthermore he made the $3 billion by converting warrants to common stock, so it's actually not like GS paid out of capital or profits. Perhaps GS stock was diluted somewhat by issuing new shares? (Not sure.)
oceanman888 8y ago
But how is this not ethical? I think we are talking about how speculating is bad here. buying low have don't have much to do with short/long term investment. I don't know if Buffet did anything that is considered fraud but I would love to read about it.

thisisit 8y ago

By "analytics power at his fingertips" I meant someone who can crunch the data and find the required financial numbers faster than an average investor. It can be both computing as well as by hand using an army of analysts. > He is a tireless advocate of stock prices reflecting actual value of the company (and his modus operendi is to know the actual value and buy great companies when they are at a substantial discount to it) Both sentences don't go together. If his modus operandi is what you describe then it is in his vested interest to ensure markets don't price the actual value of large number of companies. For one moment let's assume Buffett's intentions are pure but can we say the same thing about Dimon?

anoncoward111 8y ago
I agree with you that these multi billionaires have undisclosed motives here. But I would like to offer a counterpoint to one of your claims. You say that Buffet has a vested interest in having the ability to buy a $20 stock for $13. He does have this interest, but all of us do too. Additionally, he doesn't really have the ability to influence this change any more than we do. If a public company is selling at $13 when it should be $20, then anyone has the ability to buy as much of that stock as they want. There's no secret back channel. For example, last year, Sears was trading at $10. Now it's at $3. I shorted it and made money, because I was betting that Sears would continue to decline. If it was such a sure bet, why didn't Buffet use his magical manipulation powers to short the stock with me?