Is the Oracle Optimistic?

By Reuters Staff
May 5, 2008

Warren Buffett hosted the annual shareholders meeting in Omaha today. If the investing world has a rock star, Buffett is it:

31,000 people attended the meeting. Once upon a time (when I was in junior high) I wrote a letter to him, recommending a stock. [Cracker Barrel, ticker CBRL: seems I was enthralled with the synergy of selling tchotchkes in a restaurant.] And I got a letter back! Which I lost. He (=his ghost-writing secretary) wrote back that I had a good nose for stocks and included an invite to the annual meeting….I never made it.

Probably a mistake. As my nose for stocks wasn’t really that well developed:

The stock has roughly doubled…over 13 years…for an average annual rate of return of about 5.5%. Probably not far off “riskless” treasuries.

Anyway…what did Mr. Buffett have to say at the meeting?

  • “The worst of the crisis in Wall Street is over. In terms of people with individual mortgages, there’s a lot of pain left to come.”
  • He defended the Fed’s action to save Bear Stearns: The worry was that there would be contagion; it was a very real worry,” Buffett said. “If Bear Stearns had gone, the next day, somebody else would have gone. It could’ve been a very, very, very chaotic situation.”
  • While noting he’s close to buying a mid-sized European company and that he wants to buy companies in India and China, he offered this metaphor regarding the U.S. economy overall: “If I landed from Mars today with a billion of Mars dollars, or whatever they call them on Mars, and I was thinking about where to put my money, I don’t think I’d put the entire billion in U.S. dollars.”
  • Buffett, a big supporter of Democratic politics, diverges from the party line on China…..He doesn’t support a push for companies or countries to boycott the Olympics in China based on that country’s human rights record. Also: Factories in China have different norms for working conditions than those in the U.S., and he won’t “tell the world how to run” their businesses. Buffett may lean socialist on tax issues, but he remains staunchly capitalist on workers’ rights.

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