Comments on: THE MANY MYTHS OF WARREN BUFFETT

By: will

will — Mon, 01 Mar 2010 20:02:30 +0000

Buffett has Aspergers, once you realize this it all becomes much clearer.

He’s a tricky one…

By: percolator

percolator — Sat, 27 Feb 2010 03:14:33 +0000

So, you support Fascism or as Benito Mussolini called Corporatism, the merger of state and corporate power, because that’s exactly what the taxpayer bailouts were all about.

http://www.publiceye.org/fascist/corporatism.html

By: Stephen Jeske

Stephen Jeske — Sat, 27 Feb 2010 02:34:05 +0000

Good article. First time I’ve read about Buffet from this perspective. And I always thought I was alone in my opinion.

The real key to the success of Berkshire Hathaway is the insurance business. Think about a hedge fund being able to borrow virtually as much money as it wants, at excellent rates, and invest it. That’s Berskshire.

The insurance business is used as a form of leverage. And massive leverage at that. Think of the insurance “float” as borrowed money. All the premiums taken will have to be paid back at some point in time. In a good year, if they make a profit in their underwriting, they in effect get paid to borrow money. In a bad year, they have to pay to borrow money (just like the rest of us). If they break even, then it costs nothing to borrow the money.

With massive leverage like that, you don’t have to earn a lot on the investments, to make a lot of profit. Specially when you don’t pay much in interest!

By: Andrew Peel

Andrew Peel — Sat, 27 Feb 2010 02:30:55 +0000

Really great read. Warren Buffet has always been a bit of a mystery to me I found this helped me understand the man a lot better.

By: Bobby Casey

Bobby Casey — Fri, 26 Feb 2010 14:36:44 +0000

Of course Buffett invests different than the average investor, but to consider his original partnership analogous to a hedge funds seems a bit of a stretch. Buffett’s partnership only charge a fee if the fund returned over 6%, and then 25% of the gain above 6%. A hedge fund typically has the 2 and 20 rule, or 2% of assets 20% of the gain (total gain). Hedge fund managers get paid whether there is gain or not with the 2% of assets, then they get 20% of 100% of the gain. Buffett’s partnership only rewarded the manager (himself) once he delivered a better than 6% return. This is a much more equitable scenario and keeps the manager ‘in the game’ and not just a buyer of assets.

The opposite side of the story is, Buffett is now limited to his buys. When he deploys capital, it is at a much larger rate than the small investor and therefore he moves markets. When he bought BNI, he had to bid nearly 50% above their current market price because he wanted to buy them out and deploy a huge amount of capital. But the little guy could have bought BNI at $65/share. His investment options are limited in this way. Of course he also has other options not available to the average guy like those GS preferreds.

By: Sankalp

Sankalp — Fri, 26 Feb 2010 04:49:45 +0000

A good read. Explores the depths of Buffett’s accumulated wealth. Though I’m pretty sure that I have read somewhere before the personal hand of Buffett in all the bank bailouts. And I for one see nothing wrong with that. It is true that no one becomes a billionaire by buying and holding his position. Buffett is a master tactician and for that he’ll always have my respect. However I’d like to point out some fallacies in people’s arguments here:

1. “Buffett made money by raping the tax-payer”.-> This is without a doubt a ridiculous claim. Yes the tax-payers bailed out the banks. But I hope you people realize that the money given is not charity. It is just a temporary loan which the banks and other organizations are supposed to return with interest. Many of them have already done so.

2. Also what his fund charges over profits is entirely his prerogative. Calling it a “robbery” is completely unjustified in my opinion.

By: Ron

Ron — Fri, 26 Feb 2010 01:47:08 +0000

I am a novice, or worse, so I really can’t proclaim any special knowledge about investing generally. Basically, I am soliciting the opinions of those who read this column.

Having read books, such as “Den of Thieves,” “Born to Steal”, etc., I can’t escape the opinion that the market isn’t an honest broker, that there are far too many people between an investor and his money, and the opportunity to steal from that investor occurs regularly, and it is acted upon by men such as Michael Milkin, Ivan Boesky and Dennis Levine.

Am I wrong?

By: Ron

Ron — Fri, 26 Feb 2010 01:37:24 +0000

Interesting comment. I never fully understood the extent to which institutional investors could force the market in directions agreeable with their own interests.

I have tried to inform myself about such things, but the subject is not easily penetrated, and I am not aware of anyone in the financial industry who actually has any interest in informing us little guys.

By: JH

JH — Fri, 26 Feb 2010 00:24:50 +0000

Stansberry and Associates are the frauds. Google their name, see what you find.

That or just do the math yourself. 4% compounded annually over 60 years gets you about a 951% return. That’s only enough to make yourself a billionaire if you started with $100 million dollars (even taking into account the effects of inflation)

Way to be lazy.

By: LocalHero

LocalHero — Thu, 25 Feb 2010 23:26:59 +0000

This article is far too kind. Awhile ago, Stansberry & Associates did some number crunching & found that, if Buffet had just put his money in a plain old savings account (@4% interest), he’d be worth exactly the same as he is today without putting one dime into all of the fancy shell-games. So much for his investment acumen. He’s just another friggin’ fraud.