Warren Buffett 01 (May 08 - Jan 10)

[kennynah]

N I really thank Mr. Market for the enlightening classes; though of course I'd rather he compensated me for some of the mental anguish. Kidding !

i am sure, that we were all very well compensated through the lessons and refresher courses during this period....

[millionairemind]

Berkshire Hathaway Profit Falls 77% to $1.06 Billion (Update2)

By Erik Holm and Linda Shen

Nov. 7 (Bloomberg) -- Billionaire Warren Buffett's Berkshire Hathaway Inc. posted a fourth straight profit drop, the longest streak of quarterly declines in at least 13 years, on falling returns at insurance businesses and investment losses.

Third-quarter net income decreased 77 percent to $1.06 billion, or $682 a share, from $4.55 billion, or $2,942, a year earlier, the Omaha, Nebraska-based company said today in a regulatory filing.

``It's not as good as it might have been, but neither was it as bad as it might have been,'' said Frank Betz, a partner at Carret Zane Capital Management, which holds Berkshire shares. Declining investments, catastrophe claims and falling property and casualty rates caused losses at 14 of the 23 companies in the KBW Insurance Index that reported third-quarter results so far.

Buffett, 78, is investing in nuclear power, chewing gum and Wall Street as results slump at Berkshire's insurance units and businesses tied to the U.S. housing market. He has committed at least $28 billion this year to acquire companies, finance buyouts and purchase securities as prices fall and competitors are hobbled by limited access to credit.

Berkshire, which owns National Indemnity Co., General Re Corp. and Geico Corp., said profit from underwriting insurance policies fell 83 percent to $81 million. Its reinsurance group, which sells catastrophe coverage to other insurers, posted a $166 million pretax loss for the quarter. Berkshire typically gets about half its revenue from insurance.

Derivative Losses

Decreases in the value of some holdings and derivatives lowered earnings by $1.01 billion in the period ended Sept. 30, compared with a $1.99 billion gain in the year-earlier quarter when Berkshire booked profits from selling a stake in energy firm PetroChina Inc.

October's declines in debt and equity markets reduced the value of Berkshire's investments and derivative contracts and caused shareholders' equity, a measure of assets minus liabilities, to fall by about $9 billion in the month, the company said in the regulatory filing.

``Berkshire management believes these extraordinary conditions are temporary, and that equity prices will ultimately rise over time,'' the filing said.

Losses from derivatives result in part from accounting rules related to bets Buffett made on four stock indexes, including the Standard & Poor's 500. If the indexes fall below contractually agreed-upon levels at expiration dates beginning in 2019 Berkshire will lose the bets.

Berkshire has collected $4.85 billion on the contracts and can profit from investing the funds, the firm said.

Investment Income

The investment loss ``doesn't look great,'' said Tom Russo, a partner at Gardner Russo & Gardner, which manages holdings including Berkshire shares. ``But shareholders should rejoice that he was able to obtain that capital to invest on such attractive terms for years before the chance comes that he'll have to pay anyone.''

Investment income at Berkshire's insurance units, including stock dividends, fell 12 percent to $809 million.

Profit from selling policies at car insurer Geico Corp. fell 27 percent to $246 million before taxes on claims costs from storms. The unit added about 119,000 new policyholders in the quarter.

U.S. Hurricanes

Hurricanes Ike and Gustav cost insurers a combined $10 billion when they struck the Gulf Coast in September, the most since the record $58.7 billion of claims in 2005 when Katrina struck, according to preliminary data from Insurance Services Office Inc.

Geico competitors including Northbrook, Illinois-based Allstate Corp., the largest publicly traded auto insurer, have said drivers are reporting fewer car crashes as gas prices topped $4 a gallon for regular unleaded in the third quarter. Americans have logged 67.2 billion fewer miles through August than last year, according to the Federal Highway Administration, which hasn't released September or October data.

Geico said today that its policyholders also reported fewer accidents through the first nine months of the year.

Buffett in the past two months agreed to spend $5 billion of Berkshire's cash for a stake in Goldman Sachs Group Inc., betting the Wall Street firm would be among the survivors of a worldwide credit crisis, and another $5 billion in preferred shares of General Electric Co.

Energy, Gum

He also agreed in July to lend $3 billion to Dow Chemical Co. to help fund that firm's takeover of Rohm & Haas Co., and committed $6.5 billion in April to help Mars Inc. buy chewing gum maker Wm. Wrigley Jr. Co. Berkshire's MidAmerican Energy Holdings Co. struck a deal in September to pay $4.7 billion for Constellation Energy Group Inc.

Berkshire shares, which rose in 17 of the last 20 years, are down 20 percent since Dec. 31 as some of the firm's largest stock investments slumped. American Express Co. has plunged 51 percent this year, Coca-Cola Co. dropped 25 percent and Procter & Gamble Co. declined 12 percent. All three were among Berkshire's 10 biggest stock holdings at the end of June.

Berkshire said its stock portfolio was worth $76 billion at the end of September, a 9.4 percent increase over three months. Buffett spent about $5.8 billion on fixed-maturity securities and $3.9 billion on equities in the quarter amid a worldwide credit squeeze and declining stock markets.

The worst housing slump since the Great Depression has hurt Berkshire's building-related companies, including Acme Brick, Benjamin Moore paints and Shaw Industries. Profit at Shaw, the world's largest carpet manufacturer, fell 61 percent to $49 million as sales to residential customers declined.

Furniture, Jewelry

Profit at furniture stores, jewelry shops and the candy business declined 67 percent to $11 million.

Earnings from Berkshire's energy and utilities unit, which includes MidAmerican Energy Holdings Co. and PacifiCorp, dropped 8.5 percent to $324 million as revenue from the U.K. fell amid the strengthening of the U.S. dollar.

Buffett built Berkshire over four decades from a failing textile maker into a $175 billion company by buying out-of-favor stocks and businesses whose management he deemed superior. Berkshire also owns underwear manufacturer Fruit of the Loom, ice cream chain Dairy Queen and NetJets, which sells fractional ownership of private planes.

[millionairemind]

Just looked at berkshire as well as GS stock price this morning.

GS has dropped more than 50% since WB put up a stake in the company. Berkshire A share closed at $95.6K, way below the $147K 2 months ago.

This is the mortal danger of following WB. When he puts up a stake in GS just a few weeks ago, the stock price was around $125, now it is barely half that.

WB can be wrong, lose 50% of his fortune and still fly first class. Not sure about the rest of the small prawns like us though...

Don't follow blindly... the mkt is bigger than anyone of us, including WB.

[winston]

Billionaire Warren Buffett's Berkshire Hathaway Inc revealed Friday that it has nearly quintupled its stake in oil company ConocoPhillips, and disclosed a new stake in hydraulics manufacturer Eaton Corp.

Berkshire disclosed its investments in a U.S. Securities and Exchange Commission filing, in which it reported stock holdings on U.S. exchanges as of Sept. 30.

The company said it owned 83,955,800 shares in Houston-based Conoco, worth $6.15 billion, as of the end of September. That is up from 59.69 million shares as of June 30, and 17.51 million three months earlier.

Buffett had previously kept the June stake confidential. The SEC often lets Buffett, one of the world's richest people and perhaps its most revered investor, delay disclosure of his investing activity so others cannot copy him.

– Reuters

[millionairemind]

Buffett Picks Beat Banks Index as He Dodged Subprime (Update1)
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By Ari Levy

Nov. 26 (Bloomberg) -- Billionaire Warren Buffett’s decision to increase his stake in financial companies led by Wells Fargo & Co. and U.S. Bancorp and avoid subprime lenders is paying off for Berkshire Hathaway Inc.

Berkshire’s bank-related investments rose 36 percent in the third quarter, while the 84-member Standard & Poor’s 500 Financials Index declined 0.2 percent. Berkshire, based in Omaha, Nebraska, ranked as the biggest shareholder of Wells Fargo and U.S. Bancorp at the end of September, according to data compiled by Bloomberg.

“In one word, I can sum it up: patience,” said William Frels, chief executive officer of Mairs & Power Inc. in St. Paul, Minnesota, which owns shares of Wells Fargo and U.S. Bancorp and has Berkshire stock in some client accounts. “Warren has the luxury of being able to exercise patience, where most of the other players are under the gun to make things happen and can’t sit around and wait for opportunities.”

A weighted basket of Berkshire’s financial stocks rose at an average quarterly rate of 2.3 percent during the past year through September, Bloomberg data show. The S&P financials dropped by an average 11.4 percent per quarter in the same stretch. The index slumped 60 percent this year as new home sales fell to the lowest in 17 years.

As chairman and chief executive officer of Berkshire, the 78-year-old Buffett makes most of the company’s investing decisions. Buffett, whom Forbes magazine calls the country’s wealthiest man, declined to comment for this story. Berkshire has gained at an average annual rate of 21 percent over the past two decades, exceeding the 12 percent advance of the S&P 500 Index.

Bank of America

Berkshire’s financial investments have dropped 32 percent since Sept. 30, excluding a $5 billion investment in Goldman Sachs Group Inc., reducing Buffett’s profits. The S&P financials index fell 41 percent in the period.

Berkshire’s third-quarter holdings, released this month, show the company trimmed its stake in San Francisco-based Wells Fargo by a tenth of one percent since June to 290.4 million shares, valuing the investment at $7.8 billion as of yesterday. Berkshire increased its holdings of Minneapolis-based U.S. Bancorp by 6.3 percent to 72.9 million shares. Berkshire kept its stake in New York-based American Express Co. at 151.6 million shares, remaining the credit-card company’s biggest investor.

The only financial company Berkshire moved away from in the third quarter was Charlotte, North Carolina-based Bank of America Corp., cutting its stake to 5 million shares from 9.1 million. Bank of America did what Buffett refused to do -- buy Countrywide Financial Corp., the subprime lender plagued by tumbling home prices and record foreclosures.

Goldman Sachs Investment

Buffett said in October 2007 that he “never came close” to acquiring Countrywide shares. He also has denied reports he considered buying part of Bear Stearns Cos., the New York-based securities firm later bailed out by JPMorgan Chase & Co.

“The fact that he was smart enough to take a pass on so many deals that have gone sour indicates that he correctly saw that things were going to get worse,” said Whitney Tilson, managing director of New York-based hedge fund T2 Partners LLC, which has been adding to its Berkshire holdings.

The Goldman Sachs investment has yet to bear fruit. Berkshire agreed to buy $5 billion of the New York-based company’s perpetual preferred shares on Sept. 23 and received warrants for another $5 billion at $115 a share. The stock has since tumbled about 40 percent to $71.78. Still, Buffett will get a 10 percent annual dividend on the preferred securities.

Stock Plunges
Berkshire Class A shares dropped by 32 percent this year, and 12 percent in October, the worst month since 2000, as the company’s profit fell for four straight quarters. Berkshire gained $2,050 to $98,450 at 11:24 a.m. in New York Stock Exchange composite trading. The company’s other financial investments are M&T Bank Corp., SunTrust Banks Inc., Torchmark Corp. and Wesco Financial Corp.

Buffett wrote in a New York Times column that he’s buying U.S. stocks and may shift his personal investments into equities.

“He’s right,” said Frels, 69, who entered the investing business in 1962. “With the decline, U.S. stock prices appear quite reasonable.”

[winston]

Take Your Cue From the World's Best Investor by Alexander Green

Not long ago I excerpted a recent New York Times column by Warren Buffett explaining his take on the recent market sell-off.

Despite the dour economic outlook, Buffett expects U.S. companies to report record profits within five years. He is getting fully invested in stocks in his own personal account.

Since Buffett's column originally ran on October 14th, however, the S&P 500 has dropped 13%.

Hardly a day goes by that I don't get emails telling me that Buffett "blew it." He was "too early." Or he "failed to call the bottom."

I beg to differ. For the record, here is part of Buffett's column that I excerpted:

"Let me be clear on one point: I can't predict the short-term movements of the stock market. I haven't the faintest idea as to whether stocks will be higher or lower a month - or a year - from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up."

Let's assume for a moment that Buffett is right and five years from now U.S. companies are reporting record profits.

Since we know that share prices follow earnings, the market will likely have met or exceeded its old record high. (The Dow crossed 14,000 in early October 2007.) Investors who bought good quality stocks at current levels will be in excellent shape. So will those who merely reinvested their dividends.

To clarify, let's try a thought experiment: Today is December 8, 2013. The Dow is at 14,000. Looking back, you can now choose any one of these three options - and magically reinvent history.

Over the past six years:

1. The Dow soared from 14,000 to 18,000 and has now declined to 14,000.

2. The Dow treaded water and rarely traded much higher or lower than 14,000.

3. The Dow sank to less than 8,000 and has since climbed back to 14,000.

With the luxury of hindsight, which scenario would you prefer?

If you're in the wealth accumulation phase, clearly the best answer is #3. It may have been scary, but this was the only scenario that offered you the maximum opportunity to buy low.

That's why, unlike the average investor who is sitting on his hands (except to bite his nails occasionally), Buffett is actively buying stocks.

Some will counter that this is likely to be a steep recession and stocks may go substantially lower.

Buffett surely know this - and clearly reasons that this only makes option #3 more attractive.

History shows that most so-called market timers will either never move or move far too late. They're comfortable in cash because they believe - quite rightly in my view - that the economy will only get worse.

But think hard - and read your history - before you opt out of the market entirely. Yes, the Dow sometimes falls during a recession. But, perversely, other times it soars.

For example, in the 13-month recession in 1926-27, the market went up 41.1%. In the 8-month recession in 1945, it went up 19.5%. In the 11-month recession in 1948-49, it went up 15.2%. In the 10-month recession in 1953-54, it went up 24.2%. In the 10-month recession of 1960-61, it went up 20.3%. In the 16-month recession in 1981-82, it went up 14.6%. And so on.

In my view, investors who are cursing this market are either spending far too much time listening to the &"end-of-the-worlders" or stuck looking back, not forward.

If Buffett is right - and he has a long history of being just that - these investors are moaning at opportunity's door right now.

If you want to meet your five- and 10-year investment goals, imagine yourself five and 10 years from now. Ask yourself what you will wish then that you were doing with your money today.

Then govern yourself accordingly.

[winston]

"I always knew I was going to be rich. I don't think I ever doubted it for a minute."

- Warren Buffett

[kennynah]

people actually believe in WB ? hahaha...he will go down in history as a formidable investor..i have no doubt...i respect this fella...but i think his methods....outmoded...

[millionairemind]

I am sure he will bounce back nicely next year. He always does


Warren Buffett's Berkshire Hathaway suffers worst performance in 30 years with 32pc fall

Billionaire investor Warren Buffett's Berkshire Hathaway slumped 32pc last year, the worst performance in more than three decades, as the U.S. recession forced down the value of the firm's equity holdings and derivative bets.

Most of the decline in shares happened in the last three months as Berkshire posted a fourth straight profit drop amid sagging insurance results.

However, the company still beat the 38pc tumble of the Standard & Poor's 500 Index, the 14th year in 20 that Buffett outperformed the benchmark.

Just six of 1,591 US stock mutual funds with at least $250m (£174m) in assets made money for investors last year, according to data compiled by Bloomberg.

"In 2008, there was nowhere to hide," said Guy Spier, chief investment officer at Aquamarine Capital Management, which holds shares in the Omaha, Nebraska-based company.

"Berkshire can't escape the general fate of American businesses. What Buffett tries to do is ensure that Berkshire Hathaway does less badly than other companies."

Mr Buffett, 78, poured money into stocks as prices fell and increased Berkshire's pace of deals as the contraction in credit markets hobbled buyout firms.

He spent about $3.9bn on equities in the third quarter, making Berkshire the biggest shareholder in ConocoPhillips, the second-largest US refiner. Berkshire announced 12 acquisitions in 2008, compared with eight in 2007, and also agreed to buy $8 billion in preferred shares from Goldman Sachs Group Inc. and General Electric Co.

"Buffett has the opportunity to do what he does best, which is acquire new companies at prices that have him licking his lips," said Frank Betz, a partner at Warren, New Jersey-based Carret Zane Capital Management, which holds Berkshire shares.

"I don't think Mr. Buffett is bummed out at all." Jackie Wilson, a spokeswoman for Berkshire, "Didn't return a call seeking comment."

Most of the top holdings in Berkshire's stock portfolio, valued at $76bn as of September 30, declined at least 15pc in the past three months of 2008. ConocoPhillips plunged 29pc in the fourth quarter. Coca-Cola Co., Berkshire's top holding, dropped 14pc, and No. 2 Wells Fargo & Co. plummeted 21pc.

Declines in the value of derivatives also pressured Berkshire shares. Buyers of the contracts would be entitled to billions of dollars from Berkshire if four stock indexes drop below agreed-upon levels on dates beginning in 2019. Mr Buffett said the liability on the contracts was $6.73bn at the end of the third quarter. Berkshire has collected $4.85bn on the contracts and can profit from investing the funds, the firm said.

All four indexes, including the Standard & Poor's 500, would have to fall to zero for Berkshire to be liable for the entire $35.5bn that's at risk, Mr Buffett said in November.
Acknowledging investor concern, Mr Buffett has said he' d provide more information on how he calculates losses on the contracts.

Mr Buffett built Berkshire over four decades from a failing textile maker into a $150bn company by buying out-of-favor stocks and businesses whose management he deemed superior.

[Cheng]

people actually believe in WB ? hahaha...he will go down in history as a formidable investor..i have no doubt...i respect this fella...but i think his methods....outmoded...

Time will be our witness. I learnt a lot from him.