6 ms·

Warren Buffett editorial in NYT: Buy American. I Am.

95 points by kradic 18y ago

haasted 18y ago
Short summary: "Time to talk up the market. I have already placed the money I wanted to place while it was down." :)
- ksvs 18y ago
  Not merely nasty, but false as well. He says explicitly that he hasn't finished buying.
  - jumper 18y ago
    Uh.... How does what he say prove what he will do? If he were being dishonest here, maybe he would be... I dunno, dishonest? I personally have no idea what Buffett's really thinking, but maybe you left some points out of your argument there?
- DanielBMarkham 18y ago
  It's good to be skeptical when reading commentaries, but it's better, when you're skeptical, to make more of a case than simply a slogan. As I recall, Buffett went heavily into precious metals and bonds over the past few years. Now he's puling that money out and going to the market. Everybody else is buying precious metals because they're scared and selling their stocks. Looks damn smart to me.
DanielBMarkham 18y ago
Be fearful when others are greedy, and be greedy when others are fearful Excellent advice. Buffett walks in great footsteps here. Wasn't it J.P. Getty that came out during the depression and said something like "Buy stocks. We're buying as much as we possibly can." ( I paraphrase from memory here)
- breck 18y ago
  I could only find "I buy when other people are selling," but he did apparently make a killing during the Great Depression simply by buying stocks. I thought this quote was terrific and really relevant to HN: "Going to work for a large company is like getting on a train. Are you going sixty miles an hour or is the train going sixty miles an hour and you're just sitting still? " There are a bunch of great quotes: http://www.linkrap.com/Getty http://www.linkrap.com/Getty
  - DanielBMarkham 18y ago
    Found it. It's from "How to be Rich" which I finished last week (after getting a recommendation from another HN'er -- good book!) (Regarding the May, 1962 Crash) "I told them quite frankly that, while I sympathized wholeheartedly with anyone who had lost money because of market developments, I saw little if any reason for alarm and absoutely none for panic....I said I felt that the stock market was in a much healthier and certainly in a much more realistic position because of the long-needed adjustment in prices. As for what I was doing, the answer was simple. I was buying stocks...Most seasoned investors are doubtless doing much the same thing. They're snapping up the fine stock bargains available as a result of the emotionally inspired selling wave." [page 152] Perhaps there's some difference this time around, but I doubt it. I imagine old J.P. would be saying the same thing today if he were alive.
deleted 18y ago
[deleted]
- pmorici 18y ago
  Number 1 would almost certainly cause some kind of war.
  - sireat 18y ago
    In 1930 Congress passed http://en.wikipedia.org/wiki/Hawley-Smoot http://en.wikipedia.org/wiki/Hawley-Smoot Tarriff Act Did it work? Anyone? Anyone? No, it did not work, and US sled deeper into Great Depression.
    - jimbokun 18y ago
      Up mod for Ben Stein homage.
floozyspeak 18y ago
I bet he's gettin something on the side to basically step into the ring of fear here and fire the flare of "now's the time". I don't think people really dispute that now is the time. The problem is the view point. You basically have to put money in and swear not to look at it again until 2013. Because the day by day view of that investment is heart attack unfolding as the bad news isn't going away, the affects of the 700 billion dollar crisis, job losses, sub prime this, abused and reckless that, and so on is going to be on the fear radar for a bit. You whacked the consumer with $140 oil a few months back saying hard times are ahead, and then you backed it up with current credit crisis, and then you watched wallstreet get bought by the government as everyone in their money proceeded to get to cash as fast as they could. You've told the consumer to stop spending get back to basics and thats happening. Folks in lots of cash, aka Buffet are in hog heaven right now. He can throw a bunch of money in, go back in cryogenic freeze with Elvis and pop back out in 2013 or so and bathe himself in cristal. Day traders hanging out with cash are making by the minute deals only to cash out and get back in on the highs and lows of the game, cautiously as they are, they are doing that. If you have funds to play, play, or throw it in there and rent out buffets cryo chamber, probably a good bet really.
- jhancock 18y ago
  I mostly agree. You have two choices with buying American stocks now: 1 - play the day trade game and squeeze out margins as the market is wild from day to day 2 - play long, buy great deals and hold for years. The only people that can play option 1 well are serious traders that have tons of time, cash, and really know what they're doing (or just have dumb luck, but applies to anything you might do with money). The only people that can play option 2 well are serious investors that have people that work for them to analyze which are best long term buys and mange them, oh yeah, and also have lots of cash on hand; cash you don't need to use a for a long time. So although I do try to pay attention to when people like Buffet dish out advice, I also understand that few can play at his game.
  - jimbokun 18y ago
    Aren't the people who play game number 1 largely responsible for the current financial mess? Maybe not day traders per se, but that sort of mentality of everyone thinking they are in the top few percent of investors and able to beat the market.
prakash 18y ago
A word of caution: Don't invest if you can't sleep soundly at night. Buffet can probably afford to lose a few billions here and there, but you probably can't.
- louislouis 18y ago
  Invest what you can afford to lose.
- jedc 18y ago
  Well said. Most people should follow Mark Cuban's recent advice: http://blogmaverick.com/2008/10/15/where-to-put-your-money-right-now/ http://blogmaverick.com/2008/10/15/where-to-put-your-money-r...
- jon_dahl 18y ago
  Another bit of advice: if you don't need your money for 20 years, you shouldn't lose sleep over short-term drops in the market. And if you are investing for the long run, you can afford to lose 50% of your portfolio today.
- dmv 18y ago
  From what I recall of the last analysis on this subject, I don't think he has 'a few billion' in his non-Berkshire holdings. The non-Berkshire holdings are basically the money he has accumulated since personally buying Berkshire Hathaway, with his fairly modest salary. He has often described that he could (and does) beat Berkshire's ROI as a small investor, which is why his non-Berkshire holdings are in the millions. His billions, from where his net worth for Fortune are calculated, is the 30+% ownership of Berkshire Hathaway (market cap today, 180B). The rest is almost a rounding error -- except that's where all of his lifestyle expenses come from, beyond his $100K salary and misc. payments, as he doesn't sell (as far as I know) any of his BH and it does not yield a dividend.
  - eru 18y ago
    About the dividends (http://www.focusinvestor.com/brkfaq.htm#Q7 http://www.focusinvestor.com/brkfaq.htm#Q7): "We feel noble intentions should be checked periodically against results. We test the wisdom of retaining earnings by assessing whether retention, over time, delivers shareholders at least $1 of market value for each $1 retained. To date, this test has been met. We will continue to apply it on a five-year rolling basis. As our net worth grows, it is more difficult to use retained earnings wisely." Source: Berkshire Hathaway's Owner's Manual Mr. Buffett:: "We will either pay large dividends or none at all if we can't obtain more money through re-investment (of those funds). There is no logic to regularly paying out 10% or 20% of earnings as dividends every year." Charles Munger: "If you went to the leading schools, they wouldn't teach dividend policy this way." Source: My notes from the 2000 Berkshire Hathaway annual meeting
binarray2000 18y ago
I have a huge amount of respect for Buffet and this article has some sound advice. But, I still don't understand if it applies only to stocks or to anything US. This sentence (2nd paragraph) "I've been buying American stocks. This is my personal account I'm talking about [...]" sounds like, I've done my share in helping out by buying equity and [I imply] you see how you do yours with buying whatever US. Correct me if I'm wrong.
known 18y ago
Stock markets oscillate between Facts, Hope and Hype.
jimbokun 18y ago
Warren Buffet is a national treasure.
- known 18y ago
  I second it.
richcollins 18y ago
Had you followed that advice after the Japanese crash of 1990, you would still be down almost 75%: http://finance.google.com/finance?q=^N225 http://finance.google.com/finance?q=^N225
- dmv 18y ago
  He did not say 'buy an index fund'. In an average investing environment, the argument for buying the index and not individual stocks is sound. However, buying in this market -- and to take advantage of the blood on the street -- is the individual play. Many companies will not make it, or will not make it without massive restructuring, or with much lower market share. But for a value investor, some companies with real moats and real protection have now been priced (by the overall market) into value.
- ksvs 18y ago
  He's not saying buy stocks after any crash, just after this one. The Japanese crash was a unique one because a corrupt old boy network of companies holding one another's stock and banks refusing to write off bad debt caused the fall to be artificially prolonged.
  - mynameishere 18y ago
    Good point. And in Japan the government responded with massive public spending and rate reductions.
    - asdf333 18y ago
      haha good one.
  - richcollins 18y ago
    What do you think is happening now? The banks aren't willing to write off bad debt if they can stay afloat. As a result, they aren't willing to lend to each other. None of the banks wants to make a loan to another bank that will just go under due to their holdings of bad debt. If the banks holding bad debt were allowed to fail, this would all be sorted out much faster.
avdempsey 18y ago
All respect to Buffet in his success and this op-ed's general message. But its simplicity reminds me of George Bush's call to "go shopping" after 9/11. Do you want to overcome fear and build America's future? Then entrepreneurs lets get building. If you don't have the self-esteem to invest in your own efforts (we need them now more than ever) then follow Buffet's advice and buy a slice of the companies that will rebuild America. If you have the chutzpah though, don't "go shopping," "get building."
dejb 18y ago
Buffet is undoubtedly a great investor. But I have a slight feeling that could be doing this more for altruistic reasons rather than personal profit. He might believe that he can inject enough confidence in the system by his reputation then maybe he can help improve things. Not necessarily by enough for his investements to pay off but to avoid a worse fate for the financial system. Remember the guy has committed to giving away most of his fortune already. Anyway it is just a theory, good luck to him either way.
- ca98am79 18y ago
  Dude - Buffet didn't become the richest person in the WORLD by being altruistic. Think about it.
  - aaronblohowiak 18y ago
    [citation needed] - he wasn't a crooked thief. There is a surprising lack of scandal surrounding him (i'm not one to care what consenting adults do in privacy.) He is a substantial philanthropist and value-based investor.
    - SwellJoe 18y ago
      I'm not sure I understand how a lack of badness equals "making investment decisions based on altruism", or how they can be conflated in any way. The way I'm reading the "debate" here is ca98am79 saying, "Buffett has no history of investing for altruistic reasons. He invests to make money, and is the most successful person in the world at doing so." And you're saying, "Stop calling Buffett a crook! He's a value investor and a philanthropist!" He, obviously, didn't call Buffett a crook. He said that Buffett is a successful investor that invests to make money. It's like two totally different conversations where both are true, but they aren't talking to one another.
      - deleted 18y ago
        [deleted]
  - 18y ago
fleaflicker 18y ago
Don't forget that Buffett now has billions of dollars riding on the recovery of American stocks. His motives for releasing this aren't all patriotic, are they?
known 18y ago
Goldman Sachs has negative Operating Cash Flow (-$14.57 billion) http://finance.yahoo.com/q/ks?s=GS http://finance.yahoo.com/q/ks?s=GS And Buffett brought $5 billion worth preferred stock of GS. Is this a rational investment?
comatose_kid 18y ago
This is exactly why I would wait. Words from Buffet will reduce fear in the market. I'd rather invest when fear is at a maximum (eg, next bad quarterly report, or bad economic numbers).
gscott 18y ago
Buffett was heavily invested in the Euro. When the stock market crashed he simply took his Euro's, cashed them in for dollars, and bought US Assets that were down. Most regular US citizens were invested at the top of the market and just can't afford to go buy more.

95 points by kradic 18y ago

haasted 18y ago

Short summary: "Time to talk up the market. I have already placed the money I wanted to place while it was down." :)

ksvs 18y ago
Not merely nasty, but false as well. He says explicitly that he hasn't finished buying.
- jumper 18y ago
  Uh.... How does what he say prove what he will do? If he were being dishonest here, maybe he would be... I dunno, dishonest? I personally have no idea what Buffett's really thinking, but maybe you left some points out of your argument there?
DanielBMarkham 18y ago
It's good to be skeptical when reading commentaries, but it's better, when you're skeptical, to make more of a case than simply a slogan. As I recall, Buffett went heavily into precious metals and bonds over the past few years. Now he's puling that money out and going to the market. Everybody else is buying precious metals because they're scared and selling their stocks. Looks damn smart to me.

DanielBMarkham 18y ago

Be fearful when others are greedy, and be greedy when others are fearful Excellent advice. Buffett walks in great footsteps here. Wasn't it J.P. Getty that came out during the depression and said something like "Buy stocks. We're buying as much as we possibly can." ( I paraphrase from memory here)

breck 18y ago
I could only find "I buy when other people are selling," but he did apparently make a killing during the Great Depression simply by buying stocks. I thought this quote was terrific and really relevant to HN: "Going to work for a large company is like getting on a train. Are you going sixty miles an hour or is the train going sixty miles an hour and you're just sitting still? " There are a bunch of great quotes: http://www.linkrap.com/Getty http://www.linkrap.com/Getty
- DanielBMarkham 18y ago
  Found it. It's from "How to be Rich" which I finished last week (after getting a recommendation from another HN'er -- good book!) (Regarding the May, 1962 Crash) "I told them quite frankly that, while I sympathized wholeheartedly with anyone who had lost money because of market developments, I saw little if any reason for alarm and absoutely none for panic....I said I felt that the stock market was in a much healthier and certainly in a much more realistic position because of the long-needed adjustment in prices. As for what I was doing, the answer was simple. I was buying stocks...Most seasoned investors are doubtless doing much the same thing. They're snapping up the fine stock bargains available as a result of the emotionally inspired selling wave." [page 152] Perhaps there's some difference this time around, but I doubt it. I imagine old J.P. would be saying the same thing today if he were alive.

deleted 18y ago

[deleted]

pmorici 18y ago
Number 1 would almost certainly cause some kind of war.
- sireat 18y ago
  In 1930 Congress passed http://en.wikipedia.org/wiki/Hawley-Smoot http://en.wikipedia.org/wiki/Hawley-Smoot Tarriff Act Did it work? Anyone? Anyone? No, it did not work, and US sled deeper into Great Depression.
  - jimbokun 18y ago
    Up mod for Ben Stein homage.

floozyspeak 18y ago

I bet he's gettin something on the side to basically step into the ring of fear here and fire the flare of "now's the time". I don't think people really dispute that now is the time. The problem is the view point. You basically have to put money in and swear not to look at it again until 2013. Because the day by day view of that investment is heart attack unfolding as the bad news isn't going away, the affects of the 700 billion dollar crisis, job losses, sub prime this, abused and reckless that, and so on is going to be on the fear radar for a bit. You whacked the consumer with $140 oil a few months back saying hard times are ahead, and then you backed it up with current credit crisis, and then you watched wallstreet get bought by the government as everyone in their money proceeded to get to cash as fast as they could. You've told the consumer to stop spending get back to basics and thats happening. Folks in lots of cash, aka Buffet are in hog heaven right now. He can throw a bunch of money in, go back in cryogenic freeze with Elvis and pop back out in 2013 or so and bathe himself in cristal. Day traders hanging out with cash are making by the minute deals only to cash out and get back in on the highs and lows of the game, cautiously as they are, they are doing that. If you have funds to play, play, or throw it in there and rent out buffets cryo chamber, probably a good bet really.

jhancock 18y ago
I mostly agree. You have two choices with buying American stocks now: 1 - play the day trade game and squeeze out margins as the market is wild from day to day 2 - play long, buy great deals and hold for years. The only people that can play option 1 well are serious traders that have tons of time, cash, and really know what they're doing (or just have dumb luck, but applies to anything you might do with money). The only people that can play option 2 well are serious investors that have people that work for them to analyze which are best long term buys and mange them, oh yeah, and also have lots of cash on hand; cash you don't need to use a for a long time. So although I do try to pay attention to when people like Buffet dish out advice, I also understand that few can play at his game.
- jimbokun 18y ago
  Aren't the people who play game number 1 largely responsible for the current financial mess? Maybe not day traders per se, but that sort of mentality of everyone thinking they are in the top few percent of investors and able to beat the market.

prakash 18y ago

A word of caution: Don't invest if you can't sleep soundly at night. Buffet can probably afford to lose a few billions here and there, but you probably can't.

louislouis 18y ago
Invest what you can afford to lose.
jedc 18y ago
Well said. Most people should follow Mark Cuban's recent advice: http://blogmaverick.com/2008/10/15/where-to-put-your-money-right-now/ http://blogmaverick.com/2008/10/15/where-to-put-your-money-r...
jon_dahl 18y ago
Another bit of advice: if you don't need your money for 20 years, you shouldn't lose sleep over short-term drops in the market. And if you are investing for the long run, you can afford to lose 50% of your portfolio today.
dmv 18y ago
From what I recall of the last analysis on this subject, I don't think he has 'a few billion' in his non-Berkshire holdings. The non-Berkshire holdings are basically the money he has accumulated since personally buying Berkshire Hathaway, with his fairly modest salary. He has often described that he could (and does) beat Berkshire's ROI as a small investor, which is why his non-Berkshire holdings are in the millions. His billions, from where his net worth for Fortune are calculated, is the 30+% ownership of Berkshire Hathaway (market cap today, 180B). The rest is almost a rounding error -- except that's where all of his lifestyle expenses come from, beyond his $100K salary and misc. payments, as he doesn't sell (as far as I know) any of his BH and it does not yield a dividend.
- eru 18y ago
  About the dividends (http://www.focusinvestor.com/brkfaq.htm#Q7 http://www.focusinvestor.com/brkfaq.htm#Q7): "We feel noble intentions should be checked periodically against results. We test the wisdom of retaining earnings by assessing whether retention, over time, delivers shareholders at least $1 of market value for each $1 retained. To date, this test has been met. We will continue to apply it on a five-year rolling basis. As our net worth grows, it is more difficult to use retained earnings wisely." Source: Berkshire Hathaway's Owner's Manual Mr. Buffett:: "We will either pay large dividends or none at all if we can't obtain more money through re-investment (of those funds). There is no logic to regularly paying out 10% or 20% of earnings as dividends every year." Charles Munger: "If you went to the leading schools, they wouldn't teach dividend policy this way." Source: My notes from the 2000 Berkshire Hathaway annual meeting

binarray2000 18y ago

I have a huge amount of respect for Buffet and this article has some sound advice. But, I still don't understand if it applies only to stocks or to anything US. This sentence (2nd paragraph) "I've been buying American stocks. This is my personal account I'm talking about [...]" sounds like, I've done my share in helping out by buying equity and [I imply] you see how you do yours with buying whatever US. Correct me if I'm wrong.

known 18y ago

Stock markets oscillate between Facts, Hope and Hype.

jimbokun 18y ago

Warren Buffet is a national treasure.

known 18y ago
I second it.

richcollins 18y ago

Had you followed that advice after the Japanese crash of 1990, you would still be down almost 75%: http://finance.google.com/finance?q=^N225 http://finance.google.com/finance?q=^N225

dmv 18y ago
He did not say 'buy an index fund'. In an average investing environment, the argument for buying the index and not individual stocks is sound. However, buying in this market -- and to take advantage of the blood on the street -- is the individual play. Many companies will not make it, or will not make it without massive restructuring, or with much lower market share. But for a value investor, some companies with real moats and real protection have now been priced (by the overall market) into value.
ksvs 18y ago
He's not saying buy stocks after any crash, just after this one. The Japanese crash was a unique one because a corrupt old boy network of companies holding one another's stock and banks refusing to write off bad debt caused the fall to be artificially prolonged.
- mynameishere 18y ago
  Good point. And in Japan the government responded with massive public spending and rate reductions.
  - asdf333 18y ago
    haha good one.
- richcollins 18y ago
  What do you think is happening now? The banks aren't willing to write off bad debt if they can stay afloat. As a result, they aren't willing to lend to each other. None of the banks wants to make a loan to another bank that will just go under due to their holdings of bad debt. If the banks holding bad debt were allowed to fail, this would all be sorted out much faster.

avdempsey 18y ago

All respect to Buffet in his success and this op-ed's general message. But its simplicity reminds me of George Bush's call to "go shopping" after 9/11. Do you want to overcome fear and build America's future? Then entrepreneurs lets get building. If you don't have the self-esteem to invest in your own efforts (we need them now more than ever) then follow Buffet's advice and buy a slice of the companies that will rebuild America. If you have the chutzpah though, don't "go shopping," "get building."

dejb 18y ago

Buffet is undoubtedly a great investor. But I have a slight feeling that could be doing this more for altruistic reasons rather than personal profit. He might believe that he can inject enough confidence in the system by his reputation then maybe he can help improve things. Not necessarily by enough for his investements to pay off but to avoid a worse fate for the financial system. Remember the guy has committed to giving away most of his fortune already. Anyway it is just a theory, good luck to him either way.

ca98am79 18y ago
Dude - Buffet didn't become the richest person in the WORLD by being altruistic. Think about it.
- aaronblohowiak 18y ago
  [citation needed] - he wasn't a crooked thief. There is a surprising lack of scandal surrounding him (i'm not one to care what consenting adults do in privacy.) He is a substantial philanthropist and value-based investor.
  - SwellJoe 18y ago
    I'm not sure I understand how a lack of badness equals "making investment decisions based on altruism", or how they can be conflated in any way. The way I'm reading the "debate" here is ca98am79 saying, "Buffett has no history of investing for altruistic reasons. He invests to make money, and is the most successful person in the world at doing so." And you're saying, "Stop calling Buffett a crook! He's a value investor and a philanthropist!" He, obviously, didn't call Buffett a crook. He said that Buffett is a successful investor that invests to make money. It's like two totally different conversations where both are true, but they aren't talking to one another.
    - deleted 18y ago
      [deleted]
- 18y ago

fleaflicker 18y ago

Don't forget that Buffett now has billions of dollars riding on the recovery of American stocks. His motives for releasing this aren't all patriotic, are they?

known 18y ago

Goldman Sachs has negative Operating Cash Flow (-$14.57 billion) http://finance.yahoo.com/q/ks?s=GS http://finance.yahoo.com/q/ks?s=GS And Buffett brought $5 billion worth preferred stock of GS. Is this a rational investment?

comatose_kid 18y ago

This is exactly why I would wait. Words from Buffet will reduce fear in the market. I'd rather invest when fear is at a maximum (eg, next bad quarterly report, or bad economic numbers).

gscott 18y ago

Buffett was heavily invested in the Euro. When the stock market crashed he simply took his Euro's, cashed them in for dollars, and bought US Assets that were down. Most regular US citizens were invested at the top of the market and just can't afford to go buy more.