Tuesday, March 10, 2009

Warren Buffett Week




It has been Warren Buffett tastic over the last week or so.

Just over a week back the veteran investor released the 2008 Berkshire Hathaway Letter, where he waxed lyrical about venereal disease and its comparisons to bankers investing in derivatives, mistakes that he made in getting in too quick last year to buy "cheap stocks" but nonetheless convinced "Americas best days lie ahead".

I agreed with him in a somewhat less that lyrical way when I wrote this wee piece.

Yesterday Buffett was giving a good grilling for 3 hours (less commercials) by the fox from CNBC Becky Quick, and investors who had sent in emails.

On Becky's Squawk Box show Buffett didn't really tell us anything we didn't already know, except to say when he called the economic crises it back in September 2008 he admits he didn't think it was going to as bad as it is right now.

Well, he was taking a big punt back then.

This email question got straight to the point:


BECKY: Which brings us to another question. A lot of people have been trying to figure out is this different from what we saw back in the Great Depression. I'm going to jump ahead to one from Dan from Shohola, Pennsylvania, who asks a question very pointedly about this. "How is the market better off today than when we were in the 1929 to 1933 period?"

BUFFETT: Well, we certainly--it's different. I mean, there's a lot of similarities between all recessions or in this case depressions or call them panics like they did back in the 19th century, and there's always differences. One key similarity is that there was a paralysis of confidence in banks and--which is silly now because of the FDIC. I mean, we--but if you went back, my dad, on August 15th, 1931, worked at a bank and he went there and it was closed and he had no job and he had his savings--small savings in there. I mean, if you don't trust where you have your money, the world stops. And they recognized that, but it was a little belatedly. They didn't put in deposit insurance until it was started in 1934 in the Glass-Steagall Act. We have a system that's far better organized to deal with that.

I was wondering out loud what depressions/recessions meant last week and the more I read the more I come to the conclusion that depressions/recessions are one in the same but depressions just last much longer and hurt more people. The fear/panic part that Buffett talks about is one common trait.

There are plenty of other pearls of wisdom from the Oracle of Omaha, from answering critics on his investment style and whether it will now change to how he sees President Obama's bailout plans and what negative effects they will have on the global economy.

If you are an investor of any kind(and most of us are one way or the other)it is well worth a look at the full interview to get an overall perspective of what he thinks about the current dire economic situation.

His 2008 Letter to Shareholders is also worth a read in conjunction with that, as is the Annual Report of Berkshire Hathaway.

They might help you put things in perspective.

Along with reading from other sources they do it for me.


Recent Share Investor Reading

Related Amazon Reading

The Essays of Warren Buffett: Lessons for Investors and Managers

The Essays of Warren Buffett: Lessons for Investors and Managers by Lawrence A. Cunningham
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c Share Investor 2009