Lunch Etiquette?

Are there any precedence that might have raised any concerns over comments and conducts by previous Warren Buffett charity lunch winners? I just hope my suspicious is wrong here as there is probably no way to impose any “lunch etiquette”. Hmmm …

Warren Buffett Lunch Winner: I Won’t Profit From Stock Tip Windfall’

P.S. Here is something less serious and more fun. Warren selling mattress at Nebraska Furniture Mart.

[via CNBC]

$2.1 million Warren Buffett lunch

A Hong Kong based hedge fund manager paid $2.1 million for a lunch with Warren. Some of the questions he asked, he could have found out from reading Alice’s biography about Warren “The Snowball“.

Berkshire Hathaway Transcript 2009 Annual Meeting with commentaries

OWH has the most detailed Berkshire Hathaway “transcript”/”play by play” for the 2009 annual meeting that I’ve found. Hope you enjoy the Q&As with Warren Buffett and Charlie Munger.

My BRK AGM question (Thanks Carol)

I am really happy the super insightful Carol Loomis picked and asked the question I sent her (thanks Carol),

“1:22 Carol Loomis of Fortune magazine asks for a shareholder who e-mailed the question what Berkshire is doing to restore its triple A rating, Buffett says it will not turn around anytime soon because credit agencies [...]“

Note: See following commentaries section (marked by @1:22) for my detailed response/concern in Warren’s answer to my question.

[HT: Special thanks to Marcelo, Alice and also Sahil for sharing their insight in this Snowball Facebook group discussion thread that helped me to formulate the question.]

My commentaries on selected items in the AGM “transcript”

@9:03: Hmmm, I thought the magazines were not just any “magazines” but old Playboy magazines (big smile) if I remember right from another article (WSJ?) describing the annual movie.

@10:17: Hmm, Warren is theoretically right that “one or more investment managers do not have to actions right away” but I think Warren is wrong in potentially delaying the announcement of the replacement investment manager(s). A month or so of extra volatility, waiting, and guessing for BRK investors/speculators, I am not sure if I can agree with Warren on this.

@10:59: Re a question about the federal stimulus bill “Buffett says when the consumer pulls back the way they have, government needs to step in. Buffett also says there will be consequences. “I think we should be doing it, but we shouldn’t think its a free ride.”” Translation: we should do it, but there will be some pain later.

@11:47: “Buffett is asked about Berkshire buying back its own shares. Buffett says most of repurchasing of shares recently has been foolish because the stocks were too expensive. ” [Interesting. I wonder what are some of these companies?]

@11:52: Good question, interesting answer. “… shareholder asks about opportunity costs of recent decisions made by Berkshire.” “Buffett says he does live the opporuntity to make those kinds of decisions. Buffett says he had not faced in quite some time the kind of opportunities it saw last year.”

@1:11: Re BYD, “Munger says engineering graduates are being hired at BYD who were at top of their classes. He says it is a remarkable compilation of talent. Munger says lithium batteries are needed in every utility company in America and using power of the sun will need batteries. Berkshire has invested in BYD and Munger says it is not a crazy venture. Munger says that car to be seen in the Qwest Center Omaha, the company makes almost every part in that car.”

@1:15: Re inflation, “Buffett says it is an unprecendeted period but inflation is almost inevitable. Munger says he has seen a lot of inflation in his lifetime, so a little inflation wil not ruin lives. Munger says the trick is to avoid the runway.“

@1:22: Thanks Carol for asking the question I sent. In Warren’s answer, I don’t understand how can the downgrades of BRK and all its subsidiaries have no “material effect on borrowing costs”?? Now, hearing “Buffett says Berkshire is still a Triple A in his mind” is nice as Warren is holding firm to his “inner score card“. Of course, to me, “in the minds of one credit rating agency that still has Berkshire at Triple A” is nothing to write home and brag about. Hmm, “Buffett says it is not material , Triple A“, really? Now, I am actually concern (”disturb” may be too strong) to read

“… Triple A, but losing it at Moody’s still irritates him. Munger says Moody’s will turn around, because Berkshire deserve it and people at Moody’s are smart. Following on that comment, Buffett says when he and Munger disagree, Munger often will say “eventually you will agree with me because I am right and you are smart.”“.

If I were the credit analyst at Moody’s rating BRK and if I still want to maintain any resemblance of credibility, I would have to be the LAST analyst to raise BRK. BRK owns ~20% of Moody’s, in my humble opinion, Warren and Charlie should have known better and not to say anything like the above in BRK AGM. I guess I might have been too strict here. But I really don’t want to read this as a WSJ headline,

“Moody’s forced to raise BRK to AAA after strong words from Warren Buffett“

Sorry Warren, your and Charlie’s words failed your famous “Salomon Headline Test“.

@2:27: Interesting question and answer re comp. “A shareholder asks about

2009 Woodstock of Capitalism

My two good economist friends told me I am too uncritical of Warren. My reply is I might appear to them (and others) that I am “too uncritical” but deep down, there are times for admiration and there are times for being critical. I think the trick is to be admiring and critical at the same time.

The 2009 Woodstock of Capitalism is tomorrow, and there will be 6 hours of live Q&A on anything shareholders ask. How cool is that!!!

P.S. I’ve sent in my questions for Warren to the reporters. Will see if my question get picked or similar questions get asked. It should be fun if it get picked.

Blood Into Gold – Peter Buffett featuring Akon

From their site, “Blood Into Gold is the compelling new song from Peter Buffett featuring Akon, pinpointing the issue of human trafficking and slavery. The poignant video, produced by UNICEF, is a powerful visual representation of the songs message, utilizing moving images and video from around the world that depict the severity of this issue. As a complementary advocacy tool to the song, the hope of the video is to call attention to the issue and inspire others to help bring an end to the atrocities associated with human trafficking.
please visit http://istheresomethingicando.com/“

[HT: Warren Buffett Watch]

Dilbert is wrong

I think Dilbert’s creator Scott Adams is wrong about his view of Warren Buffett. Warren is a true capitalist and while he donated his fortune for good of the world, I think, after reading the 960 pages insightful Buffett bio “The Snowball”, Warren won’t invest for reasons “like rescuing the market”.

Best Snowball presentation

Here is, in my humble opinion, the best Snowball (the biography about Warren Buffett) presentation that Alice has given so far. Enjoy. (Presentation starts at 6:00 or 7:00 mark. BTW, I’ve listened to this talk three times now to let the ideas slowly sink it. I will probably listen to it a few more times.)

The Snowball: Warren Buffett and the Business of Life – What a great read

I’ve finally finished reading/reviewing and picking “best of” pages from the 960 pages“The Snowball: Warren Buffett and the Business of Life” (check out my longish review/”best of” here). Alice Schroeder (link to Alice’s Facebook fan page) has become the de facto expert on all things Warren. The kind of access Warren has granted Alice is just unbelievably detailed and very personal. And it takes the openness of Warren to promise, “Whenever my version is different from somebody else’s … use the less flattering version.“

Don’t let the thickness of “The Snowball” intimidates you. If I can read it, I am sure you can too. (smile) Read and learn from the insights of Warren Buffett and may be you can make or save some money in your own investments.

“The snowball just happens if you’re in the right kind of snow, [...] I don’t just mean money either. It’s in terms of understanding the world and what kind of friends you accumulate. [...] You’d better be picking up snow as you go along, because you’re not going to be getting back up to the top of the hill again. That’s the way life works.”

Buy a copy of the book from your locally run bookstore, or Amazon, or Chapters.

P.S. If you can’t afford to buy a copy right now, I say borrow a copy from your local library but you will likely have to wait. In Calgary, there are currently 102 people waiting for a copy. At the end of the day, just read and learn. The advantage of having your own copy is that you can make your own personal notes.

10 people in The Snowball

After I finished reading The Snowball, here is my personal list of 10 people in Warren Buffett’s life that helped me understand him more,

1. Susie Buffett (Warren’s first wife) (video, as remembered in the Charlie Rose interview) (wikipedia)
2. Ben Graham (teacher)
   
3. Charlie Munger (partner)
4. Kay Graham
5. Carol J. Loomis
6. Bill and Melinda Gates
7. Alice Buffett (Warren’s Aunt)
8. Leila Buffett (Warren’s mother)
9. Astrid Buffett (Warren’s second wife)
10. Alice Schroeder (biographer)

The Snowball: 960 pages Finished, End of the Beginning

I’ve finally finished the 960 pages The Snowball: Warren Buffett and the Business of Life. Yes, 838 pages of text, pages of notes (I’ve read not all but many of these notes), and I will be using the index pages for researches to write a few more blog entries.

Now, I will and am ready to finish my “review/best of” selections (which I ended at chapter 18 when I last updated it). Stay tune.

P.S. I am excited not just because I finished the book but how I am looking forward to how I can apply what I learn from the book (which is why I said it is the “End of the Beginning”).

Berkshire’s new Form 13F-HR disclosure

Warren Buffett’s Berkshire Hathaway’s quarterly portfolio filing with SEC: Sept, 2008 as compare to June, 2008 and March, 2008.

Credit: CNBC for Sept link.

Rebel Without Applause – The Snowball

Find more episodes here. See my book review/”best of” picks here.

PBS interviews Alice Schroeder on her new Warren Buffett bio (The Snowball)

Some good info in this PBS interview of Alice. Also check out this CNN interview of Alice. Here is a C-SPAN video of Alice speaking in Omaha bookstore at the book launch.

HT: Alice Schroeder on Facebook.

Warren Buffett UNC Talk 1996

While I tried to (and failed to) find the full video for recent 2008 Oct Warren Buffett chat with college students, I found this 1996 Warren Buffett UNC Talk which you may enjoy. Here is Part 1 and you can find other parts there.

Videos from The Snowball Warren Buffett bio author Alice Schroeder

To me, it is priceless to see this collection of YouTube videos from TheSnowballBook. The following is part 1 (out of 3 parts already posted here so far with more to come).

See also my review/best of “The Snowball: Warren Buffett and the Business of Life”. Become a fan of Alice Schroeder on Facebook and leave Alice a comment or question.

Warren Buffett: “Buy American. I Am.” – In waiting for the comfort of good news, investors are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

In time of a seemingly hopeless global crisis, the hope is more will be informed enough to hear the right advices from the likes of Warren Buffett in his New York Times op-ed piece “Buy American. I Am.” Here is an excerpt (emphasis added),

In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So … I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.

Why?

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

[...] Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.

I wish you can and will make a right and wise decision based on your own personal circumstances.

HT: CNBC Warren Buffett Watch

Did Warren Buffett buy into Encana, Nexen, etc?

Dec 25, 2008 Update: Hmmm, I stand corrected. Buffett certainly didn’t buy Encana or Nexen in sufficient quantity to be required to file a SEC report. But he did increase his holdings in ConocoPhilips.

Oct 17, 2008 Update: Now we know Warren has been buying some solid American companies recently for his personal portfolio as expected. With the level of fear in the market, this may be somewhat helpful for the market but may not last long. Will see.

*******

Taking a page from the learned but totally ignorant & irresponsible Wall/Bay street analyst, allow me to make some wild and unfounded guesses. I am going to openly wander if Warren Buffet has taken advantage of the recent Global Financial Crisis in buying into deeply discounted Canadian companies like Encana, Nexen, etc last week?

Many people know that Warren Buffet and Bill Gates visited Fort McMurry some weeks ago to learn more about oil sand operations. At the time, I think Warren specifically said something like he wasn’t going to invest but may be in a few years. Well, Warren has been reading Oil & Gas Journal for years, since the 1950s or earlier, so I wouldn’t be surprised if he knows a thing or two about Oil & Gas. Now, with the share prices of these companies (Encana, Nexen, etc) dropping like a stone recently, he might not have to wait a few years to find a good price. He might have found it already. Who knows ?!!

Of course, whether he did or did not buy those shares, we might find out in a few weeks if the purchase are considered material, and assuming he has to file a report with SEC. (Note: The purchases might have been too small to be considered material to be reported.)

Anyway, it is fun to take a wild guess once in a blue moon. And I think I am going to guess more. Only time will tell if I am right or wrong. :)

“If you have to forecast, forecast often.”
- Edgar R. Fiedler in “Across the Board: The Three Rs of Economic Forecasting — Irrational, Irrelevant and Irreverent”

Note to self: Living in Calgary, Alberta, I think I should start reading Oil & Gas Journal for fun. After all, I used to read Aviation Week for fun and I remember I quite enjoy it.

P.S. See this note by Andy Willis re Encana. Interesting read. Here is an excerpt (emphasis added),

The destruction of wealth in the Canadian oil patch has been nothing short of astounding, and predators have to be tempted by the perceived bargains, even if financing takeover presents no small challenge. Here is a quick snapshot of the major players in Calgary, along with the change in their market capitalization from the highs seen in the summer, and the percentage decline from that peak: [K: ?? In US dollars ??]
Suncor: $26-billion vs. $71-billion, down 63%
EnCana: $33 vs. $71, down 54%
Canadian Natural: $29 vs. $61, down 52%
Talisman: $11 vs. $27, down 59%
Nexen: $9 vs. $23, down 61%

Warren Buffett The Snowball: 224 pages down, 614 to go

Oct 17, 2008: Now we know Warren has been buying some solid American companies recently for his personal portfolio as expected. With the level of fear in the market, this may be somewhat helpful for the market but may not last long. Will see.

*******

In some strange cosmic coincidence, Warren Buffett’s biography The Snowball (see my Snowball review and best of pages selection) came out during the current global financial crisis. And I am lucky and fortunate to be able to find time to read and learn from the wisdom of Warren while we are engulfed by this seemingly unstoppable crisis. The lost of confidence seems to surround us like a Black Hole where no light of hope can escape.

Anyway, while I am transfixed by the seemingly unstoppable collapse of various stock prices, I hold firm the believe that for SOME (not all, but some) companies in good financial grounding, their shares simply means a fractional ownership of a viable business. The fact that they are getting cheaper is good for long-term investors who want to buy more of the business. Like a hamburger lovers waiting for hamburgers going on sale, or waiting to buy KFC chickens on a Toonie Tuesday for a discount.

Now, of course, these are my personal musing and I can be wrong (and I do get things wrong often). Which is, incidentally, why I am so disappointed of the statement made by Prime Minister Harper when he gave stock advices on national TV without knowing the specific circumstances of the individuals receiving his suggestions/advices. Mr. Harper, this country’s security laws exist for a good reason and you ignoring of the “Know Your Client rule” was a glaring sign of your ignorance. The brief off-handed comment made on national TV on an issue that should take much longer to give proper advice on, and even if you give advices, it should have been on an individual basis at best.

Anyway, it is 224 pages of Snowball down for me, and 614 pages to go on the main text. Mind you, I do flip to the reference notes sections fairly often. I am getting to some really good bits in terms of investing insights and stories in the book now. Of course, the back stories when Warren was young were so important to understand him and his actions as an adult. I will be posting more to my review and best of pages when I can find some time to read and post. Rest assure that I am still reading it, and won’t stop posting to my review and best of pages until I’ve finished the book.

Stock Market: Weighing vs. Voting Machines

the stock market in the short-run is a voting machine

in the long-run, it is a weighing machine

*******

“And, you know, five years from now, ten years from now, we’ll look back on this period and we’ll see that you could have made some extraordinary buys. That doesn’t mean it won’t get more extraordinary a week or a month from now. [K: This is key, even Buffett is not predicting a bottom, but he never wants to or needs to predict the bottom.] I have no idea what the stock market is going to do next month or six months from now. I do know that the American economy, over a period of time, will do very well, and people who own a piece of it will do well.”

as Warren Buffett has reminded us few days ago

Ben, Congrats for getting your MBA

Ben, Congrats for getting your MBA today.

And I wish you all the best.

Here is a Warren Buffett chat with MBA students which I blogged about previously. I hope you will enjoy this classic.

Ben, I know you are looking for a job and I think the section where Warren talks about job will be great to watch too. (starts around 22:00) Have fun and Congrats.