Buffett lets public down…again

January 21, 2010

The public has always seen in Warren Buffett a different kind of capitalist, an honest observer providing sound financial advice regardless of his personal interests. But is he?

When it comes to his own holdings Buffett seems to use a carefully cultivated reputation for financial rectitude to feather his own nest.

On Wednesday he came out against Obama’s proposed bank tax, but his comments were inconsistent. On one hand he’s always maintained banks needed to be bailed out, yet he opposes ways to make them pay for it. At this point, financial giants in which Buffett has large stakes — Wells Fargo, Goldman Sachs and General Electric — all benefit from an implicit too-big-to-fail government insurance policy. How can Mr. Buffett, an insurance executive, argue that it’s inappropriate to charge them for it?

This is just the latest example of Buffett talking his book.

Buffett also lobbied for and profited greatly from the bailouts. He invested in Goldman, he said, with the expectation that Congress would “do the right thing” by passing the Troubled Asset Relief Program. In other words, it was a bet on a bailout.

Later he mocked the stress test, which forced over-leveraged banks to raise needed capital. This was bad for Buffett because it diluted his stakes in banks.

Less well-known is that Buffett was the first to propose a private-public partnership structure in order to rescue troubled banks. In a letter to Hank Paulson in the fall of ’08, cited in Andrew Ross Sorkin’s recent book, Buffett pitched his idea for a “public-private partnership fund” that would use public debt to finance private bets on toxic assets. When Tim Geithner rolled out a similar plan a few months later, it was widely panned as a giveaway to banks.

Buffett later complained about bailouts in his annual letter to Berkshire investors, saying that government subsidized funding put firms like Berkshire at a disadvantage. He failed to note that public subsidies — in particular FDIC’s Temporary Liquidity Guarantee Program — helped to keep afloat the eight banks in which Berkshire had a stake.  From the end of ’08 through July of ’09, 75 percent of the debt sold by these eight banks came with the explicit government guarantee offered by TLGP. Without it, many might have failed, wiping out Berkshire’s equity stake.

It takes chutzpah to lobby for bailouts, make trades seeking to profit from them, and then complain that those doing so put you at a disadvantage.

Those who follow him closely are well aware that he talks his own book, but the wider public still believes him to be a trustworthy broker of unbiased financial advice and commentary. They shouldn’t.

Buffett didn’t respond to requests for comment.

52 comments

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Amen! He’s been a hypocrite his whole career, and now people in the blogosphere are calling him on it. The MSM can be bought/cajoled/humored into good press, but the bloggers, not so much.

I will be interested to see how many people write in to defend him. . .

Posted by But What do I Know? | Report as abusive

I agree. Pathetic really.

But then again, why tax them right now if we are doing so much to get them back onto fiscally strong footing? Isn’t that just moving the money from one hand to the other and then handing it back to them?

Posted by Steve Roberts | Report as abusive

Has Buffett ever created anything that contributes to the greater good – or has he created just wealth?

The Omaha Omnivore! He will eat anything which will feed his greed. His philanthropy, a tax dodge. His populism, as phony as his ukelele playing at his shareholder’s meetings.
As Adam Smith so wisely stated, a market left unchecked will devour all thing around it, and ultimately will destroy itself. Welcome to the carnage created by those unwilling to temper and control the markets. Free markets are free to destroy everything, including economic freedom!

Posted by Jamie L | Report as abusive

Most of the banks subject to the proposed tax have already repaid their TARP along with interest and the the Government has already profited from the dividends on the preferred stock in some cases and cashing in the warrants. Why should they pay for GM, GMAC, Fannie, Freddie and the others. I would agree those that benefitted from the AIG bailout should be liable for any shortfall should AIG not be able to repay the Government.

Posted by Paul | Report as abusive

Defend Him??? If it were not for the bailout Buffett would have lost virtually ALL of his investors money. How much of an icon do you think he would be without bailout funds?
Without bailout money, Buffett’s investors would have woken up one morning with the same stunned disbelief as Madoff’s investors.

Posted by Michael | Report as abusive

Man these comments are stupid.

Posted by Brian | Report as abusive

This article and these comments are appalling. Buffett is not an elected official, he is the leader of an investment company, and he has been very available and helpful to public officials throughout his career.

Regarding the last few comments, Buffett has created enormous economic and tangible benefits for a wide variety of people, including anyone who uses insurance (GEICO), hopes to buy an electric car (BYD), or enjoys soda (Coke). He allocates capital to these businesses, which is incredibly important, and he does it better than anyone else. Without TARP, Buffett would have been fine – many of his holdings (Coke, J&J, Wal-Mart) are highly resilient to economic circumstances. Also, his ukelele playing is not fake.

Posted by Daniel Axelsen | Report as abusive

The question defending him does not even arise IMHO. If I remember correctly, he had close to 50 million invested right before the TARP (free money) to AIG et al. in Goldman. Right after the stock price of GS soared. And he did rally for the bailout. If anything he was looking out for his investment, and he has a knack of garnering public support while he does that even if it mean “some people” loose out in the process. Atleast we can learn one thing from all this, we have to look out for ourselves and cant go on blind faith.

Posted by VMan | Report as abusive

Almost forgot, is it not worth mentioning that this man made the largest charitable gift in history? Comments about “greed” are completely inappropriate when discussing Warren Buffett, who drives a Lincoln and takes an incredibly modest salary.

Posted by Daniel Axelsen | Report as abusive

The previous comment from the person identified as only “But What Do I Know” clearly shows that he or she is ignorant in writing about Warren Buffett by stating, “He’s been a hypocrite his whole career, and now people in the blogosphere are calling him on it.”
If you knew anything at all about him, you would know that your statement is patently ridiculous, but then, your own moniker shows how little you know.

Posted by Robert Cunningham | Report as abusive

Warren Buffett has always been good at feathering his own nest and Berkshire Hathaway , his own company. He has done nothing for the US. His companies have never been the low cost leader. The $50, billion he is giving back through his foundation is our money recycled . Under Foundation laws , there is no need to tell us (the public ) where the tax free money is spernt.

Posted by John Robert | Report as abusive

Hey guys, this morning I woke up and now have 750 class shares B that split 50 to 1 in Berkhshire… I know the Republican congress will defend Buffet and my investment. Let the fat banks get fatter and then simply enforce the laws already in place. My only concern is that possibly the bank drove the market to where it was 2 days ago and now they are going sell their profits, stop the massive trading and send many stock holder down the tube. I think this whole thin was pre-arranged with Paulson during Bush’s last days in the bunker. The Chinese Communist are doing a better job at managing their socialist society!

Posted by Ed | Report as abusive

BANKS MAY PAYBACK RESCUE FUNDS BUT WHY THE APPLAUSE? HOW ABOUT REPARATIONS TO THE VICTIMS OF THE WALLSTREET/BANKER TYPE WHO HAVE COST THE NATION AND WORLD TRILLONS…WHERE IS THE JUSTICE HERE…CERTAINLY NO APPLAUSE IS FITTING INTHIS CONTEXT!

Posted by r.a.gunton | Report as abusive

I watched the interview with Buffett too, and was surprised at his comments about the banks. Buffett has been right (or self-servingly influential) about an untold number of things financial. About taxing the banks though, is dead wrong.

The author makes a good point, really very good point, to the tax to insurance – those that played and lost should pay higher premiums going forward. Call it a tax if you will but it is exactly how insurance companies work. The bigger the risk you are, the higher your premium.

Taxing the risky banks is not the only response that should be taken and if it were then yes, it would be inappropriate. Combined with other measures, like re-activating the Glass-Steagall Act the tax is justified.

Whether it’s called a tax, fee or surcharge, tax-payers will pay for it though higher costs or reduced services, we know this, but then avoiding the cost is not the point. The point is to prevent a handful of elite individuals from stealing from the poor and giving to the rich and in the process wreaking havoc on the world economy.

They’ve done it twice now in the last hundred years. Shame on us.

Posted by Carl | Report as abusive

Considering the man is giving every penny of his billions to charity, this hysterical shrieking seems particularly uninformed.

Posted by Gary | Report as abusive

Other normally mean spirited, the problem with Warren is his age. He increasingly acts out the attitude so well described by James Hillman in The Force of Character of the oldster who is furious if the morning paper is brought to him 10 minutes late but who does not notice it is yesterday’s edition.

Warren’s huge Burlington buy, wiping out BRK’s cash stash and dinting their credit rating was not about investing – it was a mean-spirited FU to his successors so they can only manage his dregs but not make any major decisions.

Posted by Seal | Report as abusive

Other than normally mean spirited, the problem with Warren is his age. He increasingly acts out the attitude so well described by James Hillman in The Force of Character of the oldster who is furious if the morning paper is brought to him 10 minutes late but who does not notice it is yesterday’s edition.

Warren’s huge Burlington buy, wiping out BRK’s cash stash and dinting their credit rating was not about investing – it was a mean-spirited FU to his successors so they can only manage his dregs but not make any major decisions.

Posted by Seal | Report as abusive

This is the real Buffett. The folksy philosopher is just a front – the Great Oz as common man. Warren has one and only one concern – his wealth and power. I hesitate to use the word sociopath, but his total lack of compassion for the un and under employed is so clear. When others were making a fortune from derivatives, he called them financial weapons of mass destruction – but note the silence on those weapons when he has major interest in the credit agency which enables those weapons (Moody) and now a major interest in the investment bank (Goldman Sachs) which profits from those weapons. The man is another farce, just smarter and better managing his image than Jim Cramer.

Posted by andrey | Report as abusive

Obviously he will do what is in his best interest when it comes to business otherwise he would not be fit to run BRK. Outside of business ALL of his wealth is going to charity.

Posted by Zilla | Report as abusive

Buffet is hardly the nation’s financial consience. He’s the CEO and at least half the brains behind one of the most successful companies in America. He has his shareholders in mind and his comments are consistent with that. And to compare him to Madoff is just plain ignorant. Wake up people.

Posted by Jim | Report as abusive

Buffet protecting himself? He’s doing it again in his acquistion of Burlington Northern. Shareholders will get shares of Birkshire in payment for BN shares, But just in time for the pricing of the swap, he split 50 to 1 the B shares so the public at large could finally own some of his company and then announces to the world that Birkshire shares are underpriced sending them up 4.5% on a day that the market was down very heavy leading up to his 10 day pricing period for his shares. He will save millions in the swap and these new owners of Birshire will get bilked!

Posted by Dane | Report as abusive

All business men are in it for the money. Buffett has stepped on a lot of heads on his rise to the top. Saint Warren he ain’t.

Posted by Randi | Report as abusive

Warren Buffett is just another businessman who talks the talk of ethics, but doesnt walk the walk. I worked for one of his companies which he bought for its finance division. The whole things was rife with fraud and dishonest numbers. I quit when the company refused to pay me what they owed. Sued the great man himself for negligence for failing to ensure his public and written statements on ethics were carried out in actual practice. After his attorney lost on several motions, they paid me off, but I often wish I would have let it go to trial. It wasnt that much money and the guy is a hypocrite.

Posted by Allen | Report as abusive

“I’ll tell you why I like the cigarette business. It costs a penny to make. Sell if for a dollar. It’s addictive.” –Warren Buffett.

Enough said.

Posted by DB | Report as abusive

I dont see why people refer to him saint or otherwise. Its like walmat syndrome … Its cheap YES. But at what cost. I agree that he has donated a lot and really applaud him for his philanthropy but then again at the end of it all he’s just a businessman and a really shrewd one at that. Simply passing judgement would be unwarranted

Posted by VMan | Report as abusive

Buffet wouldn’t have been close to broke if all his investment in AIG had been lost. 50 million is about 1% of his assets.

And yes Buffet has made money on the bailout, big deal. He hass been consistant in demanding regulation of banks, sheesh.

Yes he makes money, and his companies make stuff. Furniture,mobile homes, underwear, bricks, insulation,insurance (that is where his investment in AIG came in he bought an insurance company General Re which had investments in AIG BEFORE he bought it. He testified against AIG in court) Candy, boots, carpeting,newspapers, soft drinks, shoes,jewlery, steel, kitchenwear.

He is supposed to not make a profit??

Posted by Annette | Report as abusive

I think he’s mildly obsessed with being seen as a “good guy” which is why we’ve been getting that warm fuzzy feeling from him for so long. He’s cultivated it within us by telling us things that we want to hear.

Posted by JJ | Report as abusive

Ladies and Gents, He is saying “Screw the little Sheeps”…

Posted by randyb9987 | Report as abusive

I don’t know how anyone can take a billionare seriously.
One man byhimself can do very little.
To quote Mr. Buffet “When the tide goes down we can see
who is swimming naked”.
And I wonder what if anything is Mr Buffet wearing.

Posted by anthony lobo | Report as abusive

The amount of vitriol on this site directed toward Warren Buffett is only surpassed by the amount of the misinformation passing as facts. Two notable exceptions are the comments from Daniel Axelsen and Annette.

Warren Buffett’s yearly salary from BRK is only $100,000; hardly excessive for a conglomerate valued at over $150 billion.

Some posters complain that his charitable donations are only a tax dodge, which is also laughable, because he could keep the money the rest of his life and HE would never pay tax on it. I’m glad I had the foresight to invest in Berkshire Hathaway years ago. He is a role model for CEOs.

Posted by Robert Cunningham | Report as abusive

[...] Buffett lets public down…again and New off-balance sheet rule: Little impact on Wells Rolfe Winkler [...]

WB is a great businessman but we need to understand that he has made most of his money from insurance and been lucky that there has never been a truly major earthquake in California. He calls derivatives weapons of mass destruction yet sells (writes) them. He drives an old Volvo but flies a private plane. He gives his time graciously to students. He and Kay Graham flaunted their affair yet he believes in old fashioned values. He is on the board of directors of many companies and therefore can influence decisions and is really an insider but acts like an outsider. I like him but no one is perfect and he is better than most businessmen. He is so tight with his money and did not give enough time to his children and yet is giving it all away to the poor.That is good enough for me.

Posted by Jon Michael | Report as abusive

I would have to agree that Buffett is not an elected official or even an official appointed to a govt. post.

You can be disappointed in him but put it in proper perspective: what did he really owe you personally? Is he accountable to you for anything? This answer varies person to person.

Posted by Kali | Report as abusive

[...] Warren Buffett likes to talk his book.  (Rolfe Winkler) [...]

[...] Even Warren Buffet has a problem. Here is the link. [...]

As taxpayers, we are making a PROFIT off of the banks. They either have, or are, paying back the TARP. After you pay off your mortgage, does the bank continue to send you a bill each month?

Such an article as this is irresponsible, as it only serves to contine to misinform and play upon public angst, and continues to misdirect public anger. Are the banks messed up? Sure. But no more than anything else right now.

–A

Posted by Andrew | Report as abusive

Warren Buffett is simply doing his job as capital allocator and CEO of Berkshire Hathaway. He has deep obligation to deliver return on capital to his shareholders and himself. He is not a saint nor God. He is a capitalists and hence, people should realize his limitation and potential. He is one of the world’s best investor and businessman if not the best one.

Warren Buffet – I have followed his actions since the Mid – 80′s and find him to be of good conscious and honesty. A rarity in the industry.

I will confess that I have long detested banks for many reasons, but I am confused, if I understood it right the banks paid back the money with interest. If that is true what is the problem?

Posted by Alec McFarlane | Report as abusive

was buffett’s GS invstmnt disclosed on (9/23/08) trading on NONpublic illegal inside information?

Timeline of facts:

GS investmnt came AFTER

the fed bailed out aig (9/16/2008),
after paulson proposed TARP (9/19),
and AFTER the fed converted GS to a bank holding company (9/21).

HOWEVER, if buffett was TIPPED OFF by insiders (GS, NY FED, AIG, US TREASURY) of the LIKELIHOOD of approval or any of other MATERIAL information PRIOR to the public disclosure of said information (giving him an unfair advantage of having material non-public information to consider in making an invstmnt decision) then that puts the deal in troubled waters.

also, if the “insiders” provided wbuffett with any information regarding the likelihood of GS’s AIG CDSs being paid back 100% on the dollar then that puts him smack dab in the middle of an illegal trader’s muddy waters.

at any rate, whether it was ILLEGAL insider info or legal insider info, the whole thing just REEKS of vampire squid conflicted back door dealings and abuse of the political powers at ny fed and treasury, not to mention a blatant misuse of tens of billions in public funds. iow, business as usual, right out of the OBMAMA/GEITHNER economic playbook.

and now we know this:

Jan. 22 (Bloomberg) — Treasury Secretary Timothy F. Geithner spoke with Berkshire Hathaway Inc. Chief Executive Officer Warren Buffett, JPMorgan Chase & Co. CEO Jamie Dimon and Goldman Sachs Group Inc. CEO Lloyd Blankfein on the day of the bailout of American International Group Inc., phone logs show.

http://www.bloomberg.com/apps/news?pid=2 0601087&sid=az0TYtD7YCKo&pos=4

Posted by t largo | Report as abusive

I have always found Mr. Buffet to be two faced and unpatriotic especially when he refused to pitch in and help bail out the economy instead opting to profit from its (and our) pain. No J.P. Morgan he!

Posted by IdiotSavant | Report as abusive

He is the greatest investor of all time, poeple comenting on he earned money while bailing out, but the truth is if the Govt dont bail out, millins will be on the street..exept him of course..

Posted by jag | Report as abusive

You clearly don’t understand the issue at all. Buffett’s banks (Wells Fargo and US Bank) had no part in creating the subprime crisis, so he was arguing that they should not be targeted in paying for AIG, Fannie, Freddie, and the car industry. All of the TARP invested in his other invested companies (Goldman & GE) paid back all the TARP they received plus interest. Why should the companies that didn’t screw up as bad as AIG, Fannie, Freddie, and the car industries pay for their mess? Yes, Buffett did benefit from the TARP, but so did everyone on the planet! You benefited from the TARP as well, why don’t you pay a tax to the government?

Posted by PeterJohnson | Report as abusive

Is this article serious? The massive profit the Fed made of the banks doesn’t count as payment? Do people understand it is the Auto Industry that lost all the TARP money and not the financial companies… The point of the bank tax is to recover the money lost in the Auto Industry. Its like collecting insurance from a friend for the money you lent them, and demanding they also pay you for another friend who blew all the money. What a joke. Warren Buffet deserves respect for his accomplishments, his intelligence, his experience, and the fact that he is giving away more money then most people can fathom to the Gates Foundation. The ignorance in this article is astounding.

Posted by ryan | Report as abusive

The notion that Warren Buffett is a saint because he gives a charitable (and tax deductible) donation is ludicrous in the extreme. The wealth itself is the product of a huge financial subsidy courtesy of the US government. The man talked up PPIP, one of the most regressive wealth transfers ever undertaken in this country, the minute he invested in Goldman Sachs and Wells Fargo and then began to talk up the stock market.

And Buffett has a somewhat less than stellar past. The next time one of you Berkshire Hathaway groupies goes off to the lovefest at Omaha, ask “St. Warren” about Roger Fergusson. Ferguson, as some of you might know, took the full brunt of the finite reinsurance (3rd party earnings management by reinsurance contract business) fraud perpetrated by Berkshire of which Buffett is 99.9% certain to have been aware of, and blessed. He is now sitting in jail. Buffett seems to have emerged unscathed and has been busy talking up the US and its government ever since.

I’m starting to love Warren…. He’s right…. Obama is the loser in town….

Posted by Teresa | Report as abusive

Why should we be upset with Mr. Buffett who is merely acting rationally? In an economic environment created by both Democrat and Republican administrations, where government is more than willing to provide cheap money, corporate subsidies, tax breaks and incentives (read loopholes), and yes, bailouts for all, he would be failing in his fiduciary duty to refrain from gaming the system, and lining up for his slice of the pie.

Mr. Obama is now equally gaming the system with his populist rhetoric, when we all know that the FED, Bear Sterns, Lehman Bros, Fannie and Freddie, and AIG, were not and are not banks! The elephant in the room here is that what has failed here is not capitalism, but government intervention in the economy. As we have strayed farther afield from free enterprise capitalism, where losses are just as important as profits and bankruptcies free up capital from being used in failed enterprises, the deeper the hole we continue to dig. While I acknowledge regulation is important for fair operation, there is not set of regulations or government interventions that will yield a priori economic results — there will be losers and there will be winners, and they cannot be predetermined outside the competitive crucible.

Posted by Ignacio Couce | Report as abusive

HOW can some people defend the banks and vehemently fight for their right to issue huge bonuses and also carry on about letting the free market work its magic. Do you people not understand that a free market requires that we do NOT bail out banks?They must fail if the market takes things in that direction. The market must be allowed to be FREE to shut down companies that FAIL.

Otherwise these bailed-out companies enjoy an advantage that other companies, big or small, do not enjoy. The other companies cannot compete with companies that enjoy government bailouts.

Furthermore, the companies that paid back TARP funds STILL benefit from government GUARANTEES that protect their investors from losses so that they can effectively gamble with no RISK yet reap enormous profits. Do you people not get that this is corporate socialism? Let’s remove the guarantees that Goldman Sacks enjoys and vow to NEVER bail out another bank or large corporation and then see what happens. Then we will have true free market economy.

In the meantime, if we have bailed them out and we STILL protect them from losses, then they OWE us. TAX those banks.

Posted by Trela | Report as abusive

[...] Warren Buffett likes to talk his book.  (Rolfe Winkler) [...]

[...] So there is hope. As long as Obama uses this catharsis to change himself. And that should start with recovering some dignity with the help of anger. Someday, though, we will need a political system that depends upon more than one king, however elected he is. And certainly not selected by the self serving Buffet. About the later boss, see for example: http://blogs.reuters.com/rolfe-winkler/2 010/01/21/buffett-lets-public-down/?sour ce=patrick.net. [...]

Buffett isn’t being dishonest. He is a straight shooter and not afraid to speak honestly even though he is an Obama supporter. While sound and smart regulation is needed in the financial services industry so that consumers don’t lose out…. Bad regulation setup largely by the Clinton administration/Congress in the 90′s made this crisis into something major instead of just a moderate recession. Fanny Mae and Freddie Mac were out of control due to screwed up regulations setup by Congress. For all of his faults, Bush tried to prevent this but Congress wouldn’t crack down until it was way too late.

In addition, there is no question that the entire financial services industry as a whole is overpaid and getting away with stealing a bit too much from the general public. But this is hardly just big banks. It is hedge funds — they don’t pay nearly enough tax, large credit unions — they shouldn’t even exist in most cases…and they don’t pay taxes at all, private equity, medium to large banks, investment banks, insurance companies, the shadow banking industry etc.

TARP wasn’t meant to save JP Morgan Chase, Citigroup, Wells Fargo, Bank of America, Morgan Stanley, Goldman Sachs, it was meant to prevent a meltdown of the entire system/economy and restore confidence.

But a damn big reason confidence was lacking was because government did a tremendously poor job outlining the rules of the game. The large banks were practically begged by the government to acquire other large banks/investment banks that were failing and NOW the government wants to reduce their size… Even though banks in Europe and Asia are bigger. Instead of mandating Bank of America buy Merrill Lynch, why didn’t regulators state…we won’t allow you to even think about doing that unless you raise 50 billion in equity!

I actually do agree that Goldman Sachs and Morgan Stanley should not have government guarantees since they are much more of investment banks then deposit gathering institutions.

There is no need to break up the big banks. Limit there size going forward. But there is a need to break up Goldman Sachs since it does appear they have too much power and influence in Washington.

The big banks and the other financial services companies *should not* have to pay back a single nickel the government loses on the auto companies. The auto companies were mismanaged even when the economy was robust. Buffet is 100% right about this.

I do think it’s fair for the entire financial services industry or perhaps high wage earners in financial services(insurance, banking, hedge funds, private equity) to have to make up for the losses of AIG. But before forcing these companies to make up for those losses, the government should get clawbacks from AIG employees that benefitted from their scam.

Yes, banks do get to borrow money at a low cost but that privelege is available to all banks. And those savings are obviously passed on to folks seeking loans. And it’s fair to say that banks are forced to lend to low income people for the social good.

In summation, split up Goldman Sachs since it does appear they are too connected in Washington. Look into trading at all major institutions and prosecute fraud whether it is at a hedge fund or Goldman Sachs. But don’t make Goldman or anyone else in financial services pay for the bailouts to the auto companies.

Posted by wcinvest | Report as abusive

Annette, how long is a coal train ? Is the US so short on super-heroes that someone with an inside track on information supposedly donates ALL his money to charity ? Does that sound right ? Trela, you are right, how did taxpayers benefit from this ? Peter and Paul… Peter Johnson, if ‘everyone on the planet’ was saved, did the US cock it up for everyone in the first place ?

Well done Rolfe ! This guy is a hopeless egomaniacal opportunist.

Posted by Gandhiolfini | Report as abusive

I think the problem with Warren Buffet is that the layperson calls him the ‘Oracle of Omaha’. In reality, he gets into companies when their stock takes a beating, and given the fact that he’s an insider to the board meeting, he has inside info which the average Joe isn’t privy to. That makes him a cross product of an insider trader plus a private equity arbitrager. That’s the real story of the Coca-Cola acquisition as well as many others.

If he were truely an Oracle, he would have bought IBM in 1993, when they were truly hurting and looking for a turnaround with Gerstener and made a huge investment which would be up 10-15 fold in 5-6 years.

In terms of prop trading, he’s like anyone else. He lost big on Silver back in ’98 and even chucked up a billion on a failed US dollar short back in ’04. All and all, he isn’t Soros nor anyone else who’s good at timing the sentiment of the actual trading space. He’s just a screwed fellow who’s got a lot of connections and influence everywhere but unlike other billionaires, he doesn’t know how to enjoy his money.

Posted by Randy | Report as abusive

In fact BRK made quite a bit of money shorting the dollar. You wouldn’t know it from most media reports though. It was a multi year position and the media made a lot of noise about it in losing years but overall it was a big big win for Berkshire.

Posted by Chris of Stumptown | Report as abusive

Ignacio Couce: What could possibly be rational about “cheap money, corporate subsidies, tax breaks and incentives (read loopholes), and yes, bailouts for all”? These create short-run gains with untold long-run costs. What Buffett’s doing may be legal, but it is not rational. Unless, of course, you’d prefer to live in a USA that has an economy like Russia’s — which is what you’ll get if we stay on this path. Read your economics a little deeper and you’ll see that the rhetoric of the rational economic player is based on a straw man model designed for training school children not for making policy. Platitudes are for Marx — not Mises.

Posted by NYUphd | Report as abusive

[...] don’t ask the right questions, and as a result end up with firms like Berskhire becoming one of the biggest beneficiaries of the greatest bailout ever [...]

[...] don’t ask the right questions, and as a result end up with firms like Berskhire becoming one of the biggest beneficiaries of the greatest bailout ever [...]

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