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Posts Tagged ‘Warren Buffett’

LKY, Ho, Buffett and Keynes

In Financial competency on 23/05/2015 at 1:04 pm

“Investment based on genuine long-term expectation is so difficult today as to be scarcely practicable,” wrote Keynes in 1935. Only Buffett since then has shown that Keynes is wrong.

LKY (with his 30-yr investments in Merrill Lynch sold at a big loss after less than a few yrs, Citi and UBS) and Ho Ho Ho (with her investments in the Chinese banks and StanChart) show the wisdom of Keynes.

S&P index fund beats hedgies over 7 yrs/ Hedgies, PAP ministers & monkeys

In Political governance on 07/05/2015 at 1:44 pm

With three years to go, Warren Buffett is comfortably winning his charity bet that a low-cost index tracker would trounce a portfolio of hedge funds over ten years.

Returns from the S&P 500 index fund is beating a portfolio of funds assembled by hedge fund manager Protégé Partners by 63.5 per cent to 19.6 per cent, according to a slide Mr Buffett presented at Berkshire Hathaway’s annual meeting this past weekend.

(Monday’s FT)

Chart: Buffett's bet (Protégé Partners hedge fund selection v S&P 500 index fund)

http://im.ft-static.com/content/images/1dcdf770-f288-11e4-b914-00144feab7de.img

As to what PAP ministers and hedgies have in common? They pay themselves a lot for mediocre performance.

The $11.6 billion which Institutional Investor’s Alpha calculates this ultra-elite [hedgies] was paid last year, an average of $467 million per hedge fund boss, would still seem troublingly high.

Such gains seem out of line with the value of their putative contributions. After all, the modern economy is built on collaborative effort, not to mention supportive governments and central banks. Even the greatest individual contributions would not merit an annual income, including gains from holdings, of about 10,000 times the average American salary.

To add insult to injury, Alpha calculates that at least 12 of the 25 top guys (sorry, ladies, no women in this club) underperformed in 2014. That is not surprising in a highly competitive industry. BarclayHedge, a consultant which monitors about 3,000 hedge funds, reports the average net return in 2014 was 3 percent. The U.S. stock market provided close to 14 percent.

http://blogs.reuters.com/breakingviews/2015/05/05/hedge-fund-pay-hauls-a-political-financial-shame/

We have one Ah Loong (since the 1980s), Lui, Yaacob and Lim Hng Kiang and had Wong Kang Seng, Mah Bow Tan, Raymond Lim and Goh Chok Tong.

SG50/ BRK50: Buffett’s 50th anniversary party

In Uncategorized on 01/05/2015 at 2:17 pm

(Update on 2 May at 5.30pm: Another view http://www.economist.com/news/business-and-finance/21650309-future-worlds-sixth-largest-firm-unclear-berkshire-hathaways-meeting)

No big do like SG50, but then he doesn’t have a GE to fight.

Berkshire Hathaway Meeting On Saturday, more than 40,000 Berkshire Hathaway shareholders will descend on Omaha for the annual meeting of the company, which is celebrating its 50th anniversary. The gathering is known as Woodstock for Capitalists. Warren E. Buffett, Berkshire’s chairman and chief executive, and Charles T. Munger, its vice chairman, take questions for more than six hours, and their answers often make news.

Likely hot topics include the company’s recent investment in Kraft, its stakes in IBM and Coca-Cola, the debate around companies’ buying back their own shares and, a perennial favorite, succession planning.

Why Buffett hates investment bankers?

In Financial competency on 22/04/2015 at 1:34 pm

They cost him money.

Something I just read. It appeared on 3rd March in the NYT Dealbook

BUFFETT’S WARNING ON BANKS Warren E. Buffett has long ridiculed the financial industry. But his annual letter to shareholders “seemed to amp up the pugnacity and was clearly noted by the industry,” Andrew Ross Sorkin writes in the DealBook column. Mr. Buffett used his letter, published over the weekend, to warn his followers about “the Street’s denizens.” He criticized investment bankers for urging acquirers to pay up to 50 percent premiums over market price for publicly held businesses and railed against spinoffs.

“No doubt, Mr. Buffett speaks the truth. There are countless examples of the build-it-up-and-tear-it-down phenomenon,” Mr. Sorkin writes. “But as Mr. Buffett often points out the foibles of the finance industry, he also extols the personal virtues of some of the biggest names in investment banking. Berkshire owns a stake in Goldman Sachs, and Mr. Buffett has talked publicly about owning shares of JPMorgan Chase in his own account.” He has praised Lloyd C. Blankfein, Goldman’s chief executive, and Jamie Dimon, the chief executive of JPMorgan.

What explains Mr. Buffett’s stance on the industry? One investment banker and blogger wrote over the weekend that Mr. Buffett “despises investment bankers and employs his considerable folksy charm to scare potential business sellers away from using us for the plain and simple reason that we make his job harder and more expensive.” For his part, Mr. Buffett, when reached at his office in Omaha, explained that he was trying to educate his shareholders. “There’s nothing wrong with looking at the biases of a given field,” he said.

SG50/ BKR50: Buffett, LKY & Ah Loong

In Financial competency, Political governance on 31/03/2015 at 5:03 am

(Or “Ah Loong imitated Buffett, not dad”)

When business leaders make mistakes, they have nothing to lose from a proper apology

Thus runs the subtitle of a an aricle in an article sometime back FT which goes on: One business leader who has no problem detailing his mistakes is Warren Buffett. He regularly does it in his annual letter to shareholders. This year’s marked the golden anniversary of his and Charlie Munger’s control of Berkshire Hathaway so he dredged up 50 years of mistakes.

They included investing in dying textile companies and seeing acquisition “synergies” evaporate.

More recent mistakes included holding on to Tesco shares even though he knew it was likely that the UK retailer’s initial problems were just the first in a series. “You see a cockroach in your kitchen; as the days go by, you meet his relatives,” he wrote.

The reasons Mr Buffett gave for his mistakes were not poor advice, or lapses by his managers, but his own “thumb-sucking”, “childish behaviour” and “I simply was wrong”.

The advantage of pointing out your own errors is not only that it deprives others of the opportunity but that it makes it plain that business is hard, that we make mistakes and that only by examining them can we reduce, but not eliminate, our chances of making them again.(FT extract)

Well it didn’t work in politics for our PM did it?

Ah Loong in 2011 departed from dad’s Hard Truths of “Never explain, never apologise”, “PAP is never wrong”, “The message is always right. Blame the messenger, not the message”, “THE LKY way or the highway”, and “It’s the song, not the singer”..

In an attempt to avoid losing a GRC and setting a new record low for the popular vote, he said, “If we didn’t get it right, I’m sorry. But we will try better the next time.” 

It was an apology that Prime Minister Lee Hsien Loong saw fit to repeat twice on Tuesday during the People’s Action Party (PAP) first lunchtime rally at Boat Quay next to UOB Plaza.

PM Lee acknowledged some of the government’s initiatives have resulted in “side effects”, such as problem gambling among Singaporeans due to the opening of the Integrated Resorts.

He also cited the congestion in public transport because of the increased intake in foreigners.*

Fat good it did him or the PAP say the hardliners in the PAP and other “Lee Kuan Yew is always right” groupies: the PAP only got 60% of the votes (PAP’s worst result ever) and lost a GRC that had two ministers and one junior minister.

Worse in the presidential vote that followed, the PAP’s preferred candidate (Dr Tony Tan) won by a handful of votes from Dr Tan Cheng Bock. They shared 70% of the vote, showing that with the right formula, the PAP could do well.

The problem is that the PAP don’t have the right formula.

So apologising doesn’t always work, FT writer. The problem for Ah Loong is finding the right formula. More on the right formula soon.

——

*“These are real problems, we will tackle them.  But I hope you will understand when these problems vex you or disturb you or upset your lives, please bear with us, we are trying our best on your behalf,” said PM Lee to a crowd of about a thousand.

The secretary-general of the PAP continued, “And if we didn’t quite get it right, I’m sorry but we will try better the next time.”

Pushing on with a message he had for voters on Monday, PM Lee also admitted the government had made two other high-profile errors.

“We made a mistake when we let Mas Selamat run away. We made a mistake when Orchard Road got flooded,” he said.

“No government is perfect… we will make mistakes. But when it happens we should acknowledge it, we should apologise, take responsibility, put things right. If we are to discipline somebody, we will do that, [Err, the train services are getting worse under the “new” CEO and tpt minister, but no-one is being fired] and we must learn from the lessons and never make the same mistake again,” said PM Lee.

Yet, he explained the difficulties in making decisions with incomplete information.

For instance, if the government knew there would be a sudden surge in demand for HDB flats in mid-2009 and that foreigners would have created such congestion on the roads, it would have ramped up plans for more flats and MRT lines.

“We’re sorry we didn’t get it exactly right, but I hope you will understand and bear with us because we are trying our best to fix the problems,” he said.

The government will build 22,000 flats this year and open one new MRT line every year for the next seven years however, the government “has been right more often than wrong,”

https://sg.news.yahoo.com/blogs/singaporescene/pm-lee-didn-t-m-sorry-152850327.html

 

SG50/BKR50: Buffett taking lessons from PAP?

In Financial competency on 10/03/2015 at 1:26 pm

Fudging data without lying. LOL.

ANOTHER LOOK AT BUFFETT’S SUCCESS Warren E. Buffett has made Berkshire Hathaway’s shareholders “an astounding amount of money,” Jeff Sommer writes in the Strategies column. And he provided a window into just how much in his annual letter to shareholders, which included a table on its second page that enumerates the market return of Berkshire shares, year by year. Until now, Mr. Buffett has measured success using the change in book value of his shares.

“However you analyze it, Berkshire’s long-term performance has been awesome. Using market value, he says, its shares gained 21.6 percent annually compared with 19.4 percent for book value and 9.9 percent for the Standard & Poor’s 500-stock index, with dividends. Using market returns, the shares gained a cumulative 1,826,163 percent since he took control,” Mr. Sommer writes. But gone in his letter this year was a comparison between the book value return and the S.&P. return, which would show that he trailed the S.&.P. again, using book value. Counting 2014, Mr. Buffett has underperformed the S.&P. 500, using book value, in five of the last six years.

“By shifting to the market value metric ‒ for the first time in 50 years ‒ his returns look better. Would he have added a table on his golden anniversary showing market value if it had been a bad year for Berkshire in the stock market, whose judgment he has often disdained? I don’t know. Mr. Buffett declined to comment,” Mr. Sommer adds. But to outperform the market consistently, as Mr. Buffett has done over most of his career, “is exceedingly rare. That’s worth celebrating, even if it’s also worth asking why the recent years haven’t been extraordinary.”

NYT’s Dealbook

As I wrote here, the PAP like Buffett did very well in the early days by people who believed in them; not so well in recent yrs: https://atans1.wordpress.com/2015/02/24/sg50-versus-brk50/

Update on 21 March 2015. Letter to Economist defending change in comparison

Valuing Berkshire Hathaway

You criticised Warren Buffett for moving the goalposts by now giving more weight to Berkshire Hathaway’s share price than its book value (“Corresponderous”, March 7th). But the goalposts should have been moved long ago. The previous practice of using book value per share versus the total return of the S&P 500 was an apples-to-oranges comparison of an accounting measure with a market-valuation measure.

Naturally, Berkshire Hathaway’s book value per share would underperform when the S&P’s price-to-book ratio was soaring, as it did by 21% in 2013. Likewise it would outperform in years like 2008, when valuations were plunging. Comparing the change in Berkshire’s market value to the S&P’s total return is the best way of measuring how the market judges Berkshire’s strategy.

A.B. CAMPBELL
Minneapolis

SG50/ BKR50: Buffett on kia suism

In Uncategorized on 06/03/2015 at 5:13 am

Interesting that Warren Buffett has accidentally and unintentionally diagnosed what is holding S’poreans back.

“In the great majority of cases the lack of performance exceeding or even matching an unmanaged index in no way reflects lack of either intellectual capacity or integrity,” he wrote in 1965. “I think it is much more the product of: (1) group decisions — my perhaps jaundiced view is that it is close to impossible for outstanding investment management to come from a group of any size with all parties really participating in decisions; (2) a desire to conform to the policies and the portfolios of other large well-regarded organisations; (3) an institutional framework whereby average is ‘safe’ and the personal rewards for independent action are in no way commensurate with the general risk attached to such action; (4) an adherence to certain diversification practices which are irrational; and finally and importantly, (5) inertia.” (Latest annual report)

When the anti-PAP cybernuts rant against the PAP administration (including GIC and Temasek), they should remember one thing: the PAP administration and the cybernuts (and S’poreans in general) are all kia su.

This is what is holding us back.

If anything the cyberbuts are even more KS than most S’poreans. Most post anonymously. They would claim fear of the PAP administration. More likely they are pi seh to show how stupid and nutty they really are. They are not as brave as Roy, New Citizen H3 and Chia Yong Yong.

They may be extremely stupid but they are brave to parade their stupidity in public.

But let’s celebrate those who are brave and intelligent. People like Alex Au, Richard Wan, TRE’s techie Andrew, Affin Sha, Terry Xu, P Ravi, Siow Kum Hong, Baema and Martyn See. Though I do wish that Alex would stop wanting to take on the judiciary, and Martyn stop filing police reports.

 

BKR50: Buffett doesn’t do PAP SG50 BS

In Financial competency on 04/03/2015 at 12:21 pm

But then he doesn’t face a general election. He lets this metric talk the walk: Over the last 50 years,the stock is up 1,826,163 percent.

But to be fair to the PAP, he like the PAP did better in the early yrs than in the recent past: https://atans1.wordpress.com/2015/02/24/sg50-versus-brk50/

But then he doesn’t pay himself so much and he is no hypocrite unlike Jos Teo https://atans1.wordpress.com/2015/03/04/jos-teos-double-standards-walk-the-talk-chiams/ and Gan Kim Yong (See below for Gan’s hypocrisy and double standards.

BUFFETT HINTS AT SUCCESSOR Warren E. Buffett released his annual letter to shareholders on Saturday, reflecting on his 50 years in control of Berkshire Hathaway, one of the world’s biggest companies. In his 24,000-word letter to commemorate his golden anniversary at the company, Mr. Buffett looked back on less prescient moves. He also railed against investment bankers, accusing them of being nearsighted and self-serving.

But what made perhaps the most waves in the business world over the weekend was Mr. Buffett’s hint that the board of Berkshire Hathaway hadidentified his successor as chief executive. “Both the board and I believe we now have the right person to succeed me as C.E.O. ‒ a successor ready to assume the job the day after I die or step down,” Mr. Buffett wrote. “In certain important respects, this person will do a better job than I am doing.”

Mr. Buffett did not reveal that person’s identity, but in a separate letter, Charlie Munger, the vice chairman, suggested that either Ajit Jain, an insurance executive at the company, or Greg Abel, the head of Berkshire’s energy business, was most likely to receive the job. Mr. Buffett’s son Howard will become nonexecutive chairman when his father no longer serves in that role.

The letter also detailed Berkshire Hathaway’s success. Last year, the company’s market value increased by $18.3 billion. Over the last 50 years,the stock is up 1,826,163 percent. Although Berkshire did not strike any megadeals last year, it continued to grow by making 31 smaller so-called bolt-on acquisitions that will cost a total of $7.8 billion. Mr. Buffett also reiterated Berkshire’s interest in making a deal worth $5 billion to $20 billion, but he said that many of the deals pitched were of inferior quality.

——-

Well Gan, what about ministerial pay monetising public service?

[I]ntroducing a direct caregiver allowance may monetise family support and filial piety, said the Minister for Heath Mr Gan Kim Yong in Parliament on Tuesday (Mar 3).

In a written response … about whether the Ministry will consider the provision of allowance to caregivers taking care of an elderly, a family member with special needs or disabilities, Mr Gan said family support and filial piety are “priceless” and should not be monetised.

———————-

 

SG50 versus BRK50

In Financial competency on 24/02/2015 at 4:32 pm

Berkshire Hathaway celebrates 50 years under Mr Buffett’s control this year

If you had $1000 in BKR in 1965, you’d be worth US$11m ++ http://www.businessinsider.sg/if-you-had-invested-with-warren-buffett-2014-8/#.VOryoXyUc7E

PAP got so good meh?

A little humility pls PAP. Especially as Mr Buffett pays himself “peanuts” by yr standards.

Buffett Wealth Chart Regular

Buffett’s Hard Truth on analysts’ recommendations

In Financial competency, Investments on 10/02/2015 at 12:56 pm

Buffett said since he began investing in shares at the age of 11, he had never once bought something on the basis of an analyst recommendation. (FT)

What Scrooge McDuck can teach PAP ministers, TRE born losers etc

In Financial competency on 19/11/2014 at 4:05 am

In the 60s and the 70s, I loved getting my hair cut once a month in the Arcade at Clifford Pier. One LKY had his hair there too but the reason why I loved going to the the barber was the comics the shop had. A particular favourite comic hero was Scrooge McDuck, the maternal uncle of Donald Duck, and the grand-uncle of Huey, Dewey and Louie, Donald’s nephews.

Recently, I learnt that he and Warren Buffett are connected.

http://www.investopedia.com/articles/investing/103014/what-can-investor-learn-ducktales.asp?utm_source=coattail-buffett&utm_medium=Email&utm_campaign=WBW-11/6/2014

The PAP administration and all managers (TLCs, GLCs, SMEs and MNCs) can learn from this story

In “The Curse of Castle McDuck” Uncle Scrooge and his nephews make a trip to Scotland to visit his birthplace. Along the way Uncle Scrooge finds his first piggy bank, and says “my life of thrift began with this very bank.” When our adventurers get to Castle McDuck, they discover the old pile is haunted by a glowing hound that terrorizes the locals, and at night druids perform secret rites within the castle walls.

Uncle Scrooge and the nephews trap the druids and their magical hound (which is, in fact, just a dog), and ask them why they drove the McDucks from Castle McDuck after it was built. It turns out that Silas McDuck, who first built Castle McDuck, did it on top of the druids’ stone circle “to cut costs.” Uncle Scrooge blushingly acknowledges that cost-cutting runs in the family. 

Realizing that the McDuck clan has been in error for centuries, Scrooge McDuck offers to share the site with the druids. During the day it will be a tourist site to make money, and at night the druids can perform their ceremonies. In the end, everybody wins.

Scrooge likes to say there is “always another rainbow”, something the born-loser rabid anti-PAP paper warriors should take to heart: stop KPKBing and start working, not skivving at work, or if enemployed, looking for work.

Perhaps PAP ministers can learn from him that money is not the most important thing in life.

Ordinary S’poreans can learn

— “Work smarter, not harder” (so can the PAP administration in its productivity drive)

— “Family is the most important thing”

A gd, disorganised entry from Wikipedia on him

Buffett talks to NYT

In Financial competency on 09/12/2012 at 7:05 am

Enjoy ))). Love the bit about starving broker: I was one. Broker that is, not starving.

And he thinks short-selling is hard. He gave it up many yrs ago. I’m sure Olam would like to prove him right.

Berkshire: No Buffett premium

In Financial competency on 10/03/2012 at 9:58 am

Time to buy?

http://online.barrons.com/article/follow_up.html

And did you know Dairy Queen (his ice cream maker is in S’pore? I didn’t.

http://money.msn.com/business-news/article.aspx?feed=BLOOM&date=20120307&id=14869108

Warren Buffett: Planet wrecker investor

In Environment, Investments on 18/02/2012 at 5:19 am

His investments are wrecking the world

http://www.huffingtonpost.com/r-paul-herman/warren-buffetts-billions-_b_1251884.html

Buffett on Gold

In Commodities, Gold on 14/02/2012 at 2:30 pm

Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce — gold’s price as I write this — its value would be about $9.6 trillion. Call this cube pile A.

Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

(Apologies for not crediting where I got this from: feeling tired)

He bot preferreds, stupid

In Investments on 01/10/2011 at 6:57 am

Or the perils of trying to copy Buffett by buying ordinary GE and Goldman Sachs shares. http://dealbook.nytimes.com/2011/09/14/buffetts-not-so-golden-touch/?nl=business&emc=dlbkpma21

Warren Buffett’s past reincarnation?

In Uncategorized on 29/08/2011 at 9:30 am

Mycroft Holmes is the elder brother (by seven years) of the famous Sherlock Holmes. He has greater deductive powers than Sherlock Holmes, but according to Sherlock,  he is unwilling to put in the physical effort necessary to bring cases to their conclusions.

Given that Warren Buffett doesn’t like to exert himself but is a genius at spotting investments by deductive means, he could be a reincarnation of Mycroft Holmes. If so the spirit of Mycroft Holmes has found the the perfect use for his deductive skills, and reclusive and indolent nature: investment genius.

Masterclass in analysis: Buffett’s BOA deal

In Banks, Financial competency, Investments on 28/08/2011 at 8:08 am

When Warren E. Buffett invests in a troubled company, he gets a good deal. Dealbreaker’s Matt Levine crunched the numbers on Mr. Buffett’s Bank of America investment and estimates that the bank’s implied stock price in the $5 billion deal was $5.28 per share, more than $2 lower than where it currently trades. Note the way he uses less than precise assumptions to avoid getting into complications.

http://dealbreaker.com/2011/08/how-much-did-warren-buffett-pay-for-bofa-anyway/

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