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Buffett's 2010 Letter To Shareholders

Tyler Durden's picture




 

For those who care what the man whose corporate existence is intimately tied to the government's bailout of the financial system, has to say, below we present Buffett's 2010 letter to shareholders. 

The only section that is relevant to us, and which continues to demonstrate why Berkshire is a walking moral hazard (contrary to his conedmnation of financial weapons of mass destruction), is the disclosure on derivatives.

Derivatives

Two years ago, in the 2008 Annual Report, I told you that Berkshire was a party to 251 derivatives contracts (other than those used for operations at our subsidiaries, such as MidAmerican, and the few left over at Gen Re). Today, the comparable number is 203, a figure reflecting both a few additions to our portfolio and the unwinding or expiration of some contracts.

Our continuing positions, all of which I am personally responsible for, fall largely into two categories. We view both categories as engaging us in insurance-like activities in which we receive premiums for assuming risks that others wish to shed. Indeed, the thought processes we employ in these derivatives transactions are identical to those we use in our insurance business. You should also understand that we get paid up-front when we enter into the contracts and therefore run no counterparty risk. That’s important.

Our first category of derivatives consists of a number of contracts, written in 2004-2008, that required payments by us if there were bond defaults by companies included in certain high-yield indices. With minor exceptions, we were exposed to these risks for five years, with each contract covering 100 companies. In aggregate, we received premiums of $3.4 billion for these contracts. When I originally told you in our 2007 Annual Report about them, I said that I expected the contracts would deliver us an “underwriting profit,” meaning that our losses would be less than the premiums we received. In addition, I said we would benefit from the use of float.

Subsequently, as you know too well, we encountered both a financial panic and a severe recession. A number of the companies in the high-yield indices failed, which required us to pay losses of $2.5 billion. Today, however, our exposure is largely behind us because most of our higher-risk contracts have expired. Consequently, it appears almost certain that we will earn an underwriting profit as we originally anticipated. In addition, we have had the use of interest-free float that averaged about $2 billion over the life of the contracts. In short, we charged the right premium, and that protected us when business conditions turned terrible three years ago.

Our other large derivatives position – whose contracts go by the name of “equity puts” – involves insurance we wrote for parties wishing to protect themselves against a possible decline in equity prices in the U.S., U.K., Europe and Japan. These contracts are tied to various equity indices, such as the S&P 500 in the U.S. and the FTSE 100 in the U.K. In the 2004-2008 period, we received $4.8 billion of premiums for 47 of these contracts, most of which ran for 15 years. On these contracts, only the price of the indices on the termination date counts: No payments can be required before then.

As a first step in updating you about these contracts, I can report that late in 2010, at the instigation of our counterparty, we unwound eight contracts, all of them due between 2021 and 2028. We had originally received $647 million in premiums for these contracts, and the unwinding required us to pay $425 million. Consequently, we realized a gain of $222 million and also had the interest-free and unrestricted use of that $647 million for about three years.

Those 2010 transactions left us with 39 equity put contracts remaining on our books at yearend. On these, at their initiation, we received premiums of $4.2 billion.

The future of these contracts is, of course, uncertain. But here is one perspective on them. If the prices of the relevant indices are the same at the contract expiration dates as these prices were on December 31, 2010 – and foreign exchange rates are unchanged – we would owe $3.8 billion on expirations occurring from 2018 to 2026. You can call this amount “settlement value.”

On our yearend balance sheet, however, we carry the liability for those remaining equity puts at $6.7 billion. In other words, if the prices of the relevant indices remain unchanged from that date, we will record a $2.9 billion gain in the years to come, that being the difference between the liability figure of $6.7 billion and the settlement value of $3.8 billion. I believe that equity prices will very likely increase and that our liability will fall significantly between now and settlement date. If so, our gain from this point will be even greater. But that, of course, is far from a sure thing.

What is sure is that we will have the use of our remaining “float” of $4.2 billion for an average of about 10 more years. (Neither this float nor that arising from the high-yield contracts is included in the insurance float figure of $66 billion.) Since money is fungible, think of a portion of these funds as contributing to the purchase of BNSF.

As I have told you before, almost all of our derivatives contracts are free of any obligation to post collateral – a fact that cut the premiums we could otherwise have charged. But that fact also left us feeling comfortable during the financial crisis, allowing us in those days to commit to some advantageous purchases. Foregoing some additional derivatives premiums proved to be well worth it.

Some other soundbites via the Wall Street Journal:

Discussing why Berkshire keeps so much cash on hand:
Borrowers then learn that credit is like oxygen. When either is abundant, its presence goes unnoticed. When either is missing, that’s all that is noticed.

****

“Money will always flow toward opportunity, and there is an abundance of that in America.”

****

John Kenneth Galbraith once slyly observed that economists were most economical with ideas: They made the ones learned in graduate school last a lifetime. University finance departments often behave similarly. Witness the tenacity with which almost all clung to the theory of efficient markets throughout the 1970s and 1980s, dismissively calling powerful facts that refuted it “anomalies.” (I always love explanations of that kind: The Flat Earth Society probably views a ship’s circling of the globe as an annoying, but inconsequential, anomaly.)

****

One footnote: When we issued a press release about Todd [Comb's] joining us, a number of commentators pointed out that he was “little-known” and expressed puzzlement that we didn’t seek a “big-name.” I wonder how many of them would have known of Lou in 1979, Ajit in 1985, or, for that matter, Charlie in 1959. Our goal was to find a 2-year-old Secretariat, not a 10-year-old Seabiscuit. (Whoops–that may not be the smartest metaphor for an 80-year-old CEO to use.)

****

On hedge funds:
The hedge-fund world has witnessed some terrible behavior by general partners who have
received huge payouts on the upside and who then, when bad results occurred, have walked away rich, with their limited partners losing back their earlier gains. Sometimes these same general partners thereafter quickly started another fund so that they could immediately participate in future profits without having to overcome their past losses. Investors who put money with such managers should be labeled patsies, not partners.

****

Berkshire and the housing/mortgage crisis:
Our borrowers get in trouble when they lose their jobs, have health problems, get divorced, etc. The recession has hit them hard. But they want to stay in their homes, and generally they borrowed sensible amounts in relation to their income. In addition, we were keeping the originated mortgages for our own account, which means we were not securitizing or otherwise reselling them. If we were stupid in our lending, we were going to pay the price. That concentrates the mind. If home buyers throughout the country had behaved like our buyers, America would not have had the crisis that it did.
(Emphasis added)

****
On the worst of the global financial crisis:
As one investor said in 2009: “This is worse than divorce. I’ve lost half my net worth–and I still have my wife.”
In discussing the bazaar that is the coming annual meeting:

Remember: Anyone who says money can’t buy happiness simply hasn’t learned where to shop.

Full letter.

 

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Sat, 02/26/2011 - 12:28 | 999678 6 String
6 String's picture

....Normalcy bias at its finest.

Sat, 02/26/2011 - 15:36 | 1000092 slewie the pi-rat
slewie the pi-rat's picture

Slewie's 2.26.11 Letter to Eric Holder

cc:  We The People

 

To:  Mr. Eric Holder, Esq.  TopDog; Dept. of Justice
From:  CSp5 (ret.) slewie the pi-rat, Chaplain of The Militia Of The People Of The United States Of America

Dear Sir or Madam:

when i googled you to find out why you goobermint doucebags are screwing everything ala pooch, i very much liked what is saw.

are you married?

and, i'm startin to like yer boss a bit more, too.

he certainly has the happiest family on the planet, and if he be free-rollin for the rest, screw it, I'm IN!

#2:  "A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed."

The "State" = USA.  REALly!

http://en.wikipedia.org/wiki/File:Minute_Man_Statue_Lexington_Massachusetts_cropped.jpg

This is to report to you that, under the 2nd Amendment, AKA:   THE FREAKING LAW, sir, We The People are in defensive mode, stack arms.

And, i have also been asked to remind you:  you work for US.
This militia is not here to serve the goobermint.
Or, the 'States' unless, of course, prior arrangements have been made, in which case the arrangements will be honored.

That is, why we're here;  because we are needed in this capacity and the law demands that we muster and step forward. 

you figure out what part of "we" applies to you, sir.  and we shall do the same.

hava day, friend.

slewie out.

Sat, 02/26/2011 - 15:47 | 1000112 Rodent Freikorps
Rodent Freikorps's picture

Amen, and pass the ammunition.

Sat, 02/26/2011 - 12:31 | 999683 props2009
props2009's picture

He also says that he is itchy to put in money into American housing markets....

do we take that as a signal for QE3 which means more money into US economy esp construction?

http://dawnwires.com/investment-news/warren-buffett-i-am-itchy-to-pull-t...

Sat, 02/26/2011 - 12:53 | 999713 Long-John-Silver
Long-John-Silver's picture

It's a liquidity trap. The rats are running circles in the cage until they starve to death. In this case the rats are printing money and eating it but they still starve to death because there is no nutritional value. Once a country starts printing counterfeit money (QE to ), the game has been lost.

Sat, 02/26/2011 - 12:57 | 999721 Rodent Freikorps
Rodent Freikorps's picture

An experiment showed rats, given a choice between food and cocaine will push the coke button all the way to starving to death. Stimulus will do that.

Sat, 02/26/2011 - 12:36 | 999692 Clint Liquor
Clint Liquor's picture

I wouldn't piss in Warren Buffet's ear if his brains were on fire.

Sat, 02/26/2011 - 12:59 | 999729 Thomas
Thomas's picture

..but it would be tempting.

Sat, 02/26/2011 - 13:05 | 999747 Long-John-Silver
Long-John-Silver's picture

I would piss on him, just not where he's on fire.

Sat, 02/26/2011 - 13:55 | 999853 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

BRK.A
Mar 9,2009 $73,195
Feb 18,2011 $127,550

Too heavily weighted in financials for me.

Sat, 02/26/2011 - 14:48 | 999995 malikai
malikai's picture

Dec 31,2011 $5

 

Sat, 02/26/2011 - 14:54 | 1000011 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

If I short it hard will you backstop me?

Sat, 02/26/2011 - 12:42 | 999700 props2009
props2009's picture

Warren Buffett says he has turned around NetJets...well read this...

http://dawnwires.com/investment-news/warren-buffett-continues-to-trick-s...

Sat, 02/26/2011 - 15:00 | 1000028 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

Even Judge Jewdy had her NetJet card suspended by "The Accountants(Jews)".

Sat, 02/26/2011 - 12:43 | 999703 Nihilarian
Nihilarian's picture

I don't like Warren Buffet.

Sat, 02/26/2011 - 14:05 | 999891 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

I don't like Creggie Milton from Busted Blog goes Boom. I'd take WB 100x over Creggie the sell out vanity man.

Sat, 02/26/2011 - 12:51 | 999712 silvertrain
silvertrain's picture

Kingworldnews has a MUST HEAR with Jim Rickards this morning along with a great Mike Pento also..

Sat, 02/26/2011 - 14:07 | 999895 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

Someone told me KWN has more ass pirates per square inch than Goldman Sachlets. Can someone provide confirmation?

Sat, 02/26/2011 - 12:53 | 999714 Life of Illusion
Life of Illusion's picture

 

 

Derivatives should be called

“STEALTH FINANCIAL WEAPONS”

Sat, 02/26/2011 - 14:08 | 999896 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

Gold should be called money.

Sat, 02/26/2011 - 14:57 | 1000025 Sudden Debt
Sudden Debt's picture

anything that can be traded is as good as money.

In jails, they even trade sigarets and stuff so even that is money.

Sat, 02/26/2011 - 16:03 | 1000151 philgramm
philgramm's picture

Agree 100%!!! competing currencies keeps everyone honest.  To those who will reply "that's what we have now", No it's not.  It's akin to blaming free markets for the collapse.

Sun, 02/27/2011 - 08:43 | 1001443 Crumbles
Crumbles's picture

NOT - cigs are outlawed, current trade items are postage stamps and plastic pouches of fish - which do you prefer?

Sat, 02/26/2011 - 13:01 | 999725 Spalding_Smailes
Spalding_Smailes's picture

In other news .... China.

 

...... " Let’s face it – most Chinese growth is the result of overheated investment, and removing the sources of overheating without eliminating growth is going to prove impossible.  I have been making the same argument for at least two or three years, and so far we have seen how Beijing veers between stomping on the gas when the economy slows precipitously and stomping on the brakes when it then grows too quickly.  I don’t believe anything has changed.

 

And deposits were down

The most interesting number in the NBS release, perhaps, was January the level of bank deposits.  They were down.  Dong Tao at Credit Suisse says that this is the first time this has happened since January 2002:

What was more concerning was that it was corporate deposits that went backwards, not household deposits, as may have been expected around Chinese New Year. This gives us reason to believe that the fall in deposits is not seasonal.

One of my clients asked me two weeks ago about continued tightness in the interbank market and this was my response:

My interpretation of the liquidity tightness is also maybe a littledifferent.  If you check the latest NBS numbers you will see thatdeposits were actually down, and it was not household deposits that dropped, which could be explained by the holiday, but rather corporate deposits.  One month does not make a trend, but this is pretty consistent with the argument that highly negative real deposit rates will cause depositors to take their money out of the banking system.

In that case there may just be a mismatch between the lending and deposit side.  Loan officers are always encouraged to lend like crazy, and the funding side assumes the deposits are there, but perhaps they were caught off guard by the decline in deposits.  I am just guessing, as are we all, but we are trying to keep an eye on the topic to figure it out.

So why did corporate deposits drop?  My guess is that large businesses may be finding it much more profitable to lend money to other businesses, especially those who don’t have easy access to bank credit, than to deposit cash in the bank at such negative real rates.  Both the Credit Suisse report and an email I got last month from a friend of mine at Bank of China suggests that there may be an increase in intercompany lending, and to me this would be a very plausible consequence of negative real deposit rates.  And of course for those worried about systemic risks this would be very worrying news.  As Japan showed us in the days of zaiteku, when corporations turn to speculative financial transactions as a source of earnings they tend to increase systemic risk.

By the way, and as an aside, in my newsletter I discuss an important recent PBoC release Thursday on the true amount of new lending in China, including off-balance sheet items.  According to the PBoC, not only is new lending far greater than the official new loans number, but it actually increased from 2009 to 2010 – contrary to what the official new loans numbers imply.  This was not unexpected but nonetheless a little shocking. " .................

 

http://mpettis.com/2011/02/zaiteku-and-china’s-january-inflation/

 

Sat, 02/26/2011 - 14:10 | 999902 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

Good grief haven't you guys been calling for a crash in China for at least 2 years?

This is what happens when the investors have skin in the game.
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;) Nothing.

Sat, 02/26/2011 - 14:45 | 999989 Spalding_Smailes
Spalding_Smailes's picture

 

To make this point even clearer, I am providing an updated graph, illustrating a phenomenon often discussed in these times, which is the utterly hypocritical statements made by Chinese officials, who only recently renewed their accusation that the Fed was following an overly easy monetary policy. Let's not forget that China, via its systematic manipulation of the dollar/yuan exchange rate when it requires Chinese businesses to sell it back dollars earned via exports in exchange for fresh new yuan, is indeed the one that is engaging in money creation via the printing of new money. It is perfectly understandable that China might be frustrated by the fact that the United States, via its 0% monetary policy, is not compensating its investments "correctly," but if you check out the changes in M2 money supply in the U.S., the eurozone and China, you will immediately see who is carrying out an easy money policy with its ensuing upward effect on commodity prices in the world. M2 in the USA, the eurozone and China. In 15 years, M2 has grown five-fold in China.
As you can see in this graph, China literally allowed its money supply to skyrocket, compared to that of the U.S. or the eurozone, with annual growth averaging +17.4% between 1996 and 2008, which compares to +7.1% in the eurozone and +6.3% in the United States. Above all, since the beginning of 2009, this divergence has actually widened, despite the Fed's QEs and 0% interest rates, since Chinese M2 has been growing at 26.6% per annum (!), versus +3.5% in the U.S. and +2.3% in the eurozone. So, I wonder, is Bernanke truly responsible for the hike in world commodity prices and the ensuing popular upheavals? http://seekingalpha.com/article/252124-enough-with-the-bernanke-bashing-...

 

Sat, 02/26/2011 - 13:03 | 999740 Printfaster
Printfaster's picture

Another of plunderers of the TBTFs talking from Mt Olympus. 

TBTF:  business, government, labor, banks

All of them shaking down the entrepreneur for loose change.  When will Atlas shrug?

What is with this babble of the number of derivative contracts?  That is a totally irrelevant figure.  It is not the number but the number of dollars at risk.  He could have 251 derivative contracts, 250 risking a dollar, the last one risking 10 trillion.  Egad.

Sat, 02/26/2011 - 13:07 | 999749 Fox-Scully
Fox-Scully's picture

So size matters

Sat, 02/26/2011 - 14:16 | 999911 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

If I had two subsidiarity companies under my parent company and one sold a S&P big, while the other bought one S&P big, what is the net notional?

Thank you,
Judge Jewdy

Sat, 02/26/2011 - 13:05 | 999748 tradewithdave
tradewithdave's picture

Todd Combs will not be needed.  We can rebuild him.  We can rebuild Warren.  Yes, it will cost $500 million, but we have the technology.  Conceptually, here's what Warren will look like outrunning Seabiscuit as played by Lindsay Wagner... http://tradewithdave.com/?p=5513

Dave Harrison

tradewithdave.com

Sat, 02/26/2011 - 13:14 | 999759 in-Credible Banker
in-Credible Banker's picture

OMG who gives a rats ass what this dinosaur thinks.  I want to puke at the sight of him and his stupid shrill voice, with Becky Quick blowing him on CNBC....

Sat, 02/26/2011 - 14:20 | 999930 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

I think I saw Creggie doing the reach around while Becky was blowing. Immelt sent a memo out that morning. "All hand on deck for Warren".

Sat, 02/26/2011 - 14:31 | 999955 JW n FL
JW n FL's picture

what a lil sore losing stalker you are... thats all you have to offer???? bitching about how your ass hurts. you are a lil no nothing fag insect... go shoot yourself.

Sat, 02/26/2011 - 13:23 | 999782 quo vadis
quo vadis's picture

"Remember: Anyone who says money can’t buy happiness simply hasn’t learned where to shop"

...So this is what it's all about, Alfie?

You mean to tell me that over and against the wisdom of the ancients, conveyed in good will upon us poor devils, our Oracle confers this upon his minions?  That success boils down to the particular way one stuffs his bottomless gullet with novelties? 

The vast esteen enjoyed by Mr. Buffet is a ghastly certain sign that...  

Man, can't you just feel the times getting a bit biblical? 

Ps 130:1

Sat, 02/26/2011 - 13:27 | 999786 Seymour Butt
Seymour Butt's picture

Is this old fossil dead yet?

Sat, 02/26/2011 - 13:33 | 999797 Rodent Freikorps
Rodent Freikorps's picture

I think he has moved on to Undead.

Sat, 02/26/2011 - 14:21 | 999931 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

Making a new AUM class. Zombie Capital Management.

Sat, 02/26/2011 - 13:44 | 999808 TruthInSunshine
TruthInSunshine's picture
warren-buffetts-bizarre-thank-you-note-to-uncle-sam

This is the letter the big, fat, bloviating socialist Warren Buffett should have sent:

Dear Uncle Sucker
Sat, 02/26/2011 - 14:25 | 999942 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

Wasn't Ritholtz arrested for attempting to sell pre-teen girls on Craigslist? Yuck!

Sat, 02/26/2011 - 13:42 | 999819 Trimmed Hedge
Trimmed Hedge's picture

Although I'm not much of a Buffett fan anymore (and I'm especially not a fan of his partner-in-crime Charlie Munger due to his comments the past year or so), you have to admit that those are some *crazy* numbers... billions in bets, with hundreds of millions in profit.

 

Must be nice! LOL  : )

Sat, 02/26/2011 - 14:29 | 999950 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

4Q profit up 43% to $4.4 billion.

Nebraska (Presbyterian) vs. Wall St(Jew York City).

Sat, 02/26/2011 - 18:38 | 1000480 falak pema
falak pema's picture

I didn't know US capitalism was about religious war...

Sat, 02/26/2011 - 19:08 | 1000511 Moe Howard
Moe Howard's picture

Speaking of Jew York City, didn't Chi-town just become Jew-town?

Sat, 02/26/2011 - 13:48 | 999839 Hedgetard55
Hedgetard55's picture

BH will be BK by 2013.

Sat, 02/26/2011 - 14:33 | 999962 Judge Judy Scheinlok
Sat, 02/26/2011 - 13:54 | 999859 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

The only reason Buffett has made any money is because he is an insider. Same applies for all the other crooks on wall street. They are not clever, they are not smart or 'gifted', they win because they already know what is coming around the corner, because they have been told in advance.

They are crooks, that is all. They have one of the easiest jobs in the world.

Sat, 02/26/2011 - 14:39 | 999972 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

Hey FMB,
Whatif ZH was a Wall St based offshore entity with the easiest job in the world?? Herd the ZH-Sheeple.

Have they shown any reason to be afraid of the .gov sensors? Nooooo! They are soft core, easy and gentle.

Why hide your identity?

~Judge Jewdy.

Sat, 02/26/2011 - 13:58 | 999870 Phineas Gage
Phineas Gage's picture

From famed investor and American hero to hypocritical, socio-capitalist, book-talking fraud to senile, rambling imbecile - all in the span of three years.  Poetic.

Sat, 02/26/2011 - 14:43 | 999987 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

Just wait for the realz poetry bitchez!

Where the fuck is Marla? Why can we not have some trance with our Zero?

Rip off!

Sat, 02/26/2011 - 14:01 | 999880 X. Kurt OSis
X. Kurt OSis's picture

Having some experience with the insurance industry I can say that Warren Buffet is a thug and a gangster. His precious free float is function of muscling regulators into exemptions from rules applicable to every other participant in the market, and of course, refusing to pay claims for as long as possible.

His business model is based on the idea that equity markets don't go down over 10 year or longer periods of time and hiding volatility in asset prices through shady accounting practices (thus a lot of 10% or more holdings).

Imagine you could be a highly levered hedge fund that never needed to mark its assets to market.

This thug will not survive the next stage of this collapse thus he picks a lackey as his successor, someone easy to blame.

Sat, 02/26/2011 - 14:46 | 999993 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

There are 5 stages to a collapse for a global economy like ours. We are in stage 2.

Nuff said. Get with it FCS!

Sat, 02/26/2011 - 14:03 | 999887 Reese Bobby
Reese Bobby's picture

Buffett used to be an investor role model for me.  I have grown to view him as an empty soul fueled by ego.

"A housing recovery will probably begin within a year or so."  Dick head...

Sat, 02/26/2011 - 14:49 | 999996 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

Please predict what is going to happen next year; Feb 26, 2012. Do not generalize like Creggie does. Tell me exactly what is going to happen by 02/26/2011.

We will see who is the DH. No?

Sat, 02/26/2011 - 15:24 | 1000078 Reese Bobby
Reese Bobby's picture

You will still be poor of spirit and net worth...

Sat, 02/26/2011 - 14:09 | 999899 WTF2
WTF2's picture

America's leading oligarch.  Socialism for him and capitalism for everybody else.  Only the Mexican Carlos Slim has it better.

Sat, 02/26/2011 - 14:50 | 1000002 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

What about the WTF2 favorite, George Soros?

Sat, 02/26/2011 - 14:17 | 999918 asteroids
asteroids's picture

I liked the letter is uncle wrote. Good advice. Just need to add a zero and put some gold in that envelope.

Sat, 02/26/2011 - 14:51 | 1000004 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

My uncles cousins brothers sister told me the same thing. Buy Silver!

Sat, 02/26/2011 - 14:21 | 999935 sodbuster
sodbuster's picture

WB is a self- serving, lying SOB.

Sat, 02/26/2011 - 14:52 | 1000006 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

Hey SodBuster,
WB's sprinkler system is called 'urine luck'.

~Judge Jewdy

Sat, 02/26/2011 - 14:30 | 999957 Oh regional Indian
Oh regional Indian's picture

A classic case of money making money making more money.

We had originally received $647 million in premiums for these contracts, and the unwinding required us to pay $425 million. Consequently, we realized a gain of $222 million and also had the interest-free and unrestricted use of that $647 million for about three years.

Especially this line. Look at those NUMBers. 

Interest free use of 647 million for 3 years. It really is a crime. The world of financial services. Money for nothing. Vapid industry, vapid people, especially this connected money-bags set at the top.

Even the application of deep math for making models that make more money off money? And they call it creating value... And then there is the insurance business. The original sin, in my book. The base rationale is fear. And if it does not exist, they create it. The insurance industry is the original flase-flaggers. Hire a pirate or three, sink a boat or two and then sell the rest insurance.

The US and most of the  west is being strangled by this industry. The whole CDS business is (AIG et. al.) are insurers. Loyds, the mother-ship of the insurance industry, thick with the queen.

I'd like to see the day BH stock goes to a dollar.

ORI

http://aadivaahan.wordpress.com/2011/02/25/wisdom-for-warriors-7/

 

Sat, 02/26/2011 - 14:34 | 999966 Threeggg
Threeggg's picture

"You should also understand that we get paid up-front when we enter into the contracts and therefore run no counterparty risk. That’s important"

and then

"If so, our gain from this point will be even greater. But that, of course, is far from a sure thing"

Is that double speak ????????????????

 

 

 

Sat, 02/26/2011 - 14:56 | 1000022 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

Back in high school when everyone was dissecting frogs I was splitting cunt hairs.

Sat, 02/26/2011 - 15:37 | 1000093 Reese Bobby
Reese Bobby's picture

Back in high school I'm pretty sure you spent a lot of time hanging by your underwear...

Sat, 02/26/2011 - 18:45 | 1000489 falak pema
falak pema's picture

that is if you do have a c***

Sat, 02/26/2011 - 15:36 | 1000090 Reese Bobby
Reese Bobby's picture

Well his market calls could be smart given the long expiration?

Warren kisses Government ass because they didn't make him put up mark-to-market collateral.

He may view his option bet as an inflation hedge.  Dollar tanks stocks go higher in notional value.

Reminds me of when he made a quick move into bonds by buying General Re, (which was more screwed up than he thought).

Old Warren is smart.  He just isn't s good guy.  Has always sucked up to the rich and powerful.  He has a high tolerance for the average person's pain.  Ignores the fact the little guy has been roasted by "free-trade" and money printing.  A limousine liberal with a hick facade...

Sat, 02/26/2011 - 15:04 | 1000035 Atomizer
Sat, 02/26/2011 - 15:39 | 1000101 Atomizer
Atomizer's picture

The Oracle has been fucked 7 ways to Sunday. Camps have been divided over the years on who receives increased profits. If Warren states no, profits will be granted regardless.

Warren Buffett's Chinese Car Company Has 7 Factories Confiscated

Ask Warren to tell you about how the US government fucked him over to sell high speed railways. The fraud is coming home, the party bag will land on each corrupt government employee. Thank you for renewing the Patriot Act.. LOL.

It has always been aimed at addressing internal financial terrorism. Winks.

Sat, 02/26/2011 - 16:32 | 1000221 Monkey Craig
Monkey Craig's picture

do we know how accurate this list is? i don't think Buffett is a "pseudo Jew." i'm not really sure what that is

Sat, 02/26/2011 - 16:06 | 1000159 gwar5
gwar5's picture

Still waiting for Buffet to give away his money to the government. Foundations are his chicken shit excuse.

If he thinks the government is the wisest way to redistribute everybody else's money, what's he waiting for?

 

Sat, 02/26/2011 - 16:12 | 1000171 Luke 21
Luke 21's picture

I wish other ceos would go into the same detail to explain all aspects of their business as Warren has.

Sat, 02/26/2011 - 17:40 | 1000364 reader2010
reader2010's picture

Question: The fucker sold his entire sliver holdings about 2 million ounces at average price of how much and when? 

so much for the bullshit.

 

Sat, 02/26/2011 - 18:01 | 1000409 malek
malek's picture

...and generally they borrowed sensible amounts in relation to their income. In addition, we were keeping the originated mortgages for our own account, which means we were not securitizing or otherwise reselling them. If we were stupid in our lending, we were going to pay the price...

Ahem, is he talking about WFC here?
Sensible lending to sensible borrowers?? No securitization???

Sat, 02/26/2011 - 18:13 | 1000428 DR
DR's picture

With all those derivative bets, Buffet is admitting that BH is just another hedge fund.

Can’t any one make money off real business anymore?

Sat, 02/26/2011 - 18:22 | 1000451 bb5
bb5's picture

This guy makes me sick. He testifies that no one could see the real estate market collapsing and the rating agencies are not to blame. Max Keiser said that Buffett suffers from Fraud Blindness. I think he should have his own show on CNBC where Steve Liesman can be his permanent guest. Anybody want to watch that?

Sat, 02/26/2011 - 19:25 | 1000533 palmereldritch
palmereldritch's picture

Money can't buy happiness.

One of my favorite disinfo canards from the elite.

 

No it can't buy happiness but it can buy freedom and by anyone's measure that's an excellent beginning.

 

Sat, 02/26/2011 - 20:01 | 1000579 Flakmeister
Flakmeister's picture

I don't much care for Warren... but BNSF was a beautiful play. In this basically potemkin economy, just try to recreate a BNSF from scratch for $34 billion....

If the things implode to the level that BNSF is irrelevant, then just about everything else will be as well....

Sat, 02/26/2011 - 20:35 | 1000619 buzzsaw99
buzzsaw99's picture

Buffett can suck it bitchez.

Sat, 02/26/2011 - 20:40 | 1000621 Stanley Lord
Stanley Lord's picture

Buffett is now like GM and GE/NBC/CNBC a shill for Obama.

Do not believe a word he says.

Sat, 02/26/2011 - 21:00 | 1000650 Justaman
Justaman's picture

I don't believe I am the first to say this but Uncle W is and has always been a paper oracle.  He can't go against the TBTF mantra because BRK is one of those companies. 

Just continue to hold cash Warren.  It has served you well at negative interest rates and a declining level of purchasing power.  

But, the past is the past.  With the biggest bubble now being fiat currencies worldwide, we need to move on from UW.  His days of transparent judgement are long gone and a real disappointment to former BRK owners who have awoken to the real situation in this country.   

Sat, 02/26/2011 - 21:14 | 1000661 Cheyenne
Cheyenne's picture

"Our goal was to find a 2-year-old Secretariat, not a 10-year-old Seabiscuit. (Whoops–that may not be the smartest metaphor for an 80-year-old CEO to use.)"

No, it isn't. David Tepper has thrashed Warren for better than a decade and has, to my knowledge, no known "episodes" with being the largest shareholder in MCO until he got a phone call from...

Best to leave that nugget for the rapidly deteriorating Seabiscuit.

In the mean time, I urge scorekeepers in the crowd to click on both 5-year and 10-year performances so we can see who's wearing a swimsuit and who's utterly full of shit.

http://www.gurufocus.com/score_board.php

Sat, 02/26/2011 - 22:05 | 1000689 vas deferens
vas deferens's picture

Warren Buffett can suck Charlie Munger's fat ass. These two are the scum of the banking system.  Warren Buffett is treated like royalty what a joke.

Sat, 02/26/2011 - 23:45 | 1000990 Coldfire
Coldfire's picture

The Anacle of Omaha.

Sun, 02/27/2011 - 12:43 | 1001046 Zero Govt
Zero Govt's picture

Warren Buffet has lost it. His backing of trains is the time the penny dropped for me. Trains have been a joke transport system since the car (truck) and aeroplane arrived. It has only been those deluded arsewipes of humanity (politicians) that have kept this totally bankrupt transport system going with endless public money subsidies (annual bailouts in effect).

As for his claim it was "backing America" it's at best a throwaway PR line because his job is to make money not be a patriot. The bankrupt truth is trains are not backing America but impoverishing it because it's draining wealth (subsidies) on a 100 years past its sell-by-date transport system. Buffet RIP 

Sun, 02/27/2011 - 13:03 | 1001673 RockyRacoon
RockyRacoon's picture

His railroad deals are a regression to his childhood when his parents never got him a train set.   Poor guy now is playing with his trains on paper.

Sun, 02/27/2011 - 00:32 | 1001050 eftian
eftian's picture

so he gets to brag made a few billion on this made a few billion on that

didn`t berkshire own AIG and run it so poorly it cost us 180 billion?

how can he still be doing business as berkshire when a company they controlled cost the american people so much?

berkshire should be liquidated and the people made whole.

ridiculous corperation layering, our whole corperate structure is shot.

Sun, 02/27/2011 - 05:23 | 1001353 DrLamer
DrLamer's picture

Mr. Buffett, - making a fortune on a free market, backed by the Law of United States, by the US Constitution,-  you did NOTHING for a recovery and for improvement of US economy and/or US legal system. Instead, you have turned Your money into a part of world's evil system.

That is why we are about to go for your money. Be prepared.

Sun, 02/27/2011 - 10:23 | 1001511 LMAOLORI
LMAOLORI's picture

 

Buffett’s Betrayal not only is he an obama supporter but he's another welfare queen http://blogs.reuters.com/rolfe-winkler/2009/08/04/buffetts-betrayal/

http://blogs.reuters.com/rolfe-winkler/2009/08/04/buffetts-betrayal/

 


 

Sun, 02/27/2011 - 15:42 | 1001946 snowball777
snowball777's picture

Hate the (rigged) game, not the (hypocritical) player?

 

Sun, 02/27/2011 - 14:57 | 1001855 snowball777
snowball777's picture

Man is the Oracle gonna look funny when his $900M + $400M of 'underwriting profit' goes poof.

"You see, the fact that we're on a sinking ship is irrelevant because I have in my possession a counterfeiting machine that will provide the funds to purchase a new ship".

 

Sun, 02/27/2011 - 16:04 | 1002003 Jim B
Jim B's picture

Warren Buffet, F you!

I don't begrudge you your billions, but I am amused by your endless bitching for the steeple to pay more taxes while you hide your wealth in tax shelters.  Warren, shut up and write a "big" fricking check to the US treasury.  I won't hold my breath waiting for you to write that check!  On the contrary, you milked the Tarp program to make money in companies bailed out both directly and indirectly!  

Again Warren Buffet, F you!  

I don't mind your wealth, but your hypocrisy really pisses me off! 

 

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tony1983's picture

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