6 ms·

In the interest of full disclosure, Warren Buffett should have mentioned that he will probably make about $3.5 billion off a $5 billion investment (70% return)

by kqr2 16y ago

In the interest of full disclosure, Warren Buffett should have mentioned that he will probably make about $3.5 billion off a $5 billion investment (70% return) in Goldman Sachs. Goldman Sachs in turn received $13 billion via the AIG bailout. http://www.bnet.com/blog/financial-business/how-warren-buffett-8217s-gamble-on-goldman-sachs-paid-off-big/8326 http://www.bnet.com/blog/financial-business/how-warren-buffe... http://articles.latimes.com/2009/mar/21/business/fi-aig-goldman21 http://articles.latimes.com/2009/mar/21/business/fi-aig-gold...

varjag 16y ago
The assets of Berkshire Hathaway though are US$ 297.119 billion, per Wikipedia. He certainly has the vested interest in GS revenues, but perhaps not as much as you imply.
- pierrefar 16y ago
  Are you suggesting $3.5b are not worth mentioning?
  - jcmoney 16y ago
    Sure $3.5b is a lot of money and worth mentioning; but just that alone is somewhat misleading considering it's a very small fraction of Berkshire Hathaway.
  - varjag 16y ago
    No, what I suggested is that Golfman Sachs revenues do not make it or break it for him. The guy is very rich. Thus it is unlikely that mere 3.5 billion would affect his public statements, especially expressed in such an indirect and convoluted way as praising the U.S. government.
nl 16y ago
Perhaps he should have disclosed it. But at the same time it's difficult to find any serious investor with a mildly diversified portfolio who didn't benefit from the government intervention (from reduced losses if nothing else) Do you have 401K? I bet that has some money in Berkshire Hathaway and/or Goldman Sachs. Do you need to disclose that?
- pwhelan 16y ago
  Not only that, the BRK & GS deal was hugely publicized as were the favorable terms for BRK. Anyone who would care about it probably would have known that already. He is watched with millions of eyes for his every move. Anyone who who owns pretty much any public equity can say he/she benefited from government intervention. Full, unnecessary disclosure: Long on BRK, GS, C, BAC and others.
jeromec 16y ago
It's probably more accurate to say charities will make it. Buffett has pledged to gradually give 85% of his Berkshire stock to five foundations. A dominant five-sixths of the shares will go to the world's largest philanthropic organization, the $30 billion Bill & Melinda Gates Foundation, whose principals are close friends of Buffett's (a connection that began in 1991, when a mutual friend introduced Buffett and Bill Gates). http://money.cnn.com/2006/06/25/magazines/fortune/charity1.fortune/ http://money.cnn.com/2006/06/25/magazines/fortune/charity1.f...
- borism 16y ago
  that's after his death, and even then it's just a way to avoid inheritance tax.
  - gyardley 16y ago
    The estate tax is a disgrace, but this is overly cynical. Buffett is giving away far more than he'd pay in taxes, even at the 55% estate tax rate.
    - jbooth 16y ago
      The estate tax isn't a disgrace, it only even kicks in on estates greater than a few million. I'll repeat that -- if your estate is less than a few million, the estate tax doesn't affect you. If your estate is more than a few million, the first few are still exempt. Used to be people respected earning your own living, now all people seem to respect is compound interest.
      - gyardley 16y ago
        As of January 1st, 2011, the estate tax kicks in at $1,000,000. (The law on the books actually kicks in at $10,000, but there's a temporary credit in place.) The actual rate and exemption has varied widely from year to year. This year there's no estate tax, but in 2009 there was a $3.5MM exemption. Much of the money you have on hand when you die has already been taxed in one form or another. (If it hasn't, your death should trigger the much lower capital gains tax - that's how it works in Canada, for example.) If you've been working hard to ensure your wife and children don't want for anything in life, why in hell should the government take half of what you've earned and already paid taxes on? I don't understand your bit about compound interest. The people in this community who are affected by the estate tax don't get there through compound interest, they get there through entrepreneurship and job creation. If you want to propose that the estate tax only affects passive income, I'd certainly be in favor.
deleted 16y ago
[deleted]
gg25 16y ago
Your statements are very misleading. Goldman was forced to take TARP, as did other major banks. Goldman then repaid TARP, with 20+ percent interest. That is, taxpayers actually made billions more on the loan to Goldman Sachs. Implying that TARP benefited Warren Buffett in any direct way is absurd.
- hoop 16y ago
  Implying we /all/ didn't benefit from TARP is absurd as well, IMHO
- yummyfajitas 16y ago
  Goldman didn't directly benefit from TARP money paid to them, but they gained tremendously from TARP money paid to AIG and other counterparties (which neither they nor AIG paid back).
MikeCapone 16y ago
If Buffett hadn't injected that money into GS, it might have failed. That's the only reason why he could get such good terms (preferred shares with a 10% dividend, iirc). If GS had failed, the taxpayer would probably have had to spend a lot more money on it.
- Digital 16y ago
  Yeah, I mean we couldn't let GS fail, GS IS AMERICA!
  - MikeCapone 16y ago
    I wish we could do it that easily, but the way the banking system works, if one of those big banks fails, a lot more will go down with it, and that damage would probably dwarf the cost of making cheap loans to banks (but the important part is to plug as many holes in the system after that). You'd actually be punishing the rest of the US (and the world) more than GS (or any of the other giant banks) if you let them fail. That needs to be fixed, but the time to make a point about that probably wasn't in the middle of a global financial panic.
    - Digital 16y ago
      It really is a wonderful scam. You're so right, if GS failed we'd just be punishing the world. You're little comment about "THE WAY THE BANKING SYSTEM WORKS" is so insightful. Everyone that doesn't support taxpayer bailouts of investment banks are ignorant of the banking system and can't comprehend how it works. I'm not even going to bother with the rest. If you can't imagine any way for the government to fix the problem other than handing out public money to private companies you're a sheep.
      - lesterbuck 16y ago
        Not to mention that there are different ways for the government to bail out the banks, and we happened to take a rather outrageous one. We bailed out the banks without wiping out the current shareholders, because the "capitalists" complained about a government takeover of the banks.

by kqr2 16y ago

varjag 16y ago

The assets of Berkshire Hathaway though are US$ 297.119 billion, per Wikipedia. He certainly has the vested interest in GS revenues, but perhaps not as much as you imply.

pierrefar 16y ago
Are you suggesting $3.5b are not worth mentioning?
- jcmoney 16y ago
  Sure $3.5b is a lot of money and worth mentioning; but just that alone is somewhat misleading considering it's a very small fraction of Berkshire Hathaway.
- varjag 16y ago
  No, what I suggested is that Golfman Sachs revenues do not make it or break it for him. The guy is very rich. Thus it is unlikely that mere 3.5 billion would affect his public statements, especially expressed in such an indirect and convoluted way as praising the U.S. government.

nl 16y ago

Perhaps he should have disclosed it. But at the same time it's difficult to find any serious investor with a mildly diversified portfolio who didn't benefit from the government intervention (from reduced losses if nothing else) Do you have 401K? I bet that has some money in Berkshire Hathaway and/or Goldman Sachs. Do you need to disclose that?

pwhelan 16y ago
Not only that, the BRK & GS deal was hugely publicized as were the favorable terms for BRK. Anyone who would care about it probably would have known that already. He is watched with millions of eyes for his every move. Anyone who who owns pretty much any public equity can say he/she benefited from government intervention. Full, unnecessary disclosure: Long on BRK, GS, C, BAC and others.

jeromec 16y ago

It's probably more accurate to say charities will make it. Buffett has pledged to gradually give 85% of his Berkshire stock to five foundations. A dominant five-sixths of the shares will go to the world's largest philanthropic organization, the $30 billion Bill & Melinda Gates Foundation, whose principals are close friends of Buffett's (a connection that began in 1991, when a mutual friend introduced Buffett and Bill Gates). http://money.cnn.com/2006/06/25/magazines/fortune/charity1.fortune/ http://money.cnn.com/2006/06/25/magazines/fortune/charity1.f...

borism 16y ago
that's after his death, and even then it's just a way to avoid inheritance tax.
- gyardley 16y ago
  The estate tax is a disgrace, but this is overly cynical. Buffett is giving away far more than he'd pay in taxes, even at the 55% estate tax rate.
  - jbooth 16y ago
    The estate tax isn't a disgrace, it only even kicks in on estates greater than a few million. I'll repeat that -- if your estate is less than a few million, the estate tax doesn't affect you. If your estate is more than a few million, the first few are still exempt. Used to be people respected earning your own living, now all people seem to respect is compound interest.
    - gyardley 16y ago
      As of January 1st, 2011, the estate tax kicks in at $1,000,000. (The law on the books actually kicks in at $10,000, but there's a temporary credit in place.) The actual rate and exemption has varied widely from year to year. This year there's no estate tax, but in 2009 there was a $3.5MM exemption. Much of the money you have on hand when you die has already been taxed in one form or another. (If it hasn't, your death should trigger the much lower capital gains tax - that's how it works in Canada, for example.) If you've been working hard to ensure your wife and children don't want for anything in life, why in hell should the government take half of what you've earned and already paid taxes on? I don't understand your bit about compound interest. The people in this community who are affected by the estate tax don't get there through compound interest, they get there through entrepreneurship and job creation. If you want to propose that the estate tax only affects passive income, I'd certainly be in favor.

deleted 16y ago

[deleted]

gg25 16y ago

Your statements are very misleading. Goldman was forced to take TARP, as did other major banks. Goldman then repaid TARP, with 20+ percent interest. That is, taxpayers actually made billions more on the loan to Goldman Sachs. Implying that TARP benefited Warren Buffett in any direct way is absurd.

hoop 16y ago
Implying we /all/ didn't benefit from TARP is absurd as well, IMHO
yummyfajitas 16y ago
Goldman didn't directly benefit from TARP money paid to them, but they gained tremendously from TARP money paid to AIG and other counterparties (which neither they nor AIG paid back).

MikeCapone 16y ago

If Buffett hadn't injected that money into GS, it might have failed. That's the only reason why he could get such good terms (preferred shares with a 10% dividend, iirc). If GS had failed, the taxpayer would probably have had to spend a lot more money on it.

Digital 16y ago
Yeah, I mean we couldn't let GS fail, GS IS AMERICA!
- MikeCapone 16y ago
  I wish we could do it that easily, but the way the banking system works, if one of those big banks fails, a lot more will go down with it, and that damage would probably dwarf the cost of making cheap loans to banks (but the important part is to plug as many holes in the system after that). You'd actually be punishing the rest of the US (and the world) more than GS (or any of the other giant banks) if you let them fail. That needs to be fixed, but the time to make a point about that probably wasn't in the middle of a global financial panic.
  - Digital 16y ago
    It really is a wonderful scam. You're so right, if GS failed we'd just be punishing the world. You're little comment about "THE WAY THE BANKING SYSTEM WORKS" is so insightful. Everyone that doesn't support taxpayer bailouts of investment banks are ignorant of the banking system and can't comprehend how it works. I'm not even going to bother with the rest. If you can't imagine any way for the government to fix the problem other than handing out public money to private companies you're a sheep.
    - lesterbuck 16y ago
      Not to mention that there are different ways for the government to bail out the banks, and we happened to take a rather outrageous one. We bailed out the banks without wiping out the current shareholders, because the "capitalists" complained about a government takeover of the banks.