Warren Buffett and Bill Gates to Hold Master Class in CNBC Special

Warren Buffett and Bill Gates will be the 'Big Men on Campus' next month when they go to Columbia Business School to answer questions from the "next generation of business leaders" .. and CNBC's cameras will be there.

We've just announced that a one-hour special town hall event, Warren Buffett and Bill Gates: Keeping America Great, will air Thursday, November 12 at 9p and 12a ET. The program will be repeated on Sunday, November 15 at 10p ET.

Squawk Box co-anchor Becky Quick will be the moderator of the event, which will be taped earlier in the day. CNBC.com's Warren Buffett Watch will be inside the hall for real-time coverage as it all happens.

Buffett, of course, enrolled at Columbia Business School because his mentors, Benjamin Graham and David Dodd, taught there. He graduated in 1951.

Gates famously dropped out of Harvard's class of 1977.

It's the first time in years the two friends and online bridge partners will be back on campus for an appearance together, and the last one got rave reviews.

Their 2005 session with students at the University of Nebraska at Lincoln's College of Business Administration was turned into a PBS broadcast special and DVD. (Five stars on Amazon.com)

You can expect Buffett and Gates to be candid, informal, and very funny, with a substantial helping of their thoughts on the responsibilities we all have to make the world a better place.

Buffett, Gates pay quiet visit to Fort Worth

Under tight security — along with tremendous discretion and restraint by the Ashton Hotel staff — the world’s two wealthiest men recently spent a couple of days in Fort Worth mostly unnoticed.

Warren Buffet, legendary investor and Berkshire Hathaway chief executive, and Bill Gates, Microsoft chairman and a Berkshire Hathaway board member, attended a company meeting at the 39-room downtown boutique hotel, 610 Main St.

They arrived Thursday afternoon and departed Saturday morning.

Berkshire booked the Ashton for its meeting six months ago. The chief executives of some Berkshire companies also attended. Berkshire owns Fort Worth-based Justin Industries, which includes Acme Brick Co., and TTI, an electronics components distributor.

A couple leaving the Ashton’s 610 Grille on Friday evening noticed Gates waiting in the hotel lobby and spoke with him for several minutes, hotel staff members say.

"He couldn’t have been nicer," Ashton General Manager Mark Michalski said of Gates.

Ashton owner Matt Mildren said it was "extremely" difficult keeping the visit hush-hush. The staff was told to honor the men’s privacy but also to treat them like other guests, he said.

The hotel made sure it had only Coke products on hand — Buffet not only likes Cherry Coke but Berkshire also owns a stake in the company — as well as Buffet’s favored Tootsie Pops, Hershey’s Kisses, Fritos and Cheetos.

On Thursday, Buffet had a private board dinner in the wine cellar, while the others dined at nearby Grace restaurant. Friday’s lunch was held in a second-floor meeting room overlooking Main Street as a chuck wagon parade passed.

"It was good timing," Mildren said. "It looked like we staged it for them."

Friday’s dinner was at Del Frisco’s.

Before checking out, Buffett and Gates complimented the hotel, its staff and downtown, and Buffet even posed for pictures.

Warren Buffett's 'Buy American' - One Year Later
Published: Monday, 19 Oct 2009 | 7:00 AM ET 
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By: Alex Crippen
Executive Producer



One year ago, even though the financial world was "a mess" and would probably get messier, Warren Buffett wrote in the New York Times that he was buying U.S. stocks to lock in a "slice of America's future at a marked-down price."

He cited his "simple" rule: "Be fearful when others are greedy, and be greedy when others are fearful."

One year later, the benchmark S&P 500 is 14.9 percent higher than it was the night before Buffett's "Buy American" op-ed (read the complete article) was published on Friday, October 17, 2008.

But that's beside the point.




In his op-ed, Buffett makes clear he wasn't trying to "time" the market. He wrote he didn't have the "faintest idea" whether stocks would be higher or lower one month, or one year later. Both qualify as short-term for Buffett. He was looking five, ten, or twenty years into the future.

And it's a good thing Buffett wasn't trying to pick a short-term bottom, because his timing was awful. The S&P continued to drop that fall and winter, closing at its bear-market low of 676.53 on March 9.

If you had been smart or lucky enough to go all-in on the S&P on that day, you'd be up 60 percent now.

But Buffett's key point is that very few of us are going to be that smart or that lucky. Those waiting for the perfect moment run a big risk of coming in too late, especially if they're looking for hints that things are getting better.

The Oracle of Omaha won't make predictions about specific stock market moves, but he does have one strongly-held prophecy about the future: "The market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over."

GE: Still a Bargain 4 comments
October 21, 2009 | about: BRK.A / CMCSA / GE  
Alexander Wissel
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The country’s largest mutual fund, also know as General Electric (GE), is starting to see renewed interest from small investors and institutional traders alike.

GE is also the ultimate recovery play on the United States and the global economy.

Through General Electric’s fourteen divisions, the company reaches into almost every aspect of our lives. From the trains, planes and automobiles that move people and products, to consumer goods, technologies, financial services, utilities and entertainment, it has a hand in just about every major industry around the world. 

But you don’t need to know everything about the intricacies of each division. You just need to know that, if separated, each unit would be a leader in its industry. 

These multiple units make GE incredibly diverse and more like a mutual fund than a single company. It also leaves GE more prone to broad economic cycles. This is a good thing, because as the economy turns the corner, GE will as well. 

Here’s why GE is a great buy under $16, why the street still hasn’t jumped back in, and what they simply can’t seem to get through their heads. 

General Electric’s Capital Finance Problem

GE has been trading in a range tight range since August. And, while it has more than doubled in value from its March lows, it sits well off its 2007 high of $41.

There are a number of reasons for the General’s situation, but the biggest reason is debt. Specifically the debt from GE’s Capital Finance unit, which has been plagued by concerns it would drag the company down with it. 

While the impact of their finance unit was severe – a major concern earlier this year – the likelihood of a full-blown collapse now seems improbable. In fact, GE has been shoring up its balance sheets with asset sales and capital infusions. The real estate division is now the only unprofitable unit and, as Immelt reported, they have funded those debt obligations for almost all of next year.

And GE isn’t done yet. CEO Jeff Immelt has been very public about his desire to turn around the struggling NBC Universal unit, over the course of sales negotiations with Comcast (CMCSA) and could possibly sell its entire interest in the next few years. GE owns 80% of NBC. 

A few of the highlights from the webcast last week included increased cash flow from operating activities to $4.4 billion and a shrinking of the Finance unit’s balance sheet – and it’s potential negative impact on the stock. In addition, its backlog of industrial products now sits at $174 billion – that’s a lot of product to produce, and income yet to be booked.

Why GE Is a Great Buy Right Now

At the height of the market mayhem last year, the world’s greatest investor – Warren Buffett, through Berkshire Hathaway (BRK.A) invested $3 billion as a measure of confident in GE and its directors. He received a 10% interest payments and warrants to purchase over 134 million shares of GE stock at $22.25. These options expire in 2013. 

At the current market price, that’s a 41% increase in the stock. 

And it gets even better. While GE has cut its dividend, which angered a lot of shareholders and dividend funds, at 0.10 a share it’s still a respectable 2.55%. 

GE is going to fly under the radar for a while as it siphons large amounts of its cash flow to pay down that finance unit debt and reduce its loss exposures. This will take some time. In the meantime, earnings will look like they’re in park. The reality will be like a motorcycle that's rear wheel drive has been held off the ground while at full speed. When the bike is lowered back down – in our case, when the Capital Finance unit’s cash siphoning stops – this stock will take off. 

As these capital obligations from the finance unit clear up, it won’t be too improbable to see GE’s dividend start creeping back up. However, GE’s story doesn’t stop with its Capital Finance unit. Here are four more reasons this stock is set to move higher. 
Stimulus. The full impact of the stimulus hasn’t been seen yet in the United States or in many of the countries around the world. These efforts should start to take affect in the Q4 and into 2010. GE’s focus on infrastructure and energy are going to pay off big for them. 
Green energy. Shipping roughly 1000 wind turbines for each of the last two years puts GE in a good place for domestic energy initiatives. While wind turbines won’t reignite this stock by themselves, their existence, along with the rest of GE’s green energy programs and products give them a leadership position in the sector. 
Global economies. Strong emerging markets positions around the world. Because of their global market approach to customers, it makes GE a great way to capitalize on growth around the world without investing in specific economies. 
Exchange rates. GE books a large amount of total revenues from overseas. With the dollar in a free fall not seen since earlier this year, a weak dollar helps income earned overseas impact the bottom line better. 

After factoring in these factors, an improved economic outlook and Buffett’s investment, one of the biggest reasons that General Electric's stock will climb much higher is simply the return of the baby boomers to the markets. There are still trillions sitting in Treasuries earning little, if no interest. 

As these "soon to retire-es" look to rebuild their portfolios, they will be looking for dividend-bearing stocks that can offer them security, income and the potential for price appreciation. GE fits the bill for all three. 

And at any price under $16 a share, it’s a bargain.

Guru Ownerhship and Insider Trading Activities For U.S.Bancorp.

(GuruFocus, October 21, 2009) U.S. Bancorp (USB) today reported net income of $603 million for the third quarter of 2009, or $.30 per diluted common share. Earnings for the third quarter were driven by record total net revenue of $4.3 billion, the result of strong year-over-year growth in both net interest income and fee revenue. 

Investment Guru Warren Buffett ‘s Berkshire Hathaway is the large shareholder of the banking company. In the past, Buffett was very bullish on this stock together with Wells Fargo. 

Reflecting on today’s quarterly result announcement, Dick Bove think USB is one of the banking companies standing out:

Chen spreads a Buffett
By Zhang Ran (China Daily)
Updated: 2009-10-21 08:26
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Chen Fashu, regarded by many as China's Warren Buffett, yesterday announced that he would donate 45 percent of his personal assets, worth 8.3 billion yuan ($1.17 billion), to set up a charity modeled on the lines of the Bill and Melinda Gates Foundation.

The Newhuadu Philanthropic Foundation, once set up, is expected to be the largest civil charity foundation ever established in the country.

Chen, 48, a Fujian-born businessman who made his first million by selling groceries in his hometown during the 80s, later became a billionaire by investing in stocks on the A and H share markets.

He is currently the president of Fuzhou-based Newhuadu Industrial Group, and is ranked No 15 on Hurun's latest rich list with a personal wealth of 25 billion yuan.

The assets to be transferred to the charity will mainly include stakes that Chen owns in publicly traded companies such as Tsingtao Beer, Yunnan Baiyao Group, and some stock from his own Newhuadu Industrial Group. These will altogether account for 45 percent of his total assets according to current market value, Chen said at a media briefing in Beijing yesterday.

Chen will be the chairman, while Tang Jun, the president and CEO of Newhuadu Industrial Group, will be the managing director of the foundation.

"The charity will be modeled on the Bill & Melinda Gates Foundation. An independent team will be in charge of the operation of the foundation," Tang said. It may later seek a management tie-up with the Bill & Melinda Gates Foundation, he said.

The first batch of funding from the foundation, worth 10 million yuan, was donated to primary schools in poverty-stricken areas and poor university students yesterday.

Chen's fortune comes mainly from the Fujian-based Zijin Mining, a leading gold miner in China. His wealth expanded from 48 million yuan to 20 billion yuan when the gold mining company went public on the Shanghai bourse in 2008 and later at Hong Kong in 2009.

Chen was the second largest stakeholder of Zijin Mining before he sold around 50 percent of his holdings between May and July to buy H shares of Tsingtao Brewery Co Ltd. He is now the second largest shareholder of Shanghai-listed Yunnan Baiyao Group and the third largest shareholder of Hong Kong-listed Tsingtao Brewery Co Ltd.

However, the sale of Zijin Mining shares allegedly thrust Chen into a "tax evasion" scandal. The Beijing-based Securities Daily reported in September that the State Administration of Taxation was investigating Chen and his company for tax fraud in the Zijin Mining share sale. The report said that Chen had sold around 3 billion yuan worth of Zijin Mining shares, for which he would have to pay at least 1 billion yuan in taxes.

Individual investors who trade shares on the stock market do not pay capital investment income tax in China currently. However, experts, including Sun Gang, a researcher from the Research Institute for Fiscal Science, and Zhang Bing, a researcher from the Chinese Academy of Social Sciences, both said that individual investors who sell shares they bought before the companies went public should pay tax.

"But currently, there is no specific regulation on such taxation in China," Zhang said.

Related readings:
 Chinese tycoon's charity foundation focuses on education
 Huiyuan joins One Foundation as a partner in education efforts
 Yao Ming Foundation to help rebuild schools in Sichuan
 With Jet Li-One Foundation charity



Chen's setting up of the Newhuadu Philanthropic Foundation was widely speculated as a measure to save himself from the tax fraud accusation. 

Chen, however, said yesterday that he had been toying with the idea for two years and had spent over a year to set it up. The Ministry of Civil Affairs approved the foundation on Sept 30, Chen said.

Chen has not been the first billionaire to initiate a philanthropic foundation in China. Cao Dewang, chairman of another Fujian-based company Fuyao Group, said earlier that he planned to donate 70 percent of shares his family owns in the company to set up a 4-billion yuan foundation. However, Cao later gave up on the idea, as regulations do not permit a major shareholder of a company from transferring his shares.

Warren Buffett Opens 4th Annual Lydian Roundtable and Launches New Payments Industry Portal, PYMNTS.com
Tue Oct 20, 2009 12:50pm EDT
 

Buffett comments on economy, card industry and financial crisis and suggests
that "system works" and points to a focus on the customer as the path forward
for business
NEW YORK--(Business Wire)--
Warren Buffett, Chairman of Berkshire Hathaway Inc., opened the 4th annual
closed-door Lydian Roundtable on the Payments Industry, a closed-door gathering
of senior executives in the payments space, commenting on the resiliency of the
American system, yet cautioning that we`re not "100% there just yet" when asked
about consumer confidence and consumer spending. 

Buffett was interviewed by Cathy Baron Tamraz, President and Chief Executive
Officer of Business Wire, a Berkshire Hathaway company which partnered with
Market Platform Dynamics to launch a new online B2B channel dedicated to the
payments sector, PYMNTS.com. 

When asked about the economy`s prospects, Buffett said that "enormous" progress
has been made since a year ago, which is a credit, in his view, to what the
government did to in the Fall of 2008 to keep the economy from "going over a
cliff." And although, the economy won`t be back the way it was for a while,
Buffett believes that the worst is behind us. He was more cautious when asked
about unemployment rates, citing that companies must be convinced that demand is
there before hiring and that may take some time. 

His comments about the payments industry are based on his experience as an early
investor in American Express in 1964. He was attracted to the company because of
its positioning and their marketing, which included a green card with a
centurion icon, which he described as something akin to looking like "Mr.
Integrity." Buffett said that he was convinced that cardholders preferred
pulling out a card that "made it look you were J.P. Morgan or something." That
drove the merchant demand - and acceptance - for the product. 

Buffett cited the lessons of his American Express experience in building a
success business: give the customer what they want. The American consumer -
Buffett says, is king. He goes on to say, "You can push them around for a week
or a month maybe, but you either figure out what`s in your customers` mind and
decide you are going to serve them; or you are not going to be in business. They
are right, and you are wrong. It`s what made this country, to some extent, what
it is. No one who has ever taken good care of a customer has lost." Buffett
suggested that this consumer preference is what "keep people pulling out a card"
rather than taking advantage of the other options that have emerged recently to
replace magnetic stripe cards. 

The interview and transcript can be found at PYMNTS.com, an online media channel
that captures user-generated and expert-driven commentary, information, news and
analysis on "what`s next" in the payments sector, worldwide. The site provides a
platform for industry professionals to share content related to their latest
company and product developments, to tap into the collective commentary and
analysis from experts, bloggers and industry pundits, and to interact with
industry thought leaders and other influentials on topics of critical importance
to the future of the sector. PYMNTS.com is a joint venture between Business Wire
and Market Platform Dynamics. 

For information on the PYMNTS.com editorial calendar for upcoming topics being
featured on PYMNTS.com, please contact editorial@PYMNTS.com

You can also subscribe to receive the daily PYMNTS.com newsletter at
subscribe@PYMNTS.com

Follow us on Twitter at http://twitter.com/PYMNTS and join the PYMNTS Linked In
group. 

For information the PYMNTS.com portal contact us info@PYMNTS.com

About Market Platform Dynamics (MPD):

MPD is a management consulting firm that ignites catalyst businesses by
leveraging new technologies, business models and pricing strategies. MPD has a
wealth of experience within industries that are characterized by complex
platform-centered ecosystems, including payments, mobile/telecoms, digital and
advertising-supported media, and software-based businesses. 

MPD works with both incumbents and new entrants, offering a unique lens into the
dynamics that shape the competitive playing field. In addition to traditional
consulting-based services, MPD`s Catalyst Ventures provides intellectual and
human capital to new firms. MPD`s experts include economists, econometricians,
product development specialists, and strategic marketers who apply cutting-edge
business theory and statistical methods to the practical problems of building
and growing a profitable catalyst business. MPD is headquartered in Cambridge,
MA, and has offices in London and Hong Kong. 

For more information visit www.marketplatforms.com. 

About The Lydian Roundtable

The Lydian Roundtable is an annual closed door summit of ~50 senior executives
in the payments sector. The Roundtable was established in 2004 by Market
Platform Dynamics as a way for those at the heart of decision-making in the
space to assemble and discuss the issues that will shape its future. Unusual in
its format, everyone invited is a participant in the day-long discussion, with
panels and panel moderators focusing the discussion throughout the day. The
Roundtable is invitation only and closed to press and media. 

This year, the Lydian Roundtable launched PYMNTS.com, the partnership between
Business Wire and Market Platform Dynamics to create a dynamic new media channel
serving the payments sector. A key feature of PYMNTS.com is the Lydian Payments
Journal which is an online journal focused exclusively on the global payments
sector. 

About Business Wire

Business Wire, a Berkshire Hathaway company, is utilized by tens of thousands of
member companies and organizations worldwide to functionally enhance and
communicate investor relations and public relations content to target audiences.
As a recognized disclosure service in the United States, Canada and a dozen
European countries, Business Wire facilitates the simultaneous flow of
market-moving press releases from corporations to financial markets and their
audiences, including regulatory authorities, media, investors, financial
information systems and consumer news services. Business Wire also handles XBRL
tagging, document formatting and regulatory filing into EDGAR, SEDAR, FSA and
other systems. 

Communications professionals turn to Business Wire to optimize and issue press
releases, photos and multimedia to news organizations, journalists, trade
publications, search engines, and individuals, with full-text posting to web
sites, online services and databases. A range of distribution options enables
members to target by geography, industry, news theme and audience demographics. 

Warren Buffett's Unconventional Approach to Charitable Donations

Warren Buffett’s approach to philanthropy has been unconventional. Rather than establishing the infrastructure required to administer a foundation bearing his own name, the majority of Mr. Buffett’s wealth has been given to The Bill and Melinda Gates Foundation. Many super-rich individuals set up foundations that will exist in perpetuity, but Mr. Buffett’s instructions call for using his donations soon after they are made.

Many wealthy individuals have taken note of the Buffett approach to philanthropy and have set up similar arrangements in which their wealth is used to fund current projects. The Philadelphia Inquirer published an article Sunday regarding Barbara Dodd Anderson’s donation to the George School located in Bucks County Pennsylvania. Ms. Dodd Anderson is the daughter of David Dodd who was co-author of Security Analysis along with Benjamin Graham.

Ms. Dodd Anderson’s 2007 donation consisted of Berkshire Hathaway (BRK.A) shares and have declined in market value over the past two years. At a news conference dedicating a new library funded by this donation, Mr. Buffett made the following comment:


On Sept. 18, 2007, shares were trading at $118,700. That was when Dodd Anderson gave George the largest gift to an existing independent school in the nation.

She created an irrevocable trust designed to pay out a record $128.5 million over 20 years. The value of that $70 million trust is now $68.5 million, down just as Berkshire Hathaway shares have dropped.

“It’ll change,” Buffett said. “There are only two [share] prices that matter – the price on the day you buy it and the price on the day you sell it. If you own good businesses and you don’t do anything stupid with your money, value tends to rise.”


The article also had an amusing story, which I have not seen elsewhere, regarding Mr. Buffett’s application to Columbia Business School in 1950. Let’s just say that the application used an unconventional approach:


When he was 9 or 10, growing up in Omaha, he read every book on finance in the public library, Buffett said.

He particularly admired Security Analysis, a 1934 investing classic cowritten by David Dodd.

Later, after Buffett had been rejected from Harvard University’s graduate school of business, he was thumbing through a Columbia University catalog and noticed that Dodd was assistant dean.

Even though it was August, just weeks from the start of the fall term, he wrote to Dodd: “I thought you guys were dead, but now that I realize you are alive, I’d like to come and study with you.”


While most aspiring Columbia Business School students would do well to emulate Warren Buffett’s history, they may wish to choose a more conventional strategy when writing their essay to the admissions committee!

FINANCE | 'Too many have walked away from troubles they created for society' 
Comments 

October 21, 2009 
BY ANDREW FRYE 

Billionaire Warren Buffett, who collects a $100,000-a-year salary for running Berkshire Hathaway Inc., said Wall Street pay needs a "downside" when profits deteriorate because of reckless bets.

"You have to put in something where there is downside to people who really mess up large institutions," Buffett said in an interview conducted by Business Wire, the Berkshire subsidiary that posts corporate press releases. "Too many people have walked away from the troubles they have created for society, not just for their own institution, and they have walked away rich."
» Click to enlarge image
 
Warren Buffett said Wall Street needs a "downside" when profits deteriorate because of reckless bets.

(AP) 




Wall Street bonuses for 2009 might jump 40 percent to $26 billion, a year after bad bets on subprime mortgages sent financial firms to the government for bailouts, according to estimates by compensation consultant Johnson Associates Inc. Buffett became the second-richest American by building Omaha, Neb.-based Berkshire into a $150 billion company.

"What you have to change in Wall Street, is you have to make sure that in addition to carrots, there are sticks," he said. "And it can't be a one-way street where they are making ungodly amounts of money when things are good and then they move on to someplace else for a while when things are bad."

Buffett invested $5 billion of Berkshire's money last year into Goldman Sachs Group Inc., Wall Street's highest-paying and most profitable firm. He said in the interview that the securities industry is essential to economic growth.

"I don't look at Wall Street as 'evil,' " he said. "I look at Wall Street as given to huge excess sometimes."

Banks worldwide reported more than $1.1 trillion of credit losses and writedowns tied to the mortgage meltdown since 2007, according to Bloomberg data.

Wall Street bonuses in 2008 fell 44 percent from the prior year to $18.4 billion, according to the New York state Comptroller.

Goldman, led by CEO Lloyd Blankfein, set aside $16.7 billion to pay employees so far this year. That's enough to pay each worker $527,192. The New York-based bank repaid $10 billion it got from Treasury and reported a jump in third-quarter profit. JPMorgan Chase & Co., which repaid $25 billion of U.S. funds, said profit surged almost sevenfold in the quarter.

Warren Buffett said Wall Street needs a "downside" when profits deteriorate because of reckless bets.

Cash-Distressed Business Offers Investors Way to Follow Buffett 
Share | Email | Print | A A A 


By Alexis Leondis


Oct. 22 (Bloomberg) -- John Edelman, a former business owner, is taking Warren Buffett’s advice by investing in what he knows: home furnishings. 

“I feel so much safer doing this than buying stocks randomly,” said Edelman, of Ridgefield, Connecticut, who sold his high-end leather supply business for $67 million in October 2007 and started investing directly in three private cash- distressed home-furnishing companies last year. “Smaller investors can have more power now because they’re buying at lower values and their dollars go further.” 

The potential for average annual returns as high as 25 percent is luring some investors who are putting money in struggling businesses that aren’t publicly traded and unable to access traditional sources of capital, according to Mark Hancock, senior managing director of New York-based Tiedemann Wealth Management. That’s because some investors became disillusioned with the returns on equity and fixed-income investments last year, he said. 

“Many wealthy investors retreated at the right time, built up significant cash hoards and now want to redeploy that cash in distressed situations,” said Hancock, whose firm advises on $5.8 billion of assets for high-net worth families and institutions. The focus is on investments within industries that families have specific knowledge of, said Hancock, who estimates 10 percent to 15 percent of the firm’s 70 clients are evaluating investments in businesses that they know. 

The 2.7 million millionaires in the U.S. and Canada had $1.3 trillion in cash in 2008, based on a survey released in June by Capgemini SA and Merrill Lynch & Co. Investors put $19.2 billion into 55,480 companies last year, according to the Center for Venture Research at the University of New Hampshire in Durham. 

Supply Funds 

Government efforts, including an initiative announced yesterday by President Barack Obama, to ease lending to small businesses are not workable and some businesses are having difficulty accessing capital from banks because of weak balance sheets, said Sam Graves, a Missouri Republican, and ranking member of the House Small Business Committee, in an interview. That means individual investors can step in and supply funds, Graves said. 

Eighty percent of U.S. companies with fewer than 500 employees said access to capital was a major issue compared with 67 percent a year earlier, according to a July survey of 300 firms by the Washington-based National Small Business Association, a trade group with more than 150,000 members. 

Purchase Equity 

Investors interested in distressed investments can lend money to the business directly or purchase equity, said Darell Krasnoff, managing director of Bel Air Investment Advisors in Los Angeles, who counsels clients with at least $20 million in investable assets. They can also form limited partnerships, which pool funds from several investors and may be managed professionally, said Krasnoff, whose firm’s clients include Lee Iacocca and Barbra Streisand. 

Investing directly in cash-starved businesses is appropriate for sophisticated investors with at least $500,000 in capital who have expertise in the industry, said Jospeh Massoud, chief executive officer of Compass Diversified Holdings, a Westport, Connecticut-based owner of manufacturing, distribution and business service companies. 

“Just like Buffett says, invest in what you know,” said Massoud, referring to the chief executive officer of Berkshire Hathaway Inc., who has overseen more than $50 billion in acquisitions ranging from insurance and ice cream companies to corporate jet leasing and power plants. 

Investor’s Payoff 

An investor’s payoff can be tied to the success of the company, which can come in the form of an initial public offering, operational improvement of the business, sale of the business to another firm or dividends, said Chris Hyzy, New York-based chief investment officer at U.S. Trust, Bank of America Corp.’s private wealth management unit overseeing $180 billion. 

Illiquid investments, which lock up cash for more than one year and include distressed investments, should be from 5 percent to 12.5 percent of an investor’s portfolio, according to Arun Bharath, director of research at Bel Air Investment Advisors. 

Investments in companies, not just those that are distressed, have returned 20 percent to 25 percent on average since 2004, said Jeffrey Sohl, professor of entrepreneurship and director of the Center for Venture Research at UNH. The returns take into account companies that have failed or filed for bankruptcy, Sohl said. 

In 2008, investors in the Standard & Poor’s 500 Index lost 37 percent and a composite of high-yield bond funds declined 26 percent, according to data compiled by Bloomberg and Merrill Indexes. 

‘Substantial Returns’ 

“It’s an industry I know and one that’s suffering -- my gut is, it’s bottomed, said Edelman, 42, referring to the luxury-furnishing business. “Ideally in four to six years, I hope to get substantial returns.” 

Investors should be aware that putting money directly in cash-distressed businesses is illiquid, labor-intensive and risky, said Jon Goldstein, co-chief executive officer of Constellation Wealth Advisors, which manages almost $4 billion in assets for clients who have a minimum of $10 million in investable assets. Investors should expect to have their cash frozen for at least three years, said Goldstein, who is based in Menlo Park, California. 

There were 64,554 commercial bankruptcy filings in 2008 and almost 67,000 through September, according to data compiled from court records by Automated Access to Court Electronic Records, a service of Jupiter ESources LLC in Oklahoma City. 

Concentration Risk 

Some clients are still risk-averse and thinking about how to protect and preserve wealth, said Krasnoff of Bel Air Investment Advisors. Lending money to a private business also comes with concentration risk, as significant amounts of money are tied up in one business, he said. 

Goldstein of Constellation Wealth says he has several clients who made their fortunes in the technology industry and are considering investing in startups. The difficulty new companies are having raising venture financing means these investors are taking advantage of low prices and their expertise, he said. 

The amount of venture capital provided to startup businesses dropped 33 percent in the third quarter to $4.81 billion in 637 deals from $7.16 billion in 994 deals a year earlier, according to the National Venture Capital Association and PricewaterhouseCoopers. 

Cash Reserves 

Richard Caruso, 66, is chairman and founder of Integra LifeSciences Holdings Corp. in Plainsboro, New Jersey, which manufactures medical devices. He invested $3 million last year in Colmar, Pennsylvania-based CeeLite Technologies LLC, a maker of flat-panel lighting products. CeeLite’s predecessor company didn’t have enough capital to manufacture and sell its products worldwide. 

“Entrepreneurs are not just investors, they are visionaries and like to actively get involved in something they know and believe can be successful,” Caruso said. 

The most attractive opportunities are in industries that have been affected by the decline in retail spending, which include consumer products and capital equipment, according to Massoud of Compass Holdings. 

“I could lose all my money and could be wrong that the desire for luxury will rebound,” said Edelman, whose leather adorns the chairs in Le Cirque, the New York restaurant. “But I’ve done this with proper cash reserves. If you can’t do that, you shouldn’t be in the game.”

Buffett group wins big in stock buy of Chinese car firm
Christine Tierney / The Detroit News

Legendary investor Warren Buffett hasn't been fortunate with all his holdings over the past year, but one of his picks turned out to be a big winner. 

Buffett's Berkshire Hathaway Inc. agreed last September to pay $230 million for a 10 percent stake in Chinese automaker BYD Co. that had soared in value by the time the deal was finalized in August. BYD shares, listed on the Hong Kong Stock Exchange, have risen from $1.21 last November to $10.55 on Wednesday. 

The runup in BYD's stock, due partly to Buffett's interest, has made its founder Wang Chuanfu the richest man in China, according to the Hurun Report, a list of the wealthiest Chinese. 

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Based in the southern Chinese city of Shenzhen, BYD is a young company that started out making batteries and only entered the car business in 2003. 

But its expertise in lithium-ion batteries, coupled with the rapid growth in the Chinese vehicle market, have attracted a great deal of investor interest. 

China is on track to become the world's No. 1 vehicle market this year, and the government in Beijing is intent on developing a strong domestic auto sector with expertise in clean technologies. 

BYD developed its first electric car, the F3e, in 2006, and is rolling out the e6, a crossover which it displayed early this year at the North American International Auto Show in Detroit. 

BYD expects to sell 400,000 vehicles this year, and its exports are limited to small markets such as Ukraine. But it has ambitious goals and hopes to sell electric cars in the United States, possibly as early as next year. 

"They're a very good company. They have a lot of knowledge on batteries," said Nick Reilly, General Motor Co.'s Shanghai-based executive vice president of international operations. 

Volkswagen AG is considering a battery deal with BYD. 

While its prospects look bright, some analysts caution that the stock has risen too quickly. "Payback might be distant," Deutsche Bank analysts Vincent Ha and Alan Hellawell said in a report assigning a sell rating to BYD shares.

Buffett’s General Re Gets $9 Million to Stay in Connecticut 
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Oct. 22 (Bloomberg) -- Warren Buffett’s General Reinsurance Corp., the most profitable of the billionaire’s insurance units, got a deal for a $9 million loan from Connecticut to keep the Stamford-based company in state for at least four more years. 

The funding “ensures that a company based in our state since 1974 is not lost to a neighboring state,” Governor Jodi Rell said in an Oct. 20 statement. The 20-year, 2 percent loan requires General Re to keep an average of 820 workers in Stamford through 2013, said Jim Watson, a spokesman for the state’s Department of Economic and Commercial Development. 

Buffett, the second-richest American, oversees businesses ranging from jewelry to jet rentals from the Omaha, Nebraska headquarters of Berkshire Hathaway Inc. Buffett said this year he would cut jobs and close facilities at Berkshire units as the recession weighs on results. General Re, with more than 1,900 employees in 45 locations, earned $260 million on underwriting before taxes in this year’s first half. 

“Gen Re had to make a decision -- stay in Stamford or relocate to Westchester County, New York -- and we were not going to lose those dependable jobs,” Rell said. “Smart, targeted loans and investments by the state will prevent” the loss of insurance-industry positions. 

Buffett didn’t respond to a request for comment e-mailed to his assistant Carrie Kizer. Berkshire had about 246,000 employees at the end of 2008, just 19 of whom worked at the company’s headquarters. 

Berkshire Earnings 

Berkshire, which Buffett built into a $150 billion company by investing in out-of-favor companies, reported its first quarterly loss since 2001 on slumping investments earlier this year. The company, which typically makes a quarter to half its profits from insurance, returned to profit in the second quarter with a $3.3 billion net income. 

Geico Corp., Berkshire’s car insurer, made a deal with New York Governor David Paterson in August to receive tax credits valued by the state at about $1.5 million over five years as the company opens a new site and hires 300 people in Amherst. In September, NetJets Inc., Berkshire’s unprofitable plane-leasing unit, announced cuts of more than 300 jobs, or about 5 percent of the workforce. 

The Connecticut loan is the first such deal between General Re and the state. It will be used for “fixtures and equipment” at the company’s new facility, Rell said.

Придобиването на Wachovia увеличи печалбата на Wells Fargo с 98%
21.10.2009 16:30


Американската банка Wells Fargo, която се превърна в най-големия ипотечен кредитор в САЩ през тази година, е отчела рекордна печалба за третото тримесечие. Чрез успешното управление на рисковите заеми и придобиването на Wachovia печалбата се увеличава с 98% на годишна база.

Нетната печалба на Wells Fargo за третото тримесечие нараства до 3,24 млрд. долара, или 56 цента на акция. За сравнение положителният финансов резултат е бил 1,64 млрд. долара, или 49 цента на акция, за същия период на 2008 г. Анализаторите очакваха печалба на акция от 37 цента.

Приходите на Wells Fargo нарастват близо два пъти до 22,5 млрд. долара през третото тримесечие. Въпреки добрите финансови резултати книжата на Wells Fargo поевтиняха с 2,3% до 29,82 долара за акция по време на електронната търговия на Нюйоркската фондова борса, предаде Wall Street Journal.

Wells Fargo е последната от четирите големи щатски банки, която публикува своите финансови резултати за третото тримесечие. JPMorgan, която е втората по активи банка, постигна печалба от 3,6 млрд. долара. Citigroup, която е четвърта в класацията, спечели 101 млн. долара за периода от юли до септември.

Bank of America, която е най-голямата банка в САЩ по размера на своите депозити и активи, отчете загуба от 1 млрд. долара поради нарастването на просрочените заеми. Банката е отделила 11,7 млрд. долара за покриването на кредитни загуби през третото тримесечие.

От началото на тази година пазарната капитализация на Wells Fargo се е повишила с 3,3% и това я превръща в най-печелившата банка на Нюйоркската фондова борса. Инвестиционната компания Berkshire Hathaway на милиардера Уорън Бъфет е най-големият инвеститор в банката с дял от 6,5%.

„огромен прогрес“
21.10.2009 09:12


Милиардерът Уорън Бъфет обяви, че през последната година в икономиката се наблюдава „огромен прогрес“. Въпреки това обаче той се въздържа от прогнози какво би могло да се случи през следващите три или шест месеца.

Във видео интервю, записано преди месец и публикувано вчера, към Бъфет е бил отправен въпроса какво ще се случи с икономиката през последното тримесечие на настоящата и първото тримесечие на следващата година, предава CNBC.

Бъфет е заявил, че „не може да бъде сигурен какво ще се случва в конкретните тримесечия“. Според него икономиката е отбелязала изключителен прогрес, след като е имало голяма паника. „И ако някой не е изпаднал в паника, то той не е разбрал какво се е случвало“, убеден е милиардерът.

„Това, което се случи през септември и октомври 2008 година в частност, ще се помни много, много време. Макар правителствата често да объркват нещата, те за щастие направиха някои много правилни стъпки, много важни неща. Направиха го правилно и ни предпазиха от това да паднем от борда“, смята Бъфет.

„Като следствие от финансовата паника през четвъртото тримесечие реалната икономика бе ударена като с чук. Ние се възстановяваме от това. Пациентът отиде в залата за спешна помощ и няма да излезе напълно от болницата за доста дълго време“, посочва специалистът.

Съветът на Бъфет да се купуват американски акции се отплати с 15% за година
19.10.2009 17:02


Преди точно една година милиардерът Уорън Бъфет отправи препоръка към инвеститорите да се насочат към американски акции. Това се случи в момент на тотална паника на пазарите и с очаквания за още по-голяма нестабилност.

Въпреки всичко обаче Бъфет написа коментар за New York Times, в който обяви, че купува американски акции, за да си осигури „парче от бъдещето на Америка на подценени нива“, припомня CNBC. Тогава милиардерът повтори добре известното правило: „Страхувай се, когато другите са алчни и бъди алчен тогава, когато другите се страхуват“.

Година след съвета на Бъфет, отправен на 17 октомври, широкият американски борсов индекс е напреднал с 14,9 на сто. Не това обаче е основното.

В статията си специалистът посочи, че не се опитва да уцели „момента“ на пазара и че не е залагал на това дали след месец или година пазарите ще му се отплатят. Това е така, тъй като и двата периода се разглеждат от Бъфет като краткосрочни. Практиката на милиардера е да се търсят хоризонти от 5, 10 или 20 години.

Това е добра новина за Бъфет, тъй като моментът тогава бе ужасен за краткосрочно влизане на пазара. Причината е, че предстоеше мощен спад на S&P 500 до дъното от 676,53 пункта, регистрирано на 9 март. Ако някой е успял да уцели това дъно, е получил доходност от над 60 на сто досега.

Основната препоръка на Бъфет е това, че онези, които чакат перфектния момент, поемат огромен риск да закъснеят с влизането си на пазара. Особено ако търсят сигнали, че нещата са започнали да се подобряват.

Поради тази причина Оракулът от Омаха не дава конкретни прогнози за движението на акциите. Единственото, което казва, е това, че „пазарите ще се движат нагоре, може би значително силно, преди сентиментът или икономиката да се подобрят“.

Buffett's new strategy: Buy High, Sell Low?

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October 13, 2009 – Comments (2) | RELATED TICKERS: COP , XOM , BP 

I'm talking about Conoco Phillips (COP). Anybody following the activity of Warren Buffett's company, Berkshire Hathaway, on COP must admit that Buffett does not seem like himself lately. The legendary investor who champions value investing bought COP at the very top, during the oil spike of 2008. His average cost is probably around $78. Realizing and admitting his mistake in his annual report, Buffett began selling his stake in COP to harvest capital loss -- only to find that he sold at the bottom, just before one of the biggest rallies ever. He sold a significant chunk of his COP shares, probably around $43. Capital loss benefits cannot justify locking in a 44% loss for his shareholders. More importantly, has he ditched his favorite buy-and-hold-forever strategy?

If Buffett happens to find this Motley fool blog -- okay, if I was so lucky to meet him, I would like to ask a simple question: how will you explain this in your next annual report? Just another mistake, we sold at the bottom?

The Real Reason for Berkshire Hathaway to Invest in Burlington Northern Santa Fe Corp.

Warren Buffett's attraction to Burlington Northern Santa Fe (BNI) may be due in part to the railroad's strategic importance to Berkshire Hathaway.

In recent years Buffett has increasingly been building up Berkshire's energy portfolio, primarily through its MidAmerican Energy Holdings unit. Energy has now joined insurance as one of Berkshire's two major sectors.


MidAmerican's energy assets include coal-fired power plants in the midwest for MidAmerican Energy Co. and the Pacific northwest for PacifiCorp. Take a look at BNSF's network map, and you'll see that the railroad's tracks go right through the states in which MidAmerican Energy Holdings operates.


As much as environmentalists decry the effect coal has on the environment, it's still the raw material that generates the vast majority of electricity in the U.S. That's not likely to change anytime soon. If plug-in hybrid vehicles grow in popularity, that will leave the country less dependent on oil but more dependent on electricity, which translates into the need for more coal.


The coal that BNSF hauls is responsible for more than 10 percent of the electricity produced in the U.S. More than 90 percent of BNSF's coal comes from Wyoming and Montana's Powder River Basin, whose abundant low-sulfur coal burns cleaner and, according to the company, more economically for utilities.


In other words, it's likely that Burlington Northern will be hauling ample coal for the foreseeable future, and its customers presumably include the power plants controlled by MidAmerican. Is it possible that Buffett's attraction to BNI stems from the desire to control an important shipping vehicle for Berkshire's growing array of power plants?


That seems logical. While most investors choose individual stocks solely for the prospects of that one company, Buffett is thinking about the big picture for Berkshire. Should Buffett someday make a bid for the entire company, Burlington Northern would seemingly complement MidAmerican, while also profitably hauling freight for outside companies.


This is not to say that the other theories behind Buffett's big bet on BNI have no merit. The company does seem poised to profit off a rebound in imports from China. It will be a cheaper alternative to trucking should oil prices go back up. It would be virtually impossible for a competitor to replace Burlington's massive rail network, which gives BNI the moat that Buffett so desires. But it seems feasible that Buffett is also looking at how BNI could someday fit into the Berkshire organization as a stand-alone firm.


One fact that weakens this argument is that Berkshire hasn't bought any BNI shares for many months now. Berkshire still owns about 22.6 percent of the company, a stake worth $6.3 billion. BNI is still trading around $80 a share, which is about where Buffett bought many of the shares.


Remember, however, that Buffett didn't complete his purchase of GEICO for Berkshire until 1994, nearly two decades after he bought a major chunk in the 1970s.

Is it possible that Berkshire will follow a similar path to owning BNI outright? Only time will tell. But if the company does, it will own a valuable transportation network to link up its growing power portfolio.

Warren Buffett: Stocks Don't Always Beat Bonds

Warren Buffett: Stocks Don't Always Beat Bonds

Stocks aren't a lock to beat bonds even over a period as long as 20 years, Warren Buffett points out in Saturday's Wall Street Journal.

Buffett made the comments in an interview with Jason Zweig, a talented financial writer who pens "The Intelligent Investor" column for the WSJ each Saturday. He's been involved in revising Benjamin Graham's classic investing text "The Intelligent Investor" and also has a fascinating book on the emotions of investing called "Your Money and Your Brain."


Zweig's most recent column tries to dispel readers of the notion that stocks are a sure thing to beat bonds even over fairly long periods. He points out that bonds beat stocks in the 20-year period that ended June 30. 
Zweig spoke to Buffett this past week for the column. Buffett, who has been putting more money to work in the bond market than the stock market of late, points out that the key determinant for whether bonds or stocks provide better long-term returns is the price at which the investment is purchased.


"People say that stocks have to be better than bonds, but I've pointed out just the opposite: That all depends on the starting price," the Berkshire Hathaway CEO told Zweig.


Buffett does say that investors who hold the S&P 500 for long periods have exceedingly good odds to show at least some gains (which likely provides some of the rationale behind Buffett's decision to sell close to $5 billion worth of long-term put options on the S&P 500 and other major indices). Buffett tells Zweig that the odds of losing money on the S&P 500 over 25 years are roughly one in 100. That of course does not take inflation into consideration. 
Zweig tries to make clear in the column that the risk of owning stocks doesn't simply go away if your holding period is long enough. People who buy in at inopportune times may have to wait decades to recoup their money.


As an example, Zweig points out that someone who invested $1 million in U.S. stocks on Sept. 30, 2007, would have had just half that at the beginning of March 2009. People forced to retire at that time could find themselves in real trouble.


"In short, you can't count on time alone to bail you out on your U.S. stocks," Zweig writes. "That is what bonds and foreign stocks and cash and real estate are for."

Cisco Systems Heeding Advice of Warren Buffett

Cisco Systems Inc. is heeding the words of Warren Buffett and getting greedy while others are fearful.

Cisco announced yesterday that it would pay $2.9 billion cash to buy Starent Networks Corp., which makes software and equipment for wireless carriers. 

It's the second cash deal Cisco has made this month. It also announced that it was buying Tandberg ASA of Norway for about $3 billion.

Following the Buffett mold, Cisco had squirreled away $35 billion in cash as of the start of this quarter. Sensing a market bottom, Cisco is now getting greedy with its cash horde.

The Wall Street Journal today quoted Cisco CEO John Chambers as saying the company would be "the most aggressive" it's ever been this year and next in making acquisitions.

Cisco was owned by a number of well-known value investors as of June 30, including Bill Miller, Bill Nygren and Ronald Muhlenkamp. Of the value gurus, Muhlenkamp had the highest allocation of Cisco in his fund's portfolio.

Cisco was The Muhlenkamp Fund's fourth-largest holding as of June 30, trailing only IBM, Bank of America and Oracle. Interestingly, IBM and Oracle also fit the bill of cash-rich technology companies getting greedy as the economy begins to improve,

The famously tech-averse Buffett would probably never invest in Cisco, at least in any meaningful way for Berkshire Hathaway. But that doesn't mean Cisco can't learn the lessons that have worked so well for Buffett and his shareholders.

Милиардерите под строй 
13.10.09 11:48


Супербогатите китайци безспорно са възстановили позициите си, разклатени от финансовата криза, като в момента в Китай има повече известни доларови милиардери от всяка друга държава, с изключение на САЩ. Това сочи публикувано изследване, цитирано от Reuters. 

Според проучването, изготвена от специализираната издателска група Хурун рипорт (Hurun Report), в Китай има 130 известни доларови милиардери спрямо 11 миналата година. Броят им в САЩ е 359, а в Русия и Индия те са съответно 32 и 24, според американското списание Forbes. 

Богатите китайци стават по-богати, като средното състояние в класацията е 571 милиона долара - с близо една трета повече от миналата година, посочва съставителят Рупърт Хугуерф. 

Списъкът на най-богатите китайци тази година се оглавява от Ван Чуанфу - председател на управителния съвет на компанията за производство на електрически автомобили и батерии BYD Co Ltd, в която дял има американският милиардер Уорън Бъфет - със състояние, оценено на 5,1 милиарда долара. Той също така се е изкачил с най-много позиции в класацията на богаташите - с цели 102 стъпала.

В две изречения Уорън Бъфет каза най-същественото за ефективните пазари: „Правилното наблюдение, че пазарът често е ефективен, доведе академиците, инвестиционните посредници и корпоративните мениджъри до погрешното заключение, че той винаги е такъв. Разликата между двете твърдения е като между деня и нощта.“
Способността да я разпознавате в реални условия е решаваща за това дали ще се озовете с богатство от $50 млрд. или с възвращаемостта на средния инвеститор. Бъфет натрупа състояние именно от спорадичните случаи, в които пазарът е неефективен.
Хипотезата за ефективния пазар е основа на финансовия свят вече почти 50 години. Един от създателите й Майкъл Йенсен бе казал, че в икономическата наука няма твърдение, подкрепено от по-солидни емпирични доказателства. Подобно на свои съвременници, като Бъртън Малкийл, чиято книга „Разходка по Уолстрийт“ е преиздавана вече осем пъти, проф. Йенсен бе нетърпелив да разгадае мистерията на индустрията за финансови услуги. Движението на цените е случайно, така че е безсмислено да плащате за активно управление. 
Пазарната ефективност е теория за начина, по който пазарите реагират на информацията, и всъщност не доказва, че те съдействат за общата икономическа ефективност, макар че не можем да отречем връзката между двете концепции. Дълго време на участниците в пазара и десните идеолози им изнасяше да насърчават това объркване. Те твърдяха, че щом пазарите са ефективни, държавната намеса в тях е контрапродуктивна, а по-свободният режим означава по-висока ефективност. 
Всеки човек с основни познания по финанси знае, че има три версии на хипотезата. Според най-крайния вариант всичко, което можете да разберете за стойността на ценните книжа, се съдържа в цената им. Той е тясно обвързан с идеята за рационалните очаквания, която доминира макроикономическите политики в последните 30 години. Държавната намеса в повечето случаи е безплодна, паричната политика трябва да следва прости и константни правила, пазарните цени са обмислено отражение на фундаментални стойности и не съществува такова нещо като балони в цените на активите. 
Тези твърдения не само не отговарят на емпиричните данни, но съдържат противоречия. Ако цените отразяват цялата налична информация, защо някой ще си прави труда да се сдобива с нея? Ако пазарите са информационно ефективни, защо се сключват толкова сделки между хора с различни очаквания за бъдещи развития? Ако теорията бе вярна, действията, които претендира да обяснява, почти нямаше да съществуват. 
Макар хипотезата за ефективните пазари да не е достоверна, тя може да хвърли известна светлина върху нещата. Абсурдите при рационалните очаквания идват от стремежа към откриване на точни зависимости, присъщ на много икономисти, бъркащи случайните прозрения с универсални истини. Икономическите модели са илюстрации и метафори, а не изчерпателни описания дори на частта от света, която описват. Можете да научите много от теорията, ако не я възприемате твърде сериозно и като Бъфет се концентрирате върху спорадичната неефективност, а не върху честата ефективност. 
Най-меката версия на хипотезата за ефективните пазари ни казва, че миналите цени не са индикатор за това, което ще се случи в бъдеще. Има доста доказателства в подкрепа на това – понякога е чиста загуба на време, по-добре да изучавате линиите на ръката си. В същото време има признаци за тенденцията краткосрочните движения на цените да се запазват – тогава набраната инерция е истинска. Ако можете да уцелите случаите, в които краткосрочният тренд става дългосрочен, ще станете богат. Напълно възможно е да натрупате пари (или да чертаете политика), като разчитате циклите на образуване и спукване на балони. Но повечето участници на пазара не успяват.
Според компромисната версия на теорията пазарите отразяват цялата обществено достъпна информация за ценните книжа. Всичко, което е общоизвестно, фигурира в цената, така че констатации като „General Electric е добре управлявана компания“ и „Великобритания има голям бюджетен дефицит“ са безполезни за инвеститорите. Вътрешната информация и собственият анализ могат да добавят стойност. 
Първата версия на теорията за ефективния пазар е популярна, защото светът, който описва, е лишен от външни социални, политически и културни влияния. Но ако реалността се определя от възгледите за света, не само ще трябва да проучим как се формират и повлияват те (нещо, което икономистите не желаят да правят), но моделите и прогнозите ще зависят от тях. Разбира се, моделите и прогнозите зависят от вярванията, така че разбирането за начина, по който се формират, е задължително. Икономиката не е царица на социалните науки, а слугиня, и трябва да се опре на антропологията, психологията и социологията на идеологиите. Бъдещето на инвестирането и икономиката е в по-еклектичния подход.

24/7 WALL ST: Symetra, a Buffett Holding, Plans IPO… Again

Posted: October 6, 2009 at 11:56 am 

After the close on Monday came a little-known IPO filing from a life insurance operation called Symetra Financial Corp. It turns out that the Bellevue, Washington-based insurer has no terms for the sale but listed a sale of up to $575 million in the initial public offering filing. This is not the first attempt to come public, but it turns out that Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) and White Mountains Insurance Group, Ltd. (NYSE: WTM) effectively control the company.

This one filed for an IPO of up to $750 million back in 2007, but the insurer pulled the plug on the IPO in 2008. You can guess the reason listed… ‘unfavorable market conditions.’

Symetra palns to trade under the stock ticker “SYA” on the New York Stock Exchange. It has an impressive lineup of joint book running managers: BofA Merrill Lynch, JPMorgan, Goldman Sachs and Barclays Capital.

We noted that Berkshire Hathaway is a shareholder, and that stake is listed as 26.3%. But other shareholders include White Mountains Insurance Group, Ltd. (NYSE: WTM) also listed with a 26.3% stake. Franklin Mutual Advisers, LLC, a unit of Franklin Resources, Inc. (NYSE: BEN) is listed as a 11.7% stakeholder. Even Och-Ziff Capital Management Group LLC (NYSE: OZM) is listed as a 6.6% stakeholder via its OZ Master Fund, Ltd. Other stakeholders include Vestar Capital Partners, Highfields Capital Management, and Caxton Associates.

Based on how Symetra’s stakeholders are listed and per the filing, this is effectively controlled by Symetra is controlled by Berkshire’s General Re and White Mountains. This time the company and holders will sell shares, although again terms are not disclosed.

Symetra’s revenues fell by almost 9% in 2008 from 2007 to $1.45 billion, with about 60% coming from group and individual insurance lines. Most of the drop was attributed to investment losses.

THE PENINSULA: Bid for Cadbury: Search for deal that both sides can swallow

10/3/2009 0:41:57
Source ::: FINANCIAL TIMES 

by Jonathan Birchall 

and Jenny Wiggins 

Irene Rosenfeld, chief executive of Kraft, has maintained a full programme of public appearances since her £10.2bn takeover approach to Cadbury last month. But amid talking about women and leadership in Toronto and efforts to combat global hunger in New York, Rosenfeld has kept carefully to her script on Cadbury. 

Kraft has said it will remain “disciplined” in its pursuit of the UK confectionary company, which Ms Rosenfeld told company employees last week was a desirable but not essential acquisition. Kraft maintains that it can finance a formal bid without needing to sell other brands, and that it can do so while keeping the investment grade credit rating on its $20bn (£12.5bn) gross long-term debt. 

The company has also maintained its silence on expectations that it will need to raise its original indicative cash and shares offer of 745p a share, made on September 7, which represented a 30 percent premium on Cadbury’s closing share price of 568p on the previous Friday. 

However, the value of the offer to Cadbury shareholders has been weakened by the 7 percent fall in Kraft’s share price since the bid was announced, partially offset by the strengthening of the dollar against sterling. With Kraft’s share price at yesterday lunchtime in New York at $25.89, the original approach was worth 719p a share, or £9.84bn. 

The strength of Kraft’s third-quarter results, due in the first week in November before the UK deadline for a formal bid, will also be a factor that Cadbury shareholders will consider when deciding whether to take Kraft’s paper. The company is expected to deliver improvements in operating margins, boosted in part by lower commodity costs. Kraft has said it will improve its operating margins to the mid-teens by 2011, up from an adjusted 12.3 per cent in 2008. 

Analysts at Nomura in London argued yesterday that Kraft could raise its offer to 850p a share, which would value Cadbury at 13.5 times 2009 earnings before interest, tax, depreciation and amortisation, and increase the cash portion of its offer from 300p a share to 440p a share. That would be almost a 50 percent premium to the pre-bid share price. 

Nomura said Kraft could afford to raise its offer to 850p and maintain its credit rating, and could appease its investors by increasing the targeted cost savings from a takeover from $625m to $750m. 

Kraft’s original $625m in estimated savings from shared distribution and marketing excludes current cost-cutting efforts at both Cadbury and Kraft. Kraft’s largest shareholders have given no public indications of what they would consider an acceptable price to pay for Cadbury. In his only public comments on the proposed deal, Warren Buffett, who owns 9.4 percent of Kraft’s shares, said he believed Kraft’s original offer already represented a “full price” for Cadbury, given what he said was the undervaluation of its own stock. 

While Kraft says it will not sell brands to fund the bid, it may be prepared to dispose of lower-margin businesses, such as its Maxwell House coffee division or its Oscar Mayer meats as part of its long-term strategic development. In 2007, it followed up its $7.2bn cash acquisition of Danone’s LU biscuit division by selling its Post cereals business to Ralcorp for $1.65bn. 

Kevin Dreyer, research analyst at US fund manager Gamco Investors, which owns about 1 per cent of Cadbury, said the fund would look favourably on an offer towards 860p. He added he had “no issue” with Kraft taking ownership of Cadbury. “There’s a lot of benefit from complementary geographic footprints as well as the greater scale ... certainly Cadbury would benefit from Kraft’s scale,” he said. 

Analysts say Cadbury has done a good job proving to investors it is worth more than 745p a share. Julian Hardwick, analyst at RBS, said: “I don’t think Kraft has won the argument that Cadbury can’t exist as an independent entity.” Cadbury shares closed yesterday at 803p. 

Todd Stitzer, Cadbury chief, told a Sanford Bernstein investor conference last month in London that he was “increasingly” confident the company would deliver on its restructuring plans and that he hoped to deliver a “good” mid-teens profit margin by 2011. Donald Yacktman, whose Yacktman Funds owns 44,200 Kraft shares, said he supported the strategic argument for a merger, but wanted to see how much Kraft was prepared to offer. “It’s not the fit, it’s the price,” he said, noting that for Rosenfeld “this will test her mettle. We’ll find out just how disciplined she really is”.

OMAHA WORLD HERALD: Gates still has plenty of stock in Berkshire

By Steve Jordon

Originally Published Sunday October 4, 2009


WORLD-HERALD STAFF WRITER 

Bill Gates' foundation has been selling Berkshire Hathaway Inc. stock but still has more money invested in Warren Buffett's Omaha-based company.

The reason: Berkshire's stock price has been gaining faster than the Bill & Melinda Gates Foundation has been selling the shares.

On July 1, Buffett made his yearly contribution of Berkshire Class B shares, part of his pledge to give most of his wealth to the foundation over a period of years. This year, the donation was 428,688 shares, worth $1.25 billion.

The latest donation boosted the foundation's holdings to 1,679,838 shares, according to filings with the Securities and Exchange Commission. (Each Class A share of Berkshire can be converted into 30 shares of Class B. The Class B shares can't be re-converted into Class A stock.)

The stock was priced at $2,924 per share July 1, making the foundation's shares worth about $4.9 billion.

By the end of last week, the foundation had sold 50,200 shares, an average of 740 shares per trading day, reducing its shares to 1,629,638.

Due to the 10.2 percent rise in Berkshire's stock price since July 1, those shares are worth $5.3 billion.

A year ago, the Gates Foundation's Berkshire shares were worth even more — nearly $5.9 billion — even before Buffett's 2009 donation. Berkshire's shares are still 30 percent below their year-ago price.

Proceeds from the foundation's recent sales have totaled about $150 million. The money could be headed for its charitable programs or it may be going into other investments to await spending.

Buffett has said he expects the foundation to sell all the Berkshire stock and spend the proceeds over the next several decades. Selling the stock won't depress the day-to-day price, he has said, because the total number of shares traded each day is relatively small, even with the foundation's recent regular sales.

Vanity Fair

Buffett raised objections to a deal that former Treasury Secretary Henry Paulson tried to arrange during last year's financial crisis, saying Paulson was too closely tied to Goldman Sachs Inc., according to the issue of Vanity Fair due out this week.

Rawstory.com reported on the magazine's account of Paulson's effort to have Goldman acquire troubled Wachovia Corp., calling for the Federal Reserve to supply financial guarantees.

Andrew Ross Sorkin, in an excerpt from a forthcoming book printed in the magazine, said the deal was nearly completed. Paulson contacted Goldman CEO Lloyd Blankfein, who also was a board member of Wachovia, and Wachovia CEO Robert Steel, a former vice chairman of Goldman and a former No. 2 man at the Treasury Department under Paulson.

Buffett also was contacted about investing in the merged company, Sorkin reported, but told a banker at Goldman that it would never happen.

“By tonight, the government will realize they can't provide capital to a deal that's being done by the former firm of the Treasury secretary with the company of a former vice chairman of Goldman Sachs and former deputy Treasury secretary,” Buffett said, according to the book. “There is no way. They'll all wake up and realize, even if it was the best deal in the world, they can't do it.”

Others also realized the deal would harm Paulson's credibility and feed conspiracy theorists, who would accuse Paulson of helping his friends financially.

Sorkin wrote that the deal died after Paulson, Fed Chairman Ben Bernanke and Timothy Geithner, president of the Federal Reserve of New York at the time and now Treasury secretary, decided against it, in part, because of the “optics” of Goldman's ties to the government.

Buffett eventually invested $5 billion in Goldman to help its finances. Dec. 31, 2008, Wachovia was acquired by Wells Fargo & Co., of which Berkshire is a major stockholder.

Richest man

The chairman and CEO of the electric car company that attracted an investment by Berkshire is China's richest man, the London Telegraph reported.

Wang Chuanfu, 43, of BYD Inc., is worth $5.1 billion following gains in the price of his company's stock, triggered in large measure by Buffett's investment, the newspaper said.

“I was shocked, I really was,” said Rupert Hoogewerf, who keeps track of Chinese billionaires. “There's no way you could have predicted he would rise to the top, but we could not find anyone else worth as much.”

Wang's parents were poor farmers who died while he was in school. He worked as a government researcher before borrowing $300,000 from relatives in 1995 to start a company that makes rechargeable cell phone batteries.

The battery business led to the electric car business, attracting the attention of Berkshire's vice chairman, Charlie Munger. Berkshire invested $232 million in BYD, receiving about a 10 percent stake that is worth about $1 billion more today.

BYD so far has sold fewer than 100 of the electric cars but plans to begin large-scale production and sales in China soon and to enter the U.S. market next year.

The newspaper said the “Buffett effect” helped drive up the stock's price more than 380 percent so far this year.

Stock price

Over the past year, Buffett's wealth declined the most, dollarwise, among those listed in Forbes magazine's new tally of the richest Americans. The decline was due to Berkshire's stock price.

Once more than $140,000 for a Class A share, the price dipped as low as $70,050 during the market crunch before recovering to the $100,000 range recently.

Buffett's Berkshire shares were worth nearly $59 billion at one point last year, before the market slide and before his Gates Foundation donation. Forbes, which released its list last week, put his wealth at $40 billion, second place behind his friend, Microsoft founder Bill Gates.

The 400 people on the Forbes list saw their combined wealth decline by $300 billion from a year earlier, the magazine reported, to $1.27 trillion, thanks to falling stock and real estate prices. Counting divorces and fraud, the magazine said, 314 of those on the list had less wealth than a year ago.

Gates, whose net worth declined by $7 billion to $50 billion, beat out Buffett for the 16th straight year, Forbes said.

If you combined the fortunes of the four Walmart heirs, they would be No. 1 with $80 billion. The top 10 lost $39.2 billion, or 14 percent of their wealth, Forbes said. The biggest gainer was Dallas banker Andrew Beal, who tripled his wealth to $4.5 billion by buying up cheap loans and assets during the market decline.

Successor

Berkshire's financial deals won't be as profitable under Buffett's successor, according to an analyst with Stifel Nicolaus & Co.

Bloomberg News reported that as an example, Meyer Shields cited the 10 percent annual return that Berkshire is getting from its $8 billion investments in Goldman Sachs Group Inc. and General Electric Co. last fall, when the credit shutdown left the companies needing financial backing.

“When Berkshire bought preferred shares from Goldman Sachs and GE, it's very likely that the imprimatur of the world's most famous investor conveyed a level of confidence that itself contributed to the deals' very generous terms,” Shields said. “Thanks to its solid cash position, Berkshire should always be a competitive acquirer, but the economic impact of Buffett's ‘halo' will probably fade.”

Buffett, 79, has said Berkshire has a succession plan in place, likely splitting his duties among one or more investment officers and a chief executive.

“We expect the ‘Buffett Premium' to wane as the inevitable transition approaches,” Shields wrote in a research note. “Buffett's knowledge and skills are replaceable, but since his iconic status isn't, the economic attractiveness of Berkshire's future investment opportunities will likely decline.”

GURUFOCUS: The private market value of Burlington Northern Santa Fe

Oct. 04, 2009 | Filed Under: BNI

There have been several questions as to the private market value of BNI. While it is difficult to put a number on this, Warren Buffett, when buying a business, always ask what is it worth and suggests looking at recent transactions in the industry to get a better understanding.

As mentioned, the industry has consolidated to just seven players so a reasonable effort to value the railroad would be to look at what these players are doing: The Dakota Minnesota & Eastern Railroad Corp. (D,M&E), a division of Canadian Pacific, recently put its $6 billion plan to ship coal in Powder River on hold. DM&E cited weakness in the economy as well as other regulatory concerns.

This is a 278 mile project with a $6 billion price tag, suggesting that each mile is worth over $21 million. Additionally, D,M&E received a $2.5 billion grant from the Federal Government. While it is unknown whether D,M&E will be successful in efforts to build the railroad, these metrics are quite telling as BNI is currently valued at over $1 million a mile, thus highlighting the margin of safety that is so important when making an investment.

With the stock trading around 80, the company is trading at approximately 14x 2010 earnings and 7x 2010 EBITDA. It should generate over $1.2 billion after capital expenditures and will pay out over $500 million in dividends. As mentioned above, the company has generated a healthy 7% cash flow yield for the last decade and used that cash flow in a wise manner – the shares have decreased by over 160 million. As there is weakness in the economy, the company has suspended its share repurchase plan but those who have been following Buffett know that he has made the bulk of his purchase around these prices.

GURU FOCUS: Warren Buffett On Ben Graham

Oct. 05, 2009

If I have seen further it is by standing on ye shoulders of Giants.” –Isaac Newton

In The Intelligent Investor and Security Analysis, Warren Buffett contributes to the titles by writing a foreword or giving permission to republish the letter he wrote on Ben Graham shortly after he passed away.While the influence is obvious on paper, you really do not get to see the face expressions, tone of voice, etc. that really show how Warren Buffett feels about Benjamin Graham. Words come to life in the Warren Buffett on Ben Graham video which I recently found. While I do not know the exact date of the video, my guess it was recorded around the time the 6th edition ofSecurity Analysis was released (September 2008).

24/7 WALL ST: Symetra, a Buffett Holding, Plans IPO… Again

Posted: October 6, 2009 at 11:56 am 

After the close on Monday came a little-known IPO filing from a life insurance operation called Symetra Financial Corp. It turns out that the Bellevue, Washington-based insurer has no terms for the sale but listed a sale of up to $575 million in the initial public offering filing. This is not the first attempt to come public, but it turns out that Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) and White Mountains Insurance Group, Ltd. (NYSE: WTM) effectively control the company.

This one filed for an IPO of up to $750 million back in 2007, but the insurer pulled the plug on the IPO in 2008. You can guess the reason listed… ‘unfavorable market conditions.’

Symetra palns to trade under the stock ticker “SYA” on the New York Stock Exchange. It has an impressive lineup of joint book running managers: BofA Merrill Lynch, JPMorgan, Goldman Sachs and Barclays Capital.

We noted that Berkshire Hathaway is a shareholder, and that stake is listed as 26.3%. But other shareholders include White Mountains Insurance Group, Ltd. (NYSE: WTM) also listed with a 26.3% stake. Franklin Mutual Advisers, LLC, a unit of Franklin Resources, Inc. (NYSE: BEN) is listed as a 11.7% stakeholder. Even Och-Ziff Capital Management Group LLC (NYSE: OZM) is listed as a 6.6% stakeholder via its OZ Master Fund, Ltd. Other stakeholders include Vestar Capital Partners, Highfields Capital Management, and Caxton Associates.

Based on how Symetra’s stakeholders are listed and per the filing, this is effectively controlled by Symetra is controlled by Berkshire’s General Re and White Mountains. This time the company and holders will sell shares, although again terms are not disclosed.

Symetra’s revenues fell by almost 9% in 2008 from 2007 to $1.45 billion, with about 60% coming from group and individual insurance lines. Most of the drop was attributed to investment losses.

THE GLOBE AND MAIL: Graham's strategy still stands tall



From Wednesday's Globe and Mail Last updated on Wednesday, Oct. 07, 2009 03:10AM EDT 

Validea.com

In the sports world, some of the most intriguing debates involve comparisons that cross generations. How many goals could Bobby Hull score in today's NHL? How about Maurice Richard? Could Babe Ruth hit 60 home runs?

In investing, you can ask similar questions - and get much more definitive answers.

Take Benjamin Graham. Born in 1894, Mr. Graham is considered the father of both value investing and the field of security analysis. He's also known as Warren Buffett's mentor. He earned his reputation by producing annual returns of about 20 per cent from the mid-1930s through the mid-1950s, far exceeding the 12.2-per-cent annual returns of the broader market.

We'll never know for sure how well Mr. Graham would have performed in today's market - but we can get a pretty good idea. That's because in his classic book The Intelligent Investor, Mr. Graham laid out a step-by-step, quantitative stock-picking method for the "defensive investor" - a method I've replicated in my Graham-inspired "Guru Strategy" computer model.

Based on the performance of that strategy, has Mr. Graham's approach been passed by? Hardly. In fact, the 10-stock Graham-inspired portfolio I track has been my best long-term performer, more than doubling in value since its July, 2003, inception.

Even amid the huge market shakeup of the past two years, the Graham portfolio has continued its strong performance. It lost less than the broader market last year, and quickly made up all of its 2008 losses.

Mind the Business 

How can a 60-year-old strategy fare so well today? It's because Mr. Graham's strategy wasn't gimmicky, or designed to capitalize on specific market conditions.

Mr. Graham knew that over the long term, stocks tend to move up or down based on how their underlying businesses perform. So, he scoured balance sheets and income statements to find strong, steady companies that were likely to thrive over the long haul.

The same criteria he used to find solid businesses 60 years ago are thus still finding solid businesses for my Graham-based portfolio today. Among those criteria:

Current Ratio: This compares current assets (a company's most liquid assets) to current liabilities (those closest to maturity) to gauge liquidity. The Graham approach wants this to be at least 2.0.

Long-Term Debt v. Net Current Assets: Net current assets (current assets minus current liabilities) should be equal to or greater than long-term debt.

Earnings-Per-Share Growth: He wanted steady growth, at least 30 per cent total over the past decade, with no negative annual EPS over the past five years.

The Margin of Safety 

Having lived through his own family's financial woes and the Great Depression, Mr. Graham thought minimizing losses was every bit as important as realizing gains. Because of that, he looked for stocks with a "margin of safety," whose prices were already so low relative to real values of their businesses that even if they struggled, the stock didn't have far to fall.

There were two ways Mr. Graham targeted such stocks: the price/earnings and price/book ratios. He measured the P/E two ways - using the past year's earnings and using the average of the past three years. He wanted both figures to be below 15.

As for the price/book ratio, Mr. Graham's defensive approach used a slightly unusual criterion: The product of the P/E ratio and the P/B ratio should be no greater than about 22.

Last year, in one of the worst market environments ever, my Graham-based model did indeed provide a margin of safety. Its tough debt requirements excluded nearly all financial firms, which were hit hard.

This year, my Graham portfolio is well ahead of the S&P 500. What is it high on right now? Here are three U.S. firms with a presence in Canada:

Smith International Inc.: Based in Houston, this oil field services firm has about 1,000 rigs in the U.S. and almost 200 in Canada. My Graham-based model likes the $2.9-billion in net current assets versus $2.1-billion in long-term debt, and 11.88 P/E ratio.

Snap-On Inc.: This Kenosha, Wis.-based company makes tools and diagnostic equipment. Two of its manufacturing and distribution centres are in Canada. My Graham-based approach likes the firm's solid 2.33 current ratio, manageable long-term debt and 11.6 P/E ratio.

Cabela's Inc.: Cabela's is the world's largest direct marketer, and a leading retailer of outdoor merchandise. The Sidney, Neb.-based firm has about 30 retail locations, most in the northern U.S. and one in Winnipeg. The Graham model likes its manageable long-term debt and low 0.97 P/B ratio.

These three stocks get a perfect 100-per-cent score from my Graham-based model. Two Canadian-based stocks also rate highly, with Toronto-based Harry Winston Diamond and Calgary-based oil services firm Precision Drilling Trust earning scores of 86 per cent.

Increasing Your Financial Intelligence Series: Rules of Warren Buffett

By Issa, October 4th, 2009

Finding Kindred Minds
I could never get enough of Warren Buffett. I follow him on Twitter (and follow everyone he follows), his name would be the red flag that would make me read financial reports and updates (and countless finance websites I subscribe to that send me maybe 20 emails a day), and I even tried to join his 10,000 Women.

I cannot help it. He was there at my first foray into the world of money and investment through a book given to me by a mentor: The Tao of Warren Buffett, by Mary Buffett and David Clark. That introduction so inspired me that I have dedicated my life to learning all I can about this enigmatic thing, wealth, which has the power to change lives – not only the money earner’s but everyone’s. Buffett, the philanthropist, showed that it can be done (and should be done). I moved on to learn the principles of Kiyosaki, Orman, Coelho, Bo Sanchez, Ramit, Tim Ferris, Dan Kennedy and countless others.

But I always go back to Buffett and his principles. Here are three and some life’s lessons.


Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1

I failed at Rule No. 1.

I just came home from the States and was making my rounds visiting friends. This particular friend was a favorite and something about her caught my eye. She was wearing a curious bag, brown and locally made and it had dangling from it, very interesting big stones. But they were not stones. They were “charms”. I was to find out later that they came in bracelets too and that they brought people “luck”. Luck! I was intrigued. I just came from a Western nation where there was no place for charms or luck and having seen these colorful, enchanting reminders of the way of life I left behind, I was at once captivated. I had an inspiration to go into business selling charm bracelets! I put in an order for so many bracelets that cost me USD$600 and I took it upon my head that I could sell them in the country that I just left.

Of course it did not work.

It was interesting that my friend’s friend (the owner) appeared not too enthusiastic to sell to me. I was intrigued by this but did not think much of it at that time. On hindsight, I should have. She was a feng shui master and she probably looked into my present and saw that it was not an auspicious time for me to be selling charm bracelets.

And so I lost the $600, which to me, then, was a lot of money (okay, okay, it is still a lot of money today).

But some important lessons were learned. One, do not go into a business that you do not understand (selling). Two, do not leave the selling to other people and think you can just sit there, oceans away, and make lots and lots of money. Sometimes it works, most of the time it does not. Three, do your due diligence. Find out about the business, does it sell, can you get the goods for less (I did not really haggle that time), how long before you make the first installment, can you get a discount for bulk, are there existing flyers to help you promote the business, how many months before you get the ROI (return on investment), what is the possibility that it would fail and is it surmountable? Four, have a marketing plan – launch the product, join trade fairs, do vigorous email marketing, provide incentives or discounts, testimonials, product review – that would span months, or years.

I still get excited at business prospects more than I should have, sometimes. But I am more cautious too, thanks to Rule No. 1.

Rule No. 2: I made my first investment at age eleven. I was wasting my life up until then.

I made my first investment when I married my investment who was a diamond-in-the-rough who has got so much potential and every day is a wonder seeing that potential come true.

I am kidding. And not. I think marriage is an investment of sorts. Your financial future depends upon whom you marry, not the person he or she is at present (because that might not be much) but his potential, because more than the net present value, it is that potential that makes it possible for the future to give its limitless rewards. Love could enable a person to see into the future (it has a reputation for blindness too, but maybe that is an afterthought invented by people who did not work at it), and belief can help the “potential” come to life.

I remember my father-in-law saying that he does not want a rich man for his daughter. He wants someone with a mind of a businessman (like him), because only a businessman can give his daughter the life of ease and happiness – limitless – that he wants for her. She got him.

And I got mine.

But like all investments, marriages (and people) should be nurtured so the material and the non-material rewards (which are more important) would come.

The investment has paid off and hubby’s genius has made it possible for me to start investing (business, stocks, mutual funds). Yes, it did not happen at age 11, but I do not think I have wasted my life until then. I was nurturing a diamond.

Rule No. 3: You can’t make a good deal with a bad person.

There is a problem – how to tell if a person is good or bad. It is not always easy. Some people have tongues of honey and can talk you into anything. I particularly remember one. He played the piano like Rachmaninoff, office was set up in one of the most expensive parts of town and he was even a geomancer with an impressive reputation (we did not check). We were surprised and flattered that he wanted to go into business with us. But before we put in the money, there was a news explosion – he was actually a con artist who scammed people in Asia and in the United States.

It was a close call.

When dealing with persons (whether referred to you or not) and you will do business with that person (the amount of money does not matter), extensive research should be done (Google may help), questions should be asked, plans should be carefully analyzed, contracts drawn up. If all else fails, trust the gut.

And have fun learning from life.

Warren buffett books

Warren Buffett was born in 1930 in Omaha, Nebraska, USA and has become probably the world’s most successful investor. He is the son of a stockbroker and Congressman, and of course everyone wants to learn about his trading secrets.
 
I don’t think that Warren Buffett has actually written a book about his investment principals himself, in that sense there is no Warren Buffett book, but he has from time to time given hints in his annual letters to share holders of Berkshire Hathaway, and in other short notes and reports to the media.
 
However there have been a lot of books written about Warren Buffett by others who have tried to put together the story and ideas behind the man and his fortune.
 
In fact if you go to Amazon and do a search for “Warren Buffett” will find 2,576 books being listed, compare that to “Bill Gates”, who for a long time was also considered to be the riches man in the world, and you only find 11 listings, that should give you some idea about the public obsession with the man.
 
I have only read one of his books called “The Warren Buffett Way”, it was hard work and somewhat of a boring read. Much of the content of all these books on Warren Buffett seems to be the same basic information about value investing and being patient with your investments. I don’t think there is much to be gained by reading more than one of them.
 
Here is a small selection of some of the better known ones:
 
The Warren Buffett Way, Second Edition by Robert G. Hagstrom, Ken Fisher and Bill
The Snowball – Warren Buffett and The Business of Life
The essential Buffett library
Investing – the Last Liberal Art – by Robert Hagstrom
Buffett: by Roger Lowenstein
The New Buffettology, by Mary Buffet and David Clark
The Interpretation of Financial Statements, by Benjamin Graham
Value Investing: by Janet Lowe
Robert Hagstrom, The Warren Buffett Way
Buffettology by Mary Buffett and David Clark
Janet Lowe, Warren Buffett Speaks – Wit and Wisdom from the Word’s Greatest Investor
John Train, The Midas Touch: The Strategies That Have Made Warren Buffett ‘America’s Preeminent Investor’.
Andrew Kilpatrick, Of Permanent Value, The Story of Warren Buffett
Warren Buffett, Lawrence Cunningham (editor), The Essays of Warren Buffett
Ms Janet M. Tavakoli, Dear Mr. Buffett: What An Investor Learns 1,269 Miles From Wall Street
 
Many of these Buffet books are quite large, with many pages that would take a long time to read, and even longer to understand and make any sense of. A better way of understanding Buffett maybe to find investment articles which have summarised the Buffett principals into short concise lessons that can be quickly learnt and applied.
 
One point of caution however, and this is not investment advice, Buffett has made most of his fortune during the years of the great USA bull markets, times have changed and it is possible these principals are no longer as effective as they used to be.

Бъфет изстреля китайски бизнесмен на челна позиция по богатство в страната
29.09.2009 23:13


Уан Чуанфу – основател на компанията BYD, в която групата на Уорън Бъфет Berkshire Hathaway държи 10 на сто, се изкачи със 102 места до челната позиция в годишната класация на най-богатите хора в Китай, предаде ВВС.

Богатството на Уан е нараснало от 880 млн. долара до 5,1 млрд. долара, след като подразделение на Berkshire Hathaway закупи дела от 10% в BYD за 230 млн. долара.

Акциите на компанията, от която Уан притежава 27,8%, са скочили с 387% тази година.

BYD стартира дейността си с производство на батерии за мобилни телефони, но доби популярност с хибридните си автомобили. Компанията е създадена през 1995 г., а започва производство на електрически коли през 2003 г.

На второ място в класацията се нарежда Джан Ин, създала компанията за рециклиране и пакетиране Nine Dragons Paper. Нейното богатство се оценява на 4,9 млрд. долара.

Според класацията броят на милиардерите в Китай се е увеличил до 130 от 101 миналата година.

Коя е най-успешната покупка на Бъфет?
06.10.2009 16:02


Покупката на компанията СТВ, произвеждаща оборудване за ферми за отглеждане на селскостопански животни, е „най-големият успех“ за фонда Berkshire Hathaway. Това е заявил собственикът на фонда Уорън Бъфет във видеообръщение към служителите на фирмата.

По думите му Berkshire Hathaway никога няма да продаде този актив, съобщава Bloomberg.

Фондът на Бъфет купува СТВ през 2002 г. за 177 млн. долара. Оттогава, коментира Бъфет, „оперативните резултати от дейността на фирмата и проведените от нея поглъщания“ са надминали неговите очаквания. По-конкретно, през последните 7 години, СТВ е осъществила ред поглъщания в Израел, Германия и Холандия, в т.ч. фирмите Swine Services Specialists и Porcorn.

Бъфет си припомнил, че отначало се отказал от покупката на СТВ, но скоро след това променил решението си. Това станало, след като в централата на Berkshire Hathaway дошъл за делова среща генералният директор на СТВ Виктор Манчинели. „Той е точният човек, а СТВ е точната компания“, допълва Бъфет.

Уорън Бъфет е известен като инвеститор, който се придържа към простия принцип – да купува това, което самият той би ползвал. Сега активите на Berkshire Hathaway възлизат на около 150 млрд. долара. Фондът притежава дялове в Coca-Cola, American Express, Washington Post, Gillette, Walt Disney и др.