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Buffet's 2010 annual letter dated Feb 26, 2011
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2011 Feb 28, 3:57am 1,633 views 4 comments
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FortWayne
2011 Feb 28, 12:41pm
Thanks, reading that article. I remember when he came out after the crash and mentioned that high bidders on Wall street were all playing Cinderella without knowing when the clock will strike 12.
However, it is easy to talk about the problem after it happened and been dealt with. I would have liked Buffet a lot more if he publicly mentioned this before the crash.
Another good one by Buffet:
http://www.berkshirehathaway.com/letters/growing.pdf
Vicente
2011 Feb 28, 3:03pm
I am not reassured by Grampy Warren telling me everything's fine with capitalism.
Everything is NOT fine, and in fact all that leverage and crazy credit is still out there. Worst of all the economic inequality gap is getting larger. And I really don't know what "six times better" means as far as our lives today. By what metric?
I don't understand the six times better thing either, but I can't really complsin. I'm on track to bring home almost three fifty this year, and everyone wants to give me tax cuts.
I just read something on business insider that claimed that income is at an all time high. Funnily enough it did not discuss distribution of income, only totals. My guess is that average (mean or median) probably is up significsntly, even adjusted for inflation, but the mode moved rapidly downward. My older brother makes slightly more than be did 5 years ago, but I make nearly five times as much as I did then. Good for me, but not really the future that I want for my brother or either of our families.
The funny thing though is that he's a die hard libertarian who insists that laseiz faire capitalism is the path to prosperity.
Thanks, reading that article. I remember when he came out after the crash and mentioned that high bidders on Wall street were all playing Cinderella without knowing when the clock will strike 12.
However, it is easy to talk about the problem after it happened and been dealt with. I would have liked Buffet a lot more if he publicly mentioned this before the crash.
He has given lots of warnings. At the shareholder meeting, in testimony to Congress, in public statements. He correctly identified derivatives as a looming time bomb years before the financial crash, and in addition to giving warning, unwound GenRe's derivatives book in time to avoid adverse consequences for Berkshite.
The problem isn't that Buffet (and Munger, and others) don't give warnings. The problem is that nobody who thinks they'll profit from a bubble wants to act on them.
"Don’t let that reality spook you. Throughout my lifetime, politicians and pundits have constantly moaned about terrifying problems facing America. Yet our citizens now live an astonishing six times better than when I was born. The prophets of doom have overlooked the all-important factor that is certain: Human potential is far from exhausted, and the American system for unleashing that potential – a system that has worked wonders for over two centuries despite frequent interruptions for recessions and even a Civil War – remains alive and effective."
"Unquestionably, some people have become very rich through the use of borrowed money. However,
that’s also been a way to get very poor. When leverage works, it magnifies your gains. Your spouse thinks you’re clever, and your neighbors get envious. But leverage is addictive. Once having profited from its wonders, very few people retreat to more conservative practices. And as we all learned in third grade – and some relearned in 2008 – any series of positive numbers, however impressive the numbers may be, evaporates when multiplied by a single zero. History tells us that leverage all too often produces zeroes, even when it is employed by very smart people."
nice words of wisdom.
http://www.berkshirehathaway.com/letters/2010ltr.pdf