As you can tell from this post on my blog, I am no fan of value investing. While I believe investors, especially smaller investors, should partake in more aggressive strategies, I do respect its high priest, Warren Buffett. Since its release late Friday last week, his annual letter to Berkshire Hathaway (NYSE: BRK.A) shareholders has already been dissected here, here and here by those much smarter than me, but I offer my take on four important passages in his remarkable letter:"You only learn who has been swimming naked when the tides goes out – and what we are witnessing at some of our largest financial institutions is an ugly sight."
Hmm, could he be referring to troubled companies like Washington Mutual (NYSE: WM), Citigroup (NYSE: C) Merrill Lynch (NYSE: MER), Ambac Financial (NYSE: ABK) and Fannie Mae (NYSE: FNM)? Too late to do anything about it this cycle, but in the future we need greater industry transparency!
"The worst sort of business is one that grows rapidly, requires significant capital to engender growth, and then earns little or no money. Think airlines."
I agree 100%, just say no to investing in companies like Delta Airlines (NYSE: DAL), UAL Corp (NASDAQ: UAUA), AMR Corp (NYSE: AMR), Southwest Airlines (NYSE: LUV) and JetBlue Airways (NASDAQ: JBLU) in that cursed industry.
"At Berkshire, we will attempt to further increase our stream of direct and indirect foreign earnings."
Despite our country's incredible past success, it's important that investors now look elsewhere.
"But I'll make more mistakes in the future – you can bet on that."
Contrary to popular belief, mistakes are not the enemy – everybody makes them – the key is learning from them!
Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund
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Reader Comments (Page 1 of 1)
3-03-2008 @ 11:58AM
Athelstan said...
Warren Buffett is the only man in American financial circles today willing to tell the truth. Hank Paulson, our Treasury secretary, and Fed Chief Bernanke should both resign. They are both slow to grasp the seriousness of what is around them, and once there, their remedies are insufficient.
Paulson should be knocking the heads of bankers from all over the world together to open their purses, consider selling massive quantitites of gold bullion to destroy the speculators on Wall Street, and Bush should be opening wide the oil reserves to bring the oil cartel and his greedy fellow Texans and other crashing down as well. Otherwise, we face soup kitchens and bread lines when President Obama takes the oath of office next January 20.
3-03-2008 @ 12:10PM
Michael Schneider said...
Nice post!
Warren Buffett made extensive comments today on Squawk Box this morning-- 3 page synopsis of his views on a wide range of topics as expressed today are available free in the Billionaire Watch section (yellow label, top) at http://www.Barrelomoney.com .
3-07-2008 @ 12:35PM
Cully P said...
From my perspective, I think Buffett if obviously a genious, but from what I understand of value investing is that it's more of a long-term thing than a short-term thing, which is fine if you have money to put aside--and aren't concerned with raising your standard of living in the present. I personally make ok money, but there's plenty of people out there that want to get out of where they are financially and make a bigger leap sooner. What about them?
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