Warren Buffett

A Serial Short Seller Asks "Do Governments & Central Banks Ever Lose?"

It's true that “the authorities” want the price of financial assets (stocks, bonds) to go up, and the price of hard assets (commodities) to go down… which is exactly what has happened. So do governments and central banks ever lose? In the old days, they lost all the time. In one extreme example, an individual hedge fund took out the entire Bank of England. But central banks are currently on a massive winning streak. So to answer the question, “Will we ever have a crisis,” you need to answer the question, “Will we ever be allowed to have one?”

Surprise! CEOs Are Getting Rich By Buying Back Stock

For corporate management teams it’s all about instant gratification these days and if you needed proof that US equity markets have become the preferred channel for transferring debt sale proceeds directly into the pockets of top management, Bloomberg has all the evidence you need.

Frontrunning: July 6

  • Greece Bailout Referendum: They Voted ‘No’. Now What? (BBG)
  • Varoufakis Quits as Greece Enters New Showdown With Europe (BBG)
  • Merkel to Meet Hollande as Greece Told to Make Next Move (BBG)
  • German line hardens after Greek referendum 'No' (Reuters)
  • BOJ keeps rosy view of regional Japan, watching markets after Greek upset (Reuters)
  • Oil falls on Greece vote, China stock market turmoil (Reuters)
  • China Urges U.S.-Iran Compromise 36 Hours to Nuclear Deadline (BBG)
  • U.S. and Iran: the unbearable awkwardness of defending your enemy (Reuters)

Whole Foods, Half Lies

Whole Foods has just been caught ripping-off customers, above and beyond their typical rip-off prices. So what does Whole Foods' leadership finally do about the recent pricing scandal? Create a feel-good advertisement! No staff changes nor any attempt at financial regress for the systematic and ongoing misconduct. They've already double bagged and taken home those ill-gains. Even worse, as we show, even the most fair mis-pricing will generally be "straight up" not fair.

Train Carrying Toxic Gas Derails In Tennessee, Catches Fire; Thousands Evacuated

Remember when oil pipelines were at risk of spilling and as a result the progressive movement decided it would be far safer to transport US oil by train, because supposedly trains are so much safer for the environment, only to lead to a record surge in oil-carrying train accidents and derailments? Well, not even the most hardline of environment-friendlies could have anticipated what happened overnight in Blount County, Tennessee after a freight train derailed carrying flammable and poisonous material caught on fire on Wednesday night, leading to the evacuation of as many as 5000 residents from their homes.

The Warren Buffett Economy, Part 5: Why Its Days Are Numbered

Today’s style of heavy-handed monetary central planning destroys capitalist prosperity. Real capitalism cannot thrive unless inventive and enterprenurial genius is rewarded with outsized fortunes. Warren Buffett’s $73 billion net worth, and numerous like and similar financial gambling fortunes that have arisen since 1987, are not due to genius; they are owing to adept surfing on the $50 trillion bubble that has been generated by the central bank Keynesianism of Alan Greenspan and his successors.

Warren Buffett And Weather Forecasts

"Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the "hamburgers" they will soon be buying. This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices."

The Warren Buffet Economy, Part 4: Why Its Days Are Numbered

After 27 years, honest price discovery has been destroyed, thereby reducing the nerve centers of capitalism - the money and capital markets - to little more than gambling casinos. Accordingly, speculative rent-seeking in the financial arena has replaced enterprenurial innovation and supply side investment and productivity as the modus operandi of the US economy. This has resulted in a severe diminution of main street growth and a massive redistribution of windfall wealth to the tiny share of households which own most of the financial assets. Warren Buffett’s $73 billion net worth is the poster boy for this untoward state of affairs. The massive and systematic falsification of asset prices which lies at the heart of this deformation of capitalism is a direct and unavoidable consequence of monetary central planning.

The Warren Buffet Economy, Part 3: Why Its Days Are Numbered

During the last 27 years the financial system has ballooned dramatically while the US economy has slowed to a crawl - a divergent trend that has intensified with the passage of time. While the rationale for monetary central planning is bogus, the model on which state intervention is based is even more invalid.

How To "Measure" Risk

While investor behavior hasn't sunk to the depths seen just before the crisis, Oaktree Capital's Howard marks warns, in many ways it has entered the zone of imprudence. "Today I feel it's important to pay more attention to loss prevention than to the pursuit of gain... Although I have no idea what could make the day of reckoning come sooner rather than later, I don’t think it’s too early to take today’s carefree market conditions into consideration. What I do know is that those conditions are creating a degree of risk for which there is no commensurate risk premium."

Corporate Buybacks: Connecting The Dots To The F-Word

Corporate executives offer three main reasons for share repurchases: 1. Buybacks are investments in our undervalued shares signaling our confidence in the company’s future; 2. Buybacks allow the company to offset the dilution of EPS when employee stock options are exercised or stock is granted to employees; or 3. The company is mature and has limited investment opportunities, therefore we are obligated to return unneeded cash to shareholders. The logic behind each of these explanations is in the vast majority of cases is flawed, to be kind, and deceptive to be blunt.

 

What Keeps A Billionaire Awake At Night: "Envy, Hatred, Social Warfare" And The "Destruction Of The Middle Class"

There is something morbidly ironic when one of the world's richest men, in this case South African Johann Rupert, who has made billions (his net worth is roughly $7.5 billion) peddling Cartier jewelry and Chloe fashion as founder and chairman of luxury conglomerate Richemont, whose 20 brands also include Vacheron Constantin and Montblanc, said tension between the rich and poor is set to escalate, that the "envy, hatred and the social warfare" may crush society, and that "we are destroying the middle classes at this stage and it will affect us."