BUFFETT VS WALL STREET

http://biz.yahoo.com/rf/010311/n10280427.html

Buffett, known for his dislike of Wall Street whizzes, put much of the blame on investment bankers and their partners for the tech bubble, and the pain it has caused many investors.

``By shamelessly merchandising birdless bushes, promoters have in recent years moved billions of dollars from the pockets of the public to their own purses -- and to those of their friends and associates.''

According to Buffett, bankers' short-term profits were put before the interests of the average investor.

``The fact is that a bubble market has allowed the creation of bubble companies, entities designed more with an eye to making money off investors rather than for them. Too often, an initial public offering, not profits, was the primary goal of a company's promoters.''

By Bill Rigby NEW YORK, March 10 (Reuters) - Warren Buffett, billionaire investor and champion of the old economy, scolded ``giddy'' investors and a greedy Wall Street on Saturday for creating the overblown market for technology stocks last year.

``It was as if some virus, racing wildly among investment professionals as well as amateurs, induced hallucinations in which the values of stocks in certain sectors became decoupled from the values of the businesses that underlay them,'' wrote Buffett in his annual letter to shareholders of his company, Berkshire Hathaway (NYSE:BRKa - news), posted on the firm's Web site.

The year-long plunge in the tech-heavy Nasdaq has been a vindication for 70-year-old Buffett, who plays bridge with Microsoft's Bill Gates, but won't invest in tech companies that he doesn't understand.

Berkshire's stock has risen 74 percent from its 52-week low a year ago today. In the same time, the tech-heavy Nasdaq (^IXIC - news) has plunged 59 percent.

``Last year, we commented on the exuberance -- and, yes, it was irrational -- that prevailed, noting that investor expectations had grown to be several multiples of probable returns,'' said Buffett.

The whole fairy tale ended badly, said Buffett.

``After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities -- that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future -- will eventually bring on pumpkins and mice.''

Buffett's Omaha, Nebraska-based firm -- whose main business is insurance but also has subsidiaries in a range of sectors, from furniture to jewelry to plane leasing -- on Saturday reported a 114 percent leap in profits for 2000 to $3.328 billion.

The jump in profit marks a comeback for Buffett from the year before -- which he called the worst ever for the firm -- when poor returns on his old-economy investments led to accusations that Buffett had erred in missing the Internet craze.

BUFFETT VS WALL STREET

Buffett, known for his dislike of Wall Street whizzes, put much of the blame on investment bankers and their partners for the tech bubble, and the pain it has caused many investors.

``By shamelessly merchandising birdless bushes, promoters have in recent years moved billions of dollars from the pockets of the public to their own purses -- and to those of their friends and associates.''

According to Buffett, bankers' short-term profits were put before the interests of the average investor.

``The fact is that a bubble market has allowed the creation of bubble companies, entities designed more with an eye to making money off investors rather than for them. Too often, an initial public offering, not profits, was the primary goal of a company's promoters.''

Buffett also criticized himself however, recounting some of his less successful old-economy ventures.

``We make many mistakes: I'm the fellow, remember, who thought he understood the future economics of trading stamps, textiles, shoes and second-tier department stores.''

-- Anonymous, March 11, 2001

Answers

Everything Warren Buffett has ever said or done should be required reading at every undergraduate and graduate business school in the country.

He warned several years ago against all this "new economy" thinking, where technology companies 'didn't have to make a profit to be profitable', in so many words.

We're now seeing the outcome of that type of thinking.

'Buy low, sell high', and 'take in more than you pay out' are two rules of business that will never change, no matter how much technology you throw at them.

-- Anonymous, March 14, 2001

"...bubble companies, entities designed more with an eye to making money off investors rather than for them."

Boy, I wish I'd said that! That is pithy.

-- Anonymous, March 14, 2001

Go to your favorite equity graphing site (like finance.yahoo.com, etc.) Pull up Buffet's BRKA in a 2-year chart and compare it to the NASDAQ and S&P 500. If you invested a dollar in all 3 two years ago, you would have lost a little in all 3 today, but all 3 are about the same today.

If you strongly believe in "buy low and only sell when it is higher" you will lose a lot of value when the market declines. "Buy low, sell high" is sometimes the very WORST thing to do (e.g., most of 2Q Y2K through 1Q 2001). Bears got rich during that time frame. "Buy low, sell high" idiots lost their shirt.

Buffet (and BRKA) looked like an idiot 1Q Y2K. Today he is being hailed as a value hero. I predict that he will no longer be a hero in less than one year.

Regardless, I know how to add value to my customers when the market is rising, falling, flat or unpredictably volatile.

For any set of economic conditions, there is always a perfect strategy to maximize financial goals. Traditional "value" traders often lag far beyond those who ready the signals that should cause them to change strategies.

That goodness for those laggards who respond slowly. The many supply wealth to those few who respond quickly. I strive to remain in the small minority of highly responsive innovators.

-- Anonymous, May 09, 2001

Who are you, Hartwig? Don't bother Bullshitting here. Try this: Brk A vs. Dow, Nas and S&P for the last five years.

LINK TO
http://finance.yahoo.com/q? d=c&c=&k=c1&t=my&s=brka&a=v&p=s&l=on&z=m&q=l&x=on&y=on&w=on

-- Anonymous, May 09, 2001

As the chart above shows that as of today, BRKa stands above all 3 indices. In addition, Buffet has a mere $28 Billion in his own name.

What have you got, Lost Larry? Take some lessons here:

http://www.thestreet.com/_yahoo/funds/toolsofthetrade/1422150.html
LINK to Chasing Buffet on the Web

-- Anonymous, May 09, 2001