> Warren Buffett Blog: October 2013

Thursday, October 31, 2013

Chelsea Clinton and Warren Buffet

Warren Buffet on Chelsea Clinton: "Very, very, very smart cookie. She's got a bit of mom and dad. I was very impressed with her. People say the first female president may be a Clinton, I think we've got the wrong one. I think it may be Chelsea."


Tuesday, October 29, 2013

Warren Buffett on Obamacare, cellphone

Warren Buffett is one of the richest men in the worldDuring an interview he offered opinions on Obamacare and the government shutdown. He also gave a peek at what is in his wallet: a wad of $100 bills. No smartphone for Sage of Omaha; he uses an old flip cell phone

On Obamacare and Kathleen SebeliusBuffett has in the past supported President Barack Obama. And it seems that this support extends to embattled U.S. Secretary of Health and Human Services Kathleen Sebelius. Buffett says give Sebelius some time to fix the Obamacare mess she is overseeing. "I am a friend of Kathleen's. And I'm a friend of her when she's in trouble. I like Kathleen. I feel sorry for her in the position she's in. Obviously, it's a huge screw up but it will get worked out, " Warren Buffet told Piers Morgan.

Warren Buffett: Top 3 investing mistakes to avoid

Warren Buffett says doing reasonably well in the stock market is 'very easy' if you can 'avoid beating yourself.' Here are 3 mistakes he says stock investors must avoid.

"The nice thing about investing in stocks is that, over time, equities are going to do well," Buffett tells USA TODAY. "American business is going to do well. America is going to do well. So you have the tide with you."

Building wealth in stocks is still the way to go, even though the ride can get bumpy from time to time, Buffett, 83, says.

But to really profit from stocks and build wealth over time, says Buffett, individual investors must avoid making costly mistakes that shrink their portfolio balances, just as a football team that wants to boost their odds of winning must avoid fumbling the ball away, throwing an interception or taking a penalty at a bad time.

"Don't beat yourself," the Oracle of Omaha says. "Beating yourself is half the problem."

USA TODAY asked Buffett to put on his personal finance hat and to tick off the three biggest mistakes amateur investors make. Here's Buffett's "Top 3 Mistakes to Avoid":

1. Trying to time the market. "People that think they can predict the short-term movement of the stock market — or listen to other people who talk about (timing the market) — they are making a big mistake," says Buffett.

2. Trying to mimic high-frequency traders. Buying stock in a good business and hanging on for the long term, he says, is a better strategy than flipping stocks like a short-order cook flips pancakes.

"If they are trading actively, they are making a big mistake," Buffett says.

3. Paying too much in fees and expenses. There's no reason to pay an expensive management fee to invest in a mutual fund when super-low-cost index funds that mimic large indexes like the Standard & Poor's 500-stock index are available, he says.

"If they are incurring large expenses in connection with their investing," says Buffett, "they are making a big mistake."

Buffett, of course, is famous for buying stocks when they are cheap, buying solid businesses that make a lot of money today and will make a lot of money tomorrow, and hanging on to his investments for a long time to better maximize profit potential.

TOP PICKS: Warren Buffett's 10 favorite stocks

The strategy works. You don't become the richest person in America during your career with a lousy investment game plan. (Buffett, with a net worth of $58.5 billion, is currently ranked No. 2 behind Microsoft founder Bill Gates, who's worth $72 billion, according to Forbes magazine.)

"Doing reasonably well investing in stocks," Buffett says, "is very, very easy."

Here's how he says investors should play the investing game:

"Buy an index fund, preferably over time, so you end up owing good businesses at a reasonable average price," says Buffett. "And that is all you have to do."

That's it? It's that simple? Buffett says yes.

"You don't need to look at the prices of the stocks you own from week-to-week, or month-to-month, or even year-to-year," says Buffett. "If you own a cross-section of American businesses, and you don't get excited (and buy) just at the very top, and if you buy in over time, you are going to do well."

Tuesday, October 15, 2013

Warren Buffett Says No Deal on Debt Ceiling Like a Nuclear Bomb

Another 160 points down on the Dow Industrials and another meaningless press conference from President Obama promising to never pay  a “ransom” to the Republican Tea Party. The sense of  the brinksmanship suggest to me that we are wandering in a no-man’s land. You don’t hear anyone in Congress or the White House echoing Warren Buffett’s warning of a “nuclear bomb.”

I thought the whole showdown was the  Republican anathema of the Affordable Care Act, better known as ObamaCare. But the President  never mentioned the health bill today, and to me, appeared ready to accept default on the debt rather than agree to any change whatsoever in his prime domestic achievement, which even leading Democrats feel is faulty and requires some overhaul. And by the way, there is not enough time to negotiate changes in ObamaCare or or the costly entitlements before the deadline, either Oct 17 or November 1.

The only reasonably pragmatic item on the President’s laundry list today was a verbal promise to sit down and negotiate once the debt limit is raised, even if only for a limited period. I’d like to know why he didn’t press for this weeks ago. Both the White House and Congress are playing Russian Roulette with the American economy and the financial markets. You can tell Obama will never go down in history as The Great Compromiser as he insists that he has already reduced the trillion dollar budget deficit in half, glory be.

Monday, October 14, 2013

Who Else Could Have Made Warren Buffet-Style Money in the Crisis? - Wall Street Journal (blog)

The answer is anybody, according to Warren Buffet.

“The time to buy is when there’s blood in the streets,” Baron Rothschild is often credited with saying. Turns out that is easier said than done, given that metaphorical (or sometimes literal) blood often comes when most people are short on money to invest.

But for those with money to spend, a good crisis can be a beautiful thing, and few can claim to have had a better crisis than Warren Buffett. As the WSJ’s Anupreeta Das reports today, he made a series of huge bets after the financial crisis kicked in:

Starting with Mars in April of 2008, when credit markets began to tighten in advance of the financial crisis, some big-name companies looked to Mr. Buffett—and Berkshire’s huge war chest—as a lender of last resort.

In addition to much-needed capital, the companies acquired something equally valuable: Mr. Buffett’s implicit endorsement of their long-term prospects. Shares of these companies generally went up after they revealed Berkshire’s involvement.

In six major deals, Berkshire invested a total of about $26 billion. Mr. Buffett used Berkshire’s gigantic cash hoard to move swiftly and exact lucrative terms that created a stream of payments from the borrowers.

Of that $26 billion, he’s now pulled back nearly 40% of it in pretax income from the investments:

And while few of us were in the position to loan Goldman Sachs a quick $5 billion, any of us could have made similar returns from a much more accessible gamble:

“In terms of simple profitability, an average investor could have done just as well investing in the stock market if they bought during the panic period,” Mr. Buffett said in an interview Saturday. He was referring to a monthslong stretch beginning in the fall of 2008 when the stocks of some of his favorite companies, including Wells Fargo and American Express fell to historic lows. “You make your best buys when people are overwhelmingly fearful.”


Sunday, October 13, 2013

Buffett speaks out against DC

History will judge the Troubled Asset Relief Program more positively than people do now, Warren Buffett said on CNBC Thursday—five years to the day since the financial bailout program was signed into law, and in the midst of the first government shutdown in 17 years.

Appearing alongside former Treasury Secretary Hank Paulson on CNBC's "Squawk Box," Buffett first addressed TARP—saying people don't realize how tough a position Paulson was in when he crafted the rescue package.

The chairman and CEO of Berkshire Hathaway said the bailout was vital at the time in order to shore up the credibility of the banking system. "Belief creates its own reality," Buffett said. "If people think the banking system is unsound, it is unsound, because no bank can pay out all of its liabilities at the same time."
Buffett: Big banks are not too big WWarren Buffett, Berkshire Hathaway chairman and CEO, with former Treasury Secretary Hank Paulson discussing whether America's big banks are too big to manage. Paulson explains why he is focused on structural changes in the financial system.

"If [Republicans] can't get their way on another issue, they'll use the threat of, in effect, defaulting on the government's credit to get their way," Buffett said. "That won't work long-term."

We will go up to the point of 'extreme idiocy': Buffett Warren Buffett, Berkshire Hathaway chairman and CEO, and former Treasury Secretary Hank Paulson share their views on the government shutdown and the chances of default.

Tuesday, October 8, 2013

Warren Buffett predicts 11th hour debt deal

The Oracle of Omaha isn't ready to panic -- yet. Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., said this morning in an interview on CNBC that he expects Congress to resolve a stalemate

Warren Buffett, the billionaire chairman of Berkshire Hathaway, said Thursday morning in an interview on CNBC that he expects Congress to resolve a stalemate over the U.S. debt ceiling before the nation suffers serious harm.

"We will go right up to the point of extreme idiocy, but we won't cross it," he said in the CNBC interview, appearing somewhat exasperated as he spoke.

His comments come at a moment of unusual national political tension. Democrats and Republicans have not been able to resolve their differences on the budget or on the deficit. Those differences have left 800,000 federal employees on temporary furlough -- with no end in sight.

At the same time, there is no consensus on whether to raise the government's borrowing authority by the Oct. 17th deadline. Failure to do so, the administration has said, would result in the nation's first-ever default.

Monday, October 7, 2013

Warren Buffet acquires Israeli electronics company Ray-Q - Israel Hayom

Electronic components company TTI Inc. an indirect, wholly owned subsidiary of American billionaire Warren Buffet's Berkshire Hathaway, announced on Friday its acquisition of Israeli electronics company Ray-Q Interconnect.

"It's not often a company has the opportunity to add such longevity and superior technical value to their service offering. I am very pleased to be bringing the wiring and harness assembly expertise of Ray-Q to the TTI teams in Europe and Asia -- and to the benefit of our customers worldwide," TTI Europe and Asia President Gene Conahan said in a TTI press release.

Founded in 1969 as a Raychem subsidiary based in Israel with offices in Turkey and India, Ray-Q specializes in electrical and fiber optic interconnects for military, aerospace, medical and other high-reliability product industries.

Since 2000 the company has been incorporated as a representative, consultant, and distributor of leading technologies and interconnect products of world class manufacturers in Israel, Turkey, Eastern and parts of Central Europe, and India.

Ray-Q employs approximately 70 associates and counts among their customers virtually every major defense contractor.

"On behalf of our associates and customers, I can confidently say that we are most pleased to be joining such venerable organizations as TTI and Berkshire Hathaway. We look forward to their support in the globalization of our vision to be a prime supplier of electrical and FO interconnect products and solutions to high reliability system manufacturers. Becoming part of TTI will greatly enhance our added value activities in the support of the design and implementation of interconnect systems for our customers," Ray-Q CEO Yigal Funt, said.

Funt will continue to lead the Ray-Q organization and business initiatives while reporting directly to the TTI president.

TTI Founder and CEO Paul Andrews welcomed the Ray-Q acquisition. "While Ray-Q's long track record of success speaks for itself, I am particularly gratified by the company's mission to be a supplier of choice -- always dealing ethically with our customers, our supplier partners and fellow employees. These are the values that have been core to TTI's success for over 40 years and ensure that this is an excellent cultural fit for both of our companies. My team and I welcome Ray-Q's associates and customers to the TTI and Berkshire Hathaway family."

Sunday, October 6, 2013

Warren Buffett on Obamacare

A week ago, billionaire investor Warren Buffett denied he wants to “scrap” Obamacare, calling such reports “totally false.” But that has done little to stop some Republicans from spreading the rumor.

A day after Buffett’s denial, Rep. Jim Jordan said, “All the momentum is in our direction. Warren Buffett said yesterday, ‘Scrap the bill.’”

More recently, Rep. Tom Graves said on ABC’s “This Week” on Sept. 22: “Warren Buffett says stop it now and start over.” A day later, former Rep. Joe Scarborough, on his MSNBC show “Morning Joe,” said: “Warren Buffett came out last week and said … Obamacare is not going to work. We need to start all over.”

What’s going on?

The confusion stems from a Sept. 17 blog item on a website called Money Morning that carried the headline “Buffett: Scrap Obamacare and Start All Over.” The Weekly Standard blogged about that article with a similar headline, “Warren Buffett: Scrap Obamacare and Start Over.”

Some Republicans tweeted about the Weekly Standard blog post and linked to it, helping to spread the misinformation. One such re-tweet — which was later deleted — came from Rep. Tim Griffin of Arkansas: “RT: #ar2 RT @weeklystandard: Warren Buffett: Scrap #Obamacare and Start Over http://t.co/4vstDPlpEk.”

But here’s the problem: The Weekly Standard did not disclose — until it updated the story later — that Buffett’s remarks were more than three years old. Even then, his words were taken out of context by the bloggers, as Buffett himself said in a Sept. 17 interview with the Omaha World-Herald. “This is outrageous,” Buffett told the World-Herald. “It’s 100 percent wrong … totally false.”

To trace the history of this false claim, let’s first go back to March 1, 2010, when Buffett gave an interview to CNBC. It came at a time when the Affordable Care Act was nearing final approval in Congress. Obama signed the bill into law 22 days later.

In the CNBC interview, Buffett talked about the high cost of health care in the United States — which he correctly said consumes about 17 percent of the nation’s gross domestic product. He compared health care costs to “a tapeworm eating, you know, at our economic body.” He then said the Senate bill would do little to address the cost of health care.

“Unfortunately, we came up with a bill that really doesn’t attack the cost situation that much. And we have to have a fundamental change,” Buffett said.

The host, Becky Quick, asked Buffett if he was “in favor of scrapping this and going back to start over.” He said: “I would be if I were President Obama.” But he also said that he wasn’t changing his mind on the bill and he preferred it to the status quo.

Quick, March 1, 2010: This is different than what you’ve said when we’ve talked to you in the past. I mean, even a couple months ago when I sat down and talked to you, you said that you would vote, I believe, for the bill if it were in front of you.

Buffett: I–if it’s a choice…

Quick: When did you change your mind?

Buffett: No, if it was a choice today between plan A, which is what we’ve got, or plan B, what is in front of–the Senate bill, I would vote for the Senate bill. But I would much rather see a plan C that really attacks costs. And I think that’s what the American public want to see. I mean, the American public is not behind this bill. And we need the American public behind the bill, because it’s going to have to do some tough things. But in–if it doesn’t bring down costs significantly–and you can say, well, you’re bringing down costs by raising a tax over here or cutting–improving Medicare, but you can do those things anyway. That’s got nothing to do with what’s being proposed in the bill. So I–if the only choice I had in the world was the present system or the present bill, I would take the bill. But I think it’d be far better to say cost is it. We’re going to go back and we’re not going to come back to the American people until we have something that is going to take this 16 or fraction and it’s going to bring it down somewhat toward what other countries are doing.

So, Buffett at the time supported the bill and would have voted for it, despite its flaws.

Since the Affordable Care Act became law, Buffett has reiterated his support for it. In an interview with Betty Liu of Bloomberg Television’s “In the Loop” last year, Buffett was asked if the U.S. Supreme Court made the right decision to uphold the constitutionality of the law. He said yes and called the law a “step in the right direction in many ways” while also once again expressing his concern about the high cost of health care.

Liu, July 13, 2012: A few weeks ago we heard from the Supreme Court, they upheld the health care reform act, the Affordable Care Act. Was that the right decision?

Buffett: Well I think it’s the right decision, but I think that the health care problem is the number-one problem of America and of American business. If we have 17 or 18 percent of our GDP going to health care and we’re competing with countries that have 10 percent. That’s seven or eight points. There’s only 100 points in the dollar. And to have a seven- or eight-point disadvantage is huge. And a lot of businessmen complain about corporate taxes.

Liu: Yes.

Buffett: Corporate taxes are less than two percent of GDP. So if you eliminated all the corporate taxes you’ve got seven points against you on health care. It’s the tapeworm essentially of the American economy. And we have not dealt with that yet. Obamacare is a step in the right direction in many ways, but in terms of cost –

In their recent efforts to defund Obamacare, some Republicans have cast the president’s own allies as opponents of the law. They frequently cite a letter, for example, from three union leaders that asked Democratic congressional leaders to amend the law, warning that if implemented as written, the law “will shatter not only our hard-earned health benefits, but destroy the foundation of the 40-hour workweek that is the backbone of the American middle class.”

On ABC’s “This Week,” Graves, a two-term congressman from Georgia, cited union leaders and Buffett as examples of “widespread” opposition to Obamacare.

Graves, Sept. 22: Warren Buffett says stop it now and start over. You have the three top leaders of the unions in our country saying this is not what will work. It’s going to create a new underclass of workers that are under 30 hours. It’s not just Republicans, this is widespread …

But Buffett isn’t one of those critics. In his interview with the Omaha paper, which is owned by his company Berkshire Hathaway, Buffett called reports that he wants to scrap the bill and start over “100 percent wrong.”

Omaha World-Herald, Sept. 17: Buffett said the stories took his comments out of context and added the “scrapped” wording.

“I’ve never suggested nor thought Obamacare should be scrapped,” said Buffett, who has supported Obama’s political campaigns. “I support it. It relates to providing medical care for all Americans. That’s something I’ve thought should be done for a long, long time.”

Buffett himself goes too far in saying that he “never suggested nor thought Obamacare should be scrapped.” He did answer in the affirmative when asked that very question in March 2010. But his words were taken out of context, and he did not say the law should be scrapped now. He indicated his support for the bill in that interview as an improvement over the current health care system. And, after the bill became law, he reiterated that position last year and again this year.