The following comments were made at Berkshire Hathaway's Annual General Meeting last weekend in Omaha:
On the dollar:
Warren Buffett said that Canada’s currency is likely to outperfom the U.S. dollar in coming years. He acknowledged that he had bought a couple billion dollars worth of Canadian currency some time ago, and now wishes he had bought more and kept it longer than he did. Mr. Buffett continues his bearish stance on the U.S. dollar and continues to hold the Brazilian real.
He said he was “happy to invest in overseas companies, because currencies in those countries are not likely to decrease to the same extent as the U.S. dollar. The federal government appears likely to follow policies that will make the dollar even weaker.” Mr. Buffett stated that he does not feel a need to hedge on other currencies.
On the recession:
He confirmed his view that the U.S. is in fact in recession. If people find their financial situation is worse than it was six months ago, his advice is to “remain calm and make good investment decisions. It means driving the extraneous thoughts out of your mind.” He added that investors should think for themselves and be detached from the crowd.
One of Berkshire Hathaways’ subsidiary companies will likely buy an unnamed middle-sized United Kingdom company, Mr. Hull said. He believes an insurance division of Royal Bank of Scotland (RBS) is the likely target.
Berkshire Hathaway plans to continue to insure municipal bonds issues, but if premiums are too low, it won’t accept the coverage. This business has brought in over $400-million in premiums in just the first 90 days of 2008.
Mr. Munger said that much of the present trouble in the financial markets is “richly deserved” and the result of “stupidity and over-reaching” by people who ran the institutions. He added that “what you are seeing now is to some extent justice.”
Mr. Buffett said that Sweden has a few companies that he would want to buy, but only at the right price.
Both Mr. Buffett and Mr. Munger agreed that home buyers that were misled on mortgages and are facing a crisis, such as foreclosure, deserve some help. Mr. Buffett said that mortgage papers should include a single sheet that says, in simple words and bold type, the terms of the loan and what could happen to house payments and interest rates if things change.
He also said that he had written a letter to Treasury Secretary Henry Paulson in which he suggested that people taking out a mortgage should be provided a one-page document that is headlined “WARNING” in red, and describes in-depth the maximum rate they could face in the future.
Mr. Buffett believes that the housing market woes will weigh down bank results and earnings for a couple of years and the industry’s continuing write-downs due to bad debt are not over by a long shot.
On Bear Stearns:
Mr. Buffett said that the Fed did the right thing in arranging a bailout of Bear Stearns (BSC). He said that another investment bank or two would have failed only days later had the Fed not acted.
It would have been a spectacle of unprecedented proportions.” He said that action “prevented, in my opinion, the contagion where you’re going to have runs on investment banks. Just imagine the thousands of counterparties around the world having to undo contracts.
Mr. Buffett said he looked at the Bear Stearns opportunity when he got the call, but said he turned it down because he lacked enough capital and time to craft a solution.
As I understand it, Bear Stearns had $65-billion due on Monday and I didn’t have $65-billion. I couldn’t get my mind around that situation in the required time.
He also said JPMorgan (JPM) was the right buyer for Bear Stearns.
[Jeff Hull, a financial and investment advisor with Berkshire Securities Inc. (a subsidiary of Manulife Financial) is the Financial Post’s insider to Warren Buffett and his company’s AGM.]
Re: "Fear is the ENEMY more than any other thing as it confuses the mind making you do DUMB things because you aint realy thinking you are REACTING."
Yo duck... you would have been a great carpenter, because you always 'hit the nail on the head'! Thinking isn't very popular anymore duck. People don't read as much as they used to either. Well... not the things that they should read. They prefer to listen to their iPods and turn the volume up as loud as it will go. Everytime I go someplace, their's one car after the other with their boomboxes blarring and their window wide open so they can show everyone how ignorant they are. They need attention so they can show off their toys that they're paying for with their car title loans at 30% interest. Between those payday loans and the price of gas, those mentally deficient numskulls won't be able to afford to buy a hearing-aid in a few years. Constant noise is going to cause a huge increase in deaf people in the very near future. The kids from the 50's didn't have the woofer's like they make today, or a lot of them would be deaf already!
QWAK,Bear,Thinking you can just adjust over night or even a month or so may make you feel warm and fuzzy inside but it is not very realistic.
Go turn off all the breakers in the house for 24 hr and pretend that TSHTF and you are stuck and can't go any ware.
For most people today at 2 hrs they would be like a JUNKEY needing a FIX real bad! :)
No matter how prepared you THINK you are --- you AINT! No one ever IS!
With no PLAN and NO PREPS it is unlikely survival would be high probability -- of corse it depends on the spicific situation but my experience it it never seems to be like I thought or imagined it would be or actualy was prepared for.
Fear is the ENEMY more than any other thing as it confuses the mind making you do DUMB things because you aint realy thinking you are REACTING.
Every life is an ADVENTURE, planing and preperation help minimise the TRAGIC parts of the ADVENTURE. It don't garantee survival but it increases the odds in YOUR favor conciderably! ;)
Yo spliter... I'm with you on the back to basics thing... if it becomes necessary... and it very seriously could happen! I'm in the same gas situation... and it's not an issue with us either. But it's the rest of the people that can make our little world a little difficult just because we're better prepared. No tellin' what desperate people might do! The way people are today, it doesn't take much to set them off like maniacs. Road rage is an every day thing, and so are home invasions. Two people were killed last night right about 3 miles from here, when they came home and found a nut robbing their house. The guys wife was killed and the crackpot robber was shot by her husband and killed. This is every day too! Wait until it really gets bad!!! Some people are ready or getting ready for some kind of trouble, like gas shortages, and maybe some food. But self protection is going to be a bigger problem than anybody has seen yet! Not a very comfortable thought.
j-4....we can all (or some of us) go back to basics.....like the duckie........livin of the earth (mother earth catalog)..ain't a bad plan..(if you got some gold & silver as duckie does).......i've been living a bit off the hog.....but i think i'll be able to adjust when it becomes neccessary...i don't need much to be a happy camper............i fill my gas tank once a month...so for me..not an issue...BUT..for others...i can only imagine those days!!!
Re: RE: gasoline demand is set to fall this year for the first time since 1991. >
Re:... spliter's response: "not so sure about that......americans are both addicted...and..some how they need to get work...and on top of that...they like to FLY."
Yo spliter... the problem with America's addiction with gasoline is that their income is having trouble keeping up with inflation... not just with gasoline, but with everything else! They're already cutting back here with carpooling and fewer work days, but longer hours. They can be squeezed just so far... before gasoline is just going to be more of an unnecessary luxury, and used only for absolute and necessary and important reasons. Bikes are going to be another booming business! As for flying... I dunno about that much longer?!! That's going to be very selective because of huge price increases, fewer providers, and much less choice. Don't forget any problems that terrorist might cause! They're still looking for a chance to completely disrupt airline travel, and from the way our so called security is going, the airlines look a lot like sitting ducks. Keep your fingers crossed and pray nothing happens again! How much will people be able to do without is what needs to be looked at very closely. KO comes to mind immediately!:)
Yo spliter... when I screw up it's a wake up call that reminds me that I'm not perfect... which I try to remember when I run my trap about this and that... because I get so carried away with things that don't even matter most of the time. That's the fun part though. When I realized that it wasn't you who was mixed up, I caught myself looking a little stupid again. So... I knew I should say so and apologize.
The fast money right now is in the oil, that's having a spike that's still not done yet. I'm keeping a constant eye on it because the profits are starting to get huge. I still can't find a chink in the chart quite yet though! There's got to be a pullback in here somewhere, but it's not in the weekly's yet, which means that any setback will be just a sharp correction and go back up again. Amazing to see! The other place to be for some real good chances to make some fast money is definitey the gold stocks. The beating they've taken has been blowing the usual suspects out of the game. They should be backing their pickup trucks up and filling them with as many shares as they can afford. They'll make enough to pay off all their bills and those ugly mortgages. But I'd still rather see people get the best insurance they can buy... Gold and Silver bullion before it takes off once again! Listening to those Wall Street guys is not a very smart thing to do... but most people don't know any better... soooo... what will be, will be! Later.
RE: gasoline demand is set to fall this year for the first time since 1991. >
>>not so sure about that......americans are both addicted...and..some how they need to get work...and on top of that...they like to FLY.....
j-4.......forget what i said or didn't said.........i'm not even sure what you were apologizing for...(but i'll accept it ;_)
>>what you are rambling about here..(and with these KO knuckle heads)............is there is a big difference between a "good-great co"....and a good stock (chart)......in otherwords....great companies....doen't always perform well....maybe in the long run..10 yrs..whatever..............BUT i'm too old to invest hoping and praying that 10 yrs out my stock will be up 20%.............as that guy on TV ad says..."I WANT MY MONEY NIOW
Just a quix something from the NYT on investment managers switching to commodities instead of stocks:
<Since they last increased oil supplies in September, members of the Organization of the Petroleum Exporting Countries have abdicated most of their responsibilities toward the market, arguing that the higher prices had more to do with investment flows than with supply and demand.
The problem for OPEC is that prices have become largely unhinged from real market factors. As the dollar declines and the economy slows, investment funds have moved into commodities like oil or gold, which they consider safer and more profitable than stocks.
But the political cost of rising energy prices, especially in the United States, which is in the midst of a presidential election, is making OPEC’s position increasingly delicate. Economic growth in the United States has slowed and gasoline demand is set to fall this year for the first time since 1991. >