PBS, June 26, 2017, Here is Warren Buffett’s first tax return, filed at age 14
For anyone who bought a $150,000 beach house that is on sale for $11 million now could be consider a good investment. (Have a look of this video of the inside of Buffett’s beach house.) But for fame investor Warren Buffett, well, thats different. To Buffett, the same $150,000 in 1971 could become quite a different beast in 2017 over 46 later. In “The Oracle of Omaha is selling. This time it’s real estate” CNBC news reported in March 2017 (emphasis added),
“He [Warren Buffett] paid $150,000 for the property back in 1971, which is about $900,000 in today’s dollars.
“When I bought it for $150,000, I borrowed some money from Great Western Savings and Loans. So I probably only had $30,000 of equity in it or something like that – it’s the only mortgage I’ve had for fifty years,” Buffett said.
He added, “I thought I could probably do better with the money than have it be an all equity purchase of the house.”
And indeed he did.
“That $110 or $120 thousand I borrowed, I was buying Berkshire then,” says Buffett.
The businessman says he was constantly buying Berkshire in the early ’70s, when the stock was around $40 a share.
“I might have bought 3,000 shares of Berkshire or something like that from the proceeds of the loan — so that’s [worth] $750 million [today].”“
Yes, the 750 million dollars is a mind boggling number as Buffett earned that with the $120,000 he borrowed. In a sense, the $30,000 that he didn’t borrow could have meant $187.5 million if he bought BRK shares instead which is way more than the house list price of $11 million.
At the end of the day, Buffett, his first wife and family plus friends got a lot of enjoyment from the house over the years and that is more than mere “investment” and monetary return.
I remember reading Buffett gifting his three children some BRK shares (not a ton) through grandpa Howard. Warren’s three children could have been “rich” if they had kept onto their shares. BUT that would have been the wrong way to live lives as they have to experience their lives in their own ways instead of holding to “mere money” as none of us can take money away from this earth when we pass on.
“Flash Boys” is a brand new (published March 31, 2014) book by famed writer Michael Lewis (author of The Big Short and Moneyball) about how the U.S. stock market is “rigged”! Yes a U.S. stock market that is “rigged” so much that big investors (managers of multi-billion dollars pension or mutual funds) to small investors (individuals that invest their own RRSP and 401(k) retirement money) are being electronically “scalped” and scammed. Without further delay, here is a guide to Lewis’ top 6 “Flash Boys” videos. Lewis has done a bunch of media appearances to promote this book. Seeing and hearing Lewis explain things in his words is a ton of fun. You will get to learn how Brad Katsuyama, a Toronto-born former Royal Bank of Canada trader, becomes the reluctant hero in this tale.
1) CBS 60 Minutes March 30, 2014 video segment: The first and most important “Flash Boys” video is the must watch! All 14+ minutes are highly watchable, insightful, and may make you really angry once you understand some of the ways people rigged the market against investors! The last three out of four of the 60 Minutes Overtime clips add only a little bit of information and can be skipped. CBS has also provided a full transcript of the segment on the same page.
2) April 1st, 2014 live CNBC debate: The ‘epic’ debate on high-frequency trading between Michael Lewis, Brad Katsuyama and William O’Brien (BATS Global Markets exchange president) is another must watch. The debate was so heated and engaging that some traders on the NYSE exchange floor stopped to watch. (note: Some errors were made by both side and one critical factual error was important enough that BATS was forced to issue a correction on April 4th, 2014 “under pressure from the New York Attorney General’s office“.)
The reactions to the debate at the end of this Marketwatch article is worth a read too.
3) Charlie Rose (April 2nd, 2014 video): Charlie Rose did an wonderful job in this 25+ minutes chat giving viewers some great insights. Rose is seen by many as someone who sets the gold standard of conducting engaging and insightful one-on-one interview. Highly recommended. (April 22nd update: Watch full 50+ mins March 31st show on CharlieRose.com)
4) Bloomberg Television’s “Market Makers” with Stephanie Ruhle and Erik Schatzker (April 2nd, 2014 video): The fun starts early when Lewis tried to explain how the U.S. stock market is rigged using a casino example and the poker players are cheated. The hosts didn’t seem to enjoy the example when they, themselves, were set to be the cheated players!
5) Bloomberg Television’s “Bloomberg Surveillance” (April 3rd, 2014 clips): You can watch different clips from the show here, here, here, here, and here. Just wish the hosts asked Lewis and Katsuyama better questions in the show.
6) Live Talks LA – Michael Lewis in conversation with Malcolm Gladwell – Flash Boys: A Wall Street Revolt (April 10th, 2014): This will likely be a very insightful conversation as one can reasonably expect from a chat between two best selling authors and wonderful story tellers. I just checked with Ted from Live Talks LA and was informed that this video will be posted hopefully tomorrow (April 15th) on Live Talks LA’s official YouTube channel first and later on video pages here and/or here. (April 18th, 2014 update: The video is now posted and it is great! Have a watch!)
8) Michael Lewis: the stock market is rigged – video interview (UK Guardian) Added on April 30th, 2014.
Note: As Lewis and Katsuyama said many times, “High-Frequency Trading (HFT)” is too wide a term and hard to define so it is better to use terms like “high speed computerized scalping” where unfairness is built into the structure of the market (which is bad, very bad) vs “high speed computerized trading” which has reduced trading costs and enhanced investors’ trading experience over the years!
Additional video and audio clips:
* CBC News in-depth interview with Katsuyama (April 4th, 2014). Worth a watch.
* April 9th, 2014 CBC radio audio clip of Lewis (2:10 – 28:09) and a ~50 seconds short clip explaining “how High-Frequency Trading makes stock markets more like rigged casinos“.
* Here is a brief video clip of Berkshire Hathaway’s Charlie Munger saying (in May 2013), “I think it is very stupid to allow a system to evolve where half of the trading is a bunch of short term people trying to get information one millionth of a nanosecond ahead of somebody else“.
Additional references that worth a read:
* “Digging Into The Cliffhanger That Ends the New Michael Lewis Book“, April 7th, 2014. Recommended interesting tidbit of information for readers of the book.
* “Lewis Calls Flash Boys Blowback ‘Thoughtless’” April 2, 2014 Bloomberg Businessweek
* March 10th, 2014 SEC S-1 filing of Virtu Financial where it talks/brags about “As a result of our successful real-time risk management strategy, we have had only one losing trading day since January 1, 2008.” [HT CNBC Bob Pisani’s “Michael Lewis’ ‘Flash Boys and high-speed trading“]
* “High-Frequency Traders Set for Curbs as EU Reins In Flash Boys“, April 13th, 2014 Bloomberg News
* “The need for speed is costing billions New York’s attorney general explains his investigation into high-frequency trading“, April 3rd, 2014, by ERIC T. SCHNEIDERMAN (New York’s attorney general)
* C-Span – Q&A: Michael Lewis “The Big Short” – Added on April 22 (video uploaded on April 5, 2010)
NOTE: This article is cross-posted on examiner.com by me.
July 22nd, 2014 Update: An hour long video chat between Michael Lewis and Conan O’Brien
“Conan talks with Michael Lewis, the author of Flash Boys & Moneyball on Wall Street’s desperate need for oversight, why the financial market should look for a responsible, overpaid “son of bitch,” & how he gets pumped up by listening to the “Frozen” soundtrack.”
According to CTV News “Encana seeks to remove embarrassing audio clip from Internet“,
“Now the company is asking Chirbit to remove the clip, according to The Globe and Mail.
“Encana is the copyright owner of the Recording. It was expressly stated at the outset of the Conference Call that ‘this conference call may not be recorded or rebroadcast without the express consent of Encana Corporation,’” Encana told the web site in a letter.
“The Recording has been posted without Encana’s consent. The unauthorized use of this Recording clearly constitutes copyright infringement. … Encana views this matter extremely seriously and requests that you respond to the undersigned on or before the close of business on Friday, February 22, 2013, failing which, Encana will have no other recourse but to take all actions as may be available to it to protect its proprietary rights.”
Chirbit has declined the request, invoking fair use laws and saying that under its policy, anyone who wants audio removed from its site should ask the poster to do so.“
To hear it for yourself in order to make an informed decision, have a listen to the audio clip in question – Warning: Offensive Language. Also have a read of Globe and Mail report, “Encana wants embarrassing audio file erased from Internet“.
To me, it seems a case could possibly be made that Encana is trying to subvert freedom of press by using copyright law, ultimately if it comes to a lawsuit it will be up to the judicial systems to decide. Now you have listened to the recording, and read the relevant materials, do you think Encana is trying to subvert freedom of press by using copyright law?
Please share your thoughts and comments. All comments are moderated but all fair comments will be approved and I will defend your rights to freedom of speech.
Stretching and bending Copyright Law
It should be noted that copyright law has been used in Canada in recent years to over-reach (in my opinion) into other unrelated areas. Take Euro-Excellence Inc. v. Kraft Canada Inc., 2007 SCC 37,  3 S.C.R. 20, a Supreme Court of Canada judgment on Canadian copyright law as an example, it ultimately is a case about the import of chocolate that somehow got twisted into a case about copyright.
Note: I have made a record of the audio clip in question as a backup in case the original recording was removed for any reason or by accident. Freedom of press is a principal worth protecting and fighting for by all working jouralists.
Forty-two months! Thats how long I’ve been eagerly awaiting for Carol Loomis‘ new book “Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2012: A Fortune Magazine Book” (368 pages, on sale Nov 26th and online amazon.com & indigo.ca). Carol is Fortune magazine senior editor-at-large and a long time (40+ years) close friend of Warren Buffett! I am thrilled to see Carol’s book published and in my hands as it feels like having an insightful person who knows Warren really well to guide me through some important and insightful articles. It will take me some time to read & review the book, please stay tune for my detailed review. Until then, my first impression of the book is it looks awesome!
Long time readers of Warren‘s news and insights will be familiar with some of key articles in this collection and also see many (for me) new articles that are important but less well known. Carol has added many insightful commentaries before the articles to give us context and share with us her views. For example, the article “The Inside Story of Warren Buffet” (April 11, 1988) is Fortune’s first profile of Warren and Carol’s preamble explains what lead her to finally wrote the first profile about Warren after knowing him for 20+ years at that point! And then the afterword for articles like “Buffett Hits $200 million Downdraft” (Nov 17, 1994) reminds readers that Warren actually made money on the USAir investment (which many people may have an impression of it being a money losing investment).
P.S. Now, let me explain my wait of almost forty-two months in this postscript. You see, in April 2009, shareholders of Warren Buffett‘s Berkshire Hathaway NOT physically presented at the annual shareholders’ meeting in Omaha were given opportunities to ask Warren & Charlie remotely in advance via email for the first time. And I jumped at the chance by emailing my question to Carol! Along with my question, I told Carol that,
“I am a big fan of your Fortune articles about Warren and BRK. (I have taken the time to look up some of your older articles and really enjoy reading them.)”
In Carol’s email reply was where I first read of the mention of a possible book (the book that I am finally holding in my hands)! So, yes, I’ve been eagerly awaiting the book since Apr 2009, and that is about forty-two months! :)
P.P.S. Sharp-eyed readers may have noticed there is a stack of five books in the above picture. Can you guess the titles of the Warren related books in the stack? Find out how many you guess correctly by clicking here to see this picture.
P.P.P.S. If you have read this far, you might as well check out my review of Warren’s biography “Snowball” by Alice.
note: this article is cross-posted by me at examiner.com
May 16, 2016 Update: (with video) “Buffett’s editor Carol Loomis: Pen, paper, Fed-Ex & email but never the telephone“. Via Yahoo, click here to view a full replay of the 2016 Berkshire Hathaway annual shareholder meeting