4 ms·

I have lost a lot of respect for Buffett over the past few months or so. When he invested in Sachs, then, essentially, lobbied congress for the bailout to boos

by pj 18y ago

I have lost a lot of respect for Buffett over the past few months or so. When he invested in Sachs, then, essentially, lobbied congress for the bailout to boost up his investment: http://dealbook.blogs.nytimes.com/2008/09/24/buffett-calls-bailout-bill-the-right-thing/ http://dealbook.blogs.nytimes.com/2008/09/24/buffett-calls-b... And then this article where he complains about how that very bailout is hurting one of his businesses?? It sounds very hypocritical to me and very selfish in a time when the economy is crumbling due to these /exact/ same kinds of selfish decisions on the part of financial warlocks -- not wizards -- warlocks. Don't tell congress the bailout is the right thing, then complain that it hurts "good" businesses. If he believes what he said, he shouldn't have bought sachs and he shouldn't have been saying it's the right thing to do. I guess that's the point. Buffett's word has lost value. What does he believe? Who is he trying to help? he bought oil at the top. His stock is at 2003 levels, half what it was at it's peak. BRK.A is worth less today than it was in 1998. Look, I used to love Buffett. Read the Warren Buffett way, read this old yellow book he wrote in the 70's about value investing. Studied him. Modeled him. And now... now I don't even know what he believes. His behavior of late is uncharacteristic of him and I'm disappointed in the legend.

ryanwaggoner 18y ago
1. It's not inconceivable for him to simultaneously think that a) Sachs was a good investment, b) the bailout is the right thing overall, but c) it introduces some issues that cause suboptimal performance elsewhere in his portfolio. 2. I don't see this little snippet as him complaining so much as explaining the moral hazard that the bailout has introduced. 3. Buffet operates on a very long time scale, so I'm not sure it's useful to say that "lately" his behavior has been uncharacteristic. Let's review in a decade or two. 4. You sound like you're having a crisis of faith. It's going to be ok :)
- pj 18y ago
  You are right on all your points, I don't disagree. That's exactly what it is, A crisis of faith. I don't know ... I had hope in Obama, not faith, but hope and he's disappointing me. What change is he bringing? He's exacerbating problems, not fixing them. There's no one to trust anymore. I didn't trust them before and for good reason, look what they did. I still trusted Buffett though, but now I'm losing that... It just seems like the rational decisions are getting squashed. It's like all these decisions are anti-evolutionary. We want the bad ideas to die. We want good ideas to thrive. We just continue to believe and spout lies around and eat it like porridge. It's gross. It makes me feel dirty. It's wrong. It's disgusting really. I'm ashamed at what this country that I love has done to the world. Ashamed. Look, I love America. I love this place. Every single one of us won the lottery being born here. We didn't choose to be born here anymore than a poverty stricken child chose to be born into that. The problem is that we won this lottery and now we've squandered it all away on fat cars, fat houses, fat bodies... We've lied to the world and ourselves for greed. For more imaginary money. Stealing. We should be punished. We should feel the pain of our wrongs so that we don't do it again. Instead, here's some ice cream and a nice corporate jet, courtesy of hard working tax payers. A crisis of faith... I guess you could call it that yeah...
  - rokhayakebe 18y ago
    PJ, Obama has been in office only 30 some days. Would you expect the new Yahoo CEO to reinvent the company in 30 days? Could you build a solid enterprise level application in 30 days? Could you double your current monthly revenue in 30 days? No. No and No. Then how in the world can one person change the lives of 300M people (or maybe 6 billion) over 30 days? Seriously what do you expect? Be patient and work on your startup and try to create jobs from it. The money you will generate will allow your employees to purchase more goods, allowing some local business to sustain, allowing those business owners to pay their employees, allowing those employees to pay for their education and so on....
    - newt0311 18y ago
      But thats the problem. Obama has already changed the lives of the 300M people in this country or at least helped in the process. The stimulus bill that he helped pass has permanently expanded the US federal government. His budget will go even farther in that direction.
      - pj 18y ago
        Exactly.
        ryanwaggoner 18y ago
        With all due respect, what did you really expect from him? He ran on a platform of supporting the bailout and expanding the role and scope of the federal government.
        pj 18y ago
        I don't remember anything in his platform about supporting a bailout. I don't even remember it being an issue during the campaign and nothing about a bailout is mentioned here: http://www.bostonherald.com/news/national/politics/2008/bios/view.bg?articleid=1063110 http://www.bostonherald.com/news/national/politics/2008/bios... So, what did I expect from him? Change. What has he delivered? More of the status quo, big spending, bad decisions, and an extreme lack of long range vision. Instead, he's solving acute problems by putting the younger generation in even more debt. He has blown the budget deficit from $500B to over a trillion. That's not change, that more of the same.
Xichekolas 18y ago
> And then this article where he complains about how that very bailout is hurting one of his businesses?? As someone has already pointed out, if you read the paragraph in the context of the letter, he wasn't so much 'complaining' as he was 'explaining a bad result for Clayton Homes'. And he is right, it's hard to compete with the government when it comes to borrowing costs. He is also right that it'll be hard to wean companies off this support. He states very clearly, however, that he still thinks the bailouts were both necessarily and the best course of action. > Who is he trying to help? Himself of course. Part of Buffett's appeal is that he usually doesn't do it by playing dirty. > BRK.A is worth less today than it was in 1998. No, it's priced today at what it was priced in 1998. Per share book value (value off assets per share) is still 89% higher than it was in 1998. In fact, price-to-book-value is less than 1 at the moment, meaning every dollar you pay for a share actually gets you slightly more than a dollar in assets.
byrneseyeview 18y ago
Look, I used to love Buffett. Read the Warren Buffett way, read this old yellow book he wrote in the 70's about value investing. Studied him. Modeled him. What 'old yellow book' is that? As far as I know, Buffett hasn't written a book. You might be thinking of The Intelligent Investor; he's written the introduction for an edition of that one. Regarding your larger point: I don't think anyone claims that the entire recession was due to the fact that loans were made or homes were bought. The recession was due to the prices at which these activities took place. It's not hypocritical to say that, for example, GE was overpriced at $30, but it's cheap at $10. And I would take issue with the idea that the current crisis is due to anything 'selfish'. It's centered on a highly subsidized market, which was designed to give people homes, not make the government rich. The fact that this well-meaning behavior backfired so dramatically is only obvious in hindsight, or to anybody who reads much history at all.
- j2d2 18y ago
  And I would take issue with the idea that the current crisis is due to anything 'selfish'. Sounds like the claim of someone working in finance. If you're referring to CRA then just follow the money and you will see CRA accounted for little over a third of all subprime loans. AND, anyone in finance should know it wasn't just the subprime deals that went down. The entire mortgage market went down. CRA being the culprit is a long-shot at best, but please elaborate if I've got you wrong. With regard to the well-meaning behavior, well, it wasn't just well-meaning behavior just like it wasn't just CRA. There was plenty of selfishness. People on the street couldn't get enough paper for packaging securities. The money on the commission for selling this was huge. You're crazy if you think anyone on the street will turn down an easy way to make money.
- pj 18y ago
  You're right, I apologize. It wasn't written by him. It's called "Value Investing Made Easy" and is /about/ him, but not written by him. can't see when it was written. I checked it out from the library years ago and it was totally worn out, so my impression may not match the copyright. here's a link: http://www.amazon.com/Value-Investing-Made-Easy-Investment/dp/0070388644/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1236093633&sr=8-1 http://www.amazon.com/Value-Investing-Made-Easy-Investment/d... Google Book: http://books.google.com/books?id=pIbGHfeURUEC&printsec=frontcover&dq=value+investing+made+easy#PPR13,M1 http://books.google.com/books?id=pIbGHfeURUEC&printsec=f... I would disagree with your comments though. I would say this crisis is about overvaluing assets, irrational exuberance fueled by greed, and improper lending practices by individuals and businesses that can easily pass the buck to someone in another country.

by pj 18y ago

ryanwaggoner 18y ago

1. It's not inconceivable for him to simultaneously think that a) Sachs was a good investment, b) the bailout is the right thing overall, but c) it introduces some issues that cause suboptimal performance elsewhere in his portfolio. 2. I don't see this little snippet as him complaining so much as explaining the moral hazard that the bailout has introduced. 3. Buffet operates on a very long time scale, so I'm not sure it's useful to say that "lately" his behavior has been uncharacteristic. Let's review in a decade or two. 4. You sound like you're having a crisis of faith. It's going to be ok :)

pj 18y ago
You are right on all your points, I don't disagree. That's exactly what it is, A crisis of faith. I don't know ... I had hope in Obama, not faith, but hope and he's disappointing me. What change is he bringing? He's exacerbating problems, not fixing them. There's no one to trust anymore. I didn't trust them before and for good reason, look what they did. I still trusted Buffett though, but now I'm losing that... It just seems like the rational decisions are getting squashed. It's like all these decisions are anti-evolutionary. We want the bad ideas to die. We want good ideas to thrive. We just continue to believe and spout lies around and eat it like porridge. It's gross. It makes me feel dirty. It's wrong. It's disgusting really. I'm ashamed at what this country that I love has done to the world. Ashamed. Look, I love America. I love this place. Every single one of us won the lottery being born here. We didn't choose to be born here anymore than a poverty stricken child chose to be born into that. The problem is that we won this lottery and now we've squandered it all away on fat cars, fat houses, fat bodies... We've lied to the world and ourselves for greed. For more imaginary money. Stealing. We should be punished. We should feel the pain of our wrongs so that we don't do it again. Instead, here's some ice cream and a nice corporate jet, courtesy of hard working tax payers. A crisis of faith... I guess you could call it that yeah...
- rokhayakebe 18y ago
  PJ, Obama has been in office only 30 some days. Would you expect the new Yahoo CEO to reinvent the company in 30 days? Could you build a solid enterprise level application in 30 days? Could you double your current monthly revenue in 30 days? No. No and No. Then how in the world can one person change the lives of 300M people (or maybe 6 billion) over 30 days? Seriously what do you expect? Be patient and work on your startup and try to create jobs from it. The money you will generate will allow your employees to purchase more goods, allowing some local business to sustain, allowing those business owners to pay their employees, allowing those employees to pay for their education and so on....
  - newt0311 18y ago
    But thats the problem. Obama has already changed the lives of the 300M people in this country or at least helped in the process. The stimulus bill that he helped pass has permanently expanded the US federal government. His budget will go even farther in that direction.
    - pj 18y ago
      Exactly.
      - ryanwaggoner 18y ago
        With all due respect, what did you really expect from him? He ran on a platform of supporting the bailout and expanding the role and scope of the federal government.
        pj 18y ago
        I don't remember anything in his platform about supporting a bailout. I don't even remember it being an issue during the campaign and nothing about a bailout is mentioned here: http://www.bostonherald.com/news/national/politics/2008/bios/view.bg?articleid=1063110 http://www.bostonherald.com/news/national/politics/2008/bios... So, what did I expect from him? Change. What has he delivered? More of the status quo, big spending, bad decisions, and an extreme lack of long range vision. Instead, he's solving acute problems by putting the younger generation in even more debt. He has blown the budget deficit from $500B to over a trillion. That's not change, that more of the same.

Xichekolas 18y ago

> And then this article where he complains about how that very bailout is hurting one of his businesses?? As someone has already pointed out, if you read the paragraph in the context of the letter, he wasn't so much 'complaining' as he was 'explaining a bad result for Clayton Homes'. And he is right, it's hard to compete with the government when it comes to borrowing costs. He is also right that it'll be hard to wean companies off this support. He states very clearly, however, that he still thinks the bailouts were both necessarily and the best course of action. > Who is he trying to help? Himself of course. Part of Buffett's appeal is that he usually doesn't do it by playing dirty. > BRK.A is worth less today than it was in 1998. No, it's priced today at what it was priced in 1998. Per share book value (value off assets per share) is still 89% higher than it was in 1998. In fact, price-to-book-value is less than 1 at the moment, meaning every dollar you pay for a share actually gets you slightly more than a dollar in assets.

byrneseyeview 18y ago

Look, I used to love Buffett. Read the Warren Buffett way, read this old yellow book he wrote in the 70's about value investing. Studied him. Modeled him. What 'old yellow book' is that? As far as I know, Buffett hasn't written a book. You might be thinking of The Intelligent Investor; he's written the introduction for an edition of that one. Regarding your larger point: I don't think anyone claims that the entire recession was due to the fact that loans were made or homes were bought. The recession was due to the prices at which these activities took place. It's not hypocritical to say that, for example, GE was overpriced at $30, but it's cheap at $10. And I would take issue with the idea that the current crisis is due to anything 'selfish'. It's centered on a highly subsidized market, which was designed to give people homes, not make the government rich. The fact that this well-meaning behavior backfired so dramatically is only obvious in hindsight, or to anybody who reads much history at all.

j2d2 18y ago
And I would take issue with the idea that the current crisis is due to anything 'selfish'. Sounds like the claim of someone working in finance. If you're referring to CRA then just follow the money and you will see CRA accounted for little over a third of all subprime loans. AND, anyone in finance should know it wasn't just the subprime deals that went down. The entire mortgage market went down. CRA being the culprit is a long-shot at best, but please elaborate if I've got you wrong. With regard to the well-meaning behavior, well, it wasn't just well-meaning behavior just like it wasn't just CRA. There was plenty of selfishness. People on the street couldn't get enough paper for packaging securities. The money on the commission for selling this was huge. You're crazy if you think anyone on the street will turn down an easy way to make money.
pj 18y ago
You're right, I apologize. It wasn't written by him. It's called "Value Investing Made Easy" and is /about/ him, but not written by him. can't see when it was written. I checked it out from the library years ago and it was totally worn out, so my impression may not match the copyright. here's a link: http://www.amazon.com/Value-Investing-Made-Easy-Investment/dp/0070388644/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1236093633&sr=8-1 http://www.amazon.com/Value-Investing-Made-Easy-Investment/d... Google Book: http://books.google.com/books?id=pIbGHfeURUEC&printsec=frontcover&dq=value+investing+made+easy#PPR13,M1 http://books.google.com/books?id=pIbGHfeURUEC&printsec=f... I would disagree with your comments though. I would say this crisis is about overvaluing assets, irrational exuberance fueled by greed, and improper lending practices by individuals and businesses that can easily pass the buck to someone in another country.