WINDS BUFFET BUFFET
Jackson Blair
Forbes Magazine once declared Warren Buffet of Omaha, Nebraska the world’s richest man. Estimates today list him as the second richest man, behind a fellow down there in Mexico.
Warren Buffet is the CEO of Berkshire Hathaway. The company defies easy description because it owns many businesses engaged in a wide variety of production.
Buffet also defies description. He continues to live in a house he bought decades ago at a price in the $30,000 range. For years he continued to drive an old car. He does not choose to be a “player” in the international Jet Set and he told his great friends Bill and Melinda Gates that he just wasn’t interested in the nitty gritty of giving away billions so could he just put his in their foundation and they could handle that for him.
Perhaps a further quirk were all those Christmas cards over the years signed “Warren, Susie and Astrid.” You see Warren was married to Susie but lived with her good friend Astrid until Susie died. Then Warren married Astrid. Actually, Susie introduced Warren to Astrid when Susie decided to move to California.
Not only can Warren pick stocks, evidently he is a gold medal picker of women. How many of us could expect our wife, worried that we might be lonely while she is away, to seek out and introduce us to one of her friends, who then was encouraged to move in with us.
I digress.
The point I want to make here is that one of the savviest investors of all times managed to lose something in the neighborhood of $11 billion in 2008.
This fact enables all of us who are down a couple thousand bucks, or are worried that we cannot buy next year’s new car or truck, or have to ask the kids to take a job waiting tables so they can still get through college, are all keeping good company with guys like Warren.
The current recession, which to me feels a lot like a depression, has not been an observer of class lines. The rich have seen their non-earned income payments dwindle, the mighty million dollar babies on Wall Street have seen their paychecks drop to zero when famous names in the annals of American business disappear from the scene or suddenly are taking marching orders from the U.S. Government.
Buffet has stated (as quoted in the N.Y. Daily News)
that our “economy will be in shambles in 2009, and perhaps longer, before recovering from the reckless lending.”
When a guy like Buffet, known for his great optimism, puts that out there for the public to consider, we all had best take note. Lets keep in mind that although his company’s profits fell 96% we don’t actually have to take up a collection to buy this fellow lunch. All things in life being relative, Warren is still going to appear in the top five of the wealthiest men in the world when Forbes gets around to that survey again. In fact, there is probably a greater likelihood that Forbes will disappear from the scene than that Warren will be considered poor.
Are you wondering what Warren might advise you to do if you could afford his advice? Warren’s Berkshire Hathaway in the last 52 weeks would have let you buy one share if you had the $147,000 that it cost. Today you can get one share for the bargain basement price of $78,600. What a deal!
Just put down the paper for a moment and run to the phone and call your broker. How many shares are you planning to buy before they go up again sometime in 2050?
I decided a long time ago that I couldn’t afford a share of Warren’s stock so I make a practice of reading everything he has to say. When I know what he is thinking about an industry, I look pretty seriously at that industry and try to find an affordable investment. So when Warren, often called the Oracle of Omaha or the Sage of Omaha, tells me the economy is in a shambles, I look for non-stock investments.
One naturally considers gold. Everybody tells you to buy some gold. If you have gold and the world goes kaput you can trade around with some cavemen or other humans roaming the earth.
Well, I checked with Warren on that idea only to find that around 1998 Warren was speaking at Harvard and some bright young Wall Street bound investment-banker-to-be wore his ignorance on his sleeve and asked the question I planned to ask: how about gold?
Buffet’s comments, related in many a newspaper then and later:
“Gold is non productive. It gets dug out of the ground in Africa or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility.”
I pause here because I am running out to sell my supply of gold.
Shortly thereafter I will have to dismiss the guards I had standing around to guard it and they, in turn, will increase the unemployment numbers that the White House will announce next week.
And so the world continues to rotate on her axis, Buffet continues to look for new investments while he is buffeted by the same ill wind that now blows on us all, and each of us tries to guess when it will be the best time to reenter the market.
Unless by market you are referring to the local grocery store, I suggest you sit tight for a while.
