
Warren Buffett editorial in NYT: Buy American. I Am. - kradic
http://www.nytimes.com/2008/10/17/opinion/17buffett.html?_r=1&oref=slogin
======
DanielBMarkham
_Be fearful when others are greedy, and be greedy when others are fearful_

Excellent advice.

Buffett walks in great footsteps here. Wasn't it J.P. Getty that came out
during the depression and said something like "Buy stocks. We're buying as
much as we possibly can." ( I paraphrase from memory here)

~~~
breck
I could only find "I buy when other people are selling," but he did apparently
make a killing during the Great Depression simply by buying stocks.

I thought this quote was terrific and really relevant to HN:

"Going to work for a large company is like getting on a train. Are you going
sixty miles an hour or is the train going sixty miles an hour and you're just
sitting still? "

There are a bunch of great quotes: <http://www.linkrap.com/Getty>

~~~
DanielBMarkham
Found it. It's from "How to be Rich" which I finished last week (after getting
a recommendation from another HN'er -- good book!)

(Regarding the May, 1962 Crash)

"I told them quite frankly that, while I sympathized wholeheartedly with
anyone who had lost money because of market developments, I saw little if any
reason for alarm and absoutely none for panic....I said I felt that the stock
market was in a much healthier and certainly in a much more realistic position
because of the long-needed adjustment in prices. As for what I was doing, the
answer was simple. I was buying stocks...Most seasoned investors are doubtless
doing much the same thing. They're snapping up the fine stock bargains
available as a result of the emotionally inspired selling wave." [page 152]

Perhaps there's some difference this time around, but I doubt it. I imagine
old J.P. would be saying the same thing today if he were alive.

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dejb
Buffet is undoubtedly a great investor. But I have a slight feeling that could
be doing this more for altruistic reasons rather than personal profit. He
might believe that he can inject enough confidence in the system by his
reputation then maybe he can help improve things. Not necessarily by enough
for his investements to pay off but to avoid a worse fate for the financial
system. Remember the guy has committed to giving away most of his fortune
already. Anyway it is just a theory, good luck to him either way.

~~~
ca98am79
Dude - Buffet didn't become the richest person in the WORLD by being
altruistic. Think about it.

~~~
aaronblohowiak
[citation needed] - he wasn't a crooked thief. There is a surprising lack of
scandal surrounding him (i'm not one to care what consenting adults do in
privacy.) He is a substantial philanthropist and value-based investor.

~~~
SwellJoe
I'm not sure I understand how a lack of badness equals "making investment
decisions based on altruism", or how they can be conflated in any way.

The way I'm reading the "debate" here is ca98am79 saying, "Buffett has no
history of investing for altruistic reasons. He invests to make money, and is
the most successful person in the world at doing so." And you're saying, "Stop
calling Buffett a crook! He's a value investor and a philanthropist!"

He, obviously, _didn't_ call Buffett a crook. He said that Buffett is a
successful investor that invests to make money.

It's like two totally different conversations where both are true, but they
aren't talking to one another.

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prakash
A word of caution: Don't invest if you can't sleep soundly at night. Buffet
can probably afford to lose a few billions here and there, but you probably
can't.

~~~
dmv
From what I recall of the last analysis on this subject, I don't think he has
'a few billion' in his non-Berkshire holdings. The non-Berkshire holdings are
basically the money he has accumulated since personally buying Berkshire
Hathaway, with his fairly modest salary. He has often described that he could
(and does) beat Berkshire's ROI as a small investor, which is why his non-
Berkshire holdings are in the millions.

His billions, from where his net worth for Fortune are calculated, is the 30+%
ownership of Berkshire Hathaway (market cap today, 180B). The rest is almost a
rounding error -- except that's where all of his lifestyle expenses come from,
beyond his $100K salary and misc. payments, as he doesn't sell (as far as I
know) any of his BH and it does not yield a dividend.

~~~
eru
About the dividends (<http://www.focusinvestor.com/brkfaq.htm#Q7>):

"We feel noble intentions should be checked periodically against results. We
test the wisdom of retaining earnings by assessing whether retention, over
time, delivers shareholders at least $1 of market value for each $1 retained.
To date, this test has been met. We will continue to apply it on a five-year
rolling basis. As our net worth grows, it is more difficult to use retained
earnings wisely." Source: Berkshire Hathaway's Owner's Manual

Mr. Buffett:: "We will either pay large dividends or none at all if we can't
obtain more money through re-investment (of those funds). There is no logic to
regularly paying out 10% or 20% of earnings as dividends every year."

Charles Munger: "If you went to the leading schools, they wouldn't teach
dividend policy this way." Source: My notes from the 2000 Berkshire Hathaway
annual meeting

~~~
dmv
Keep meaning to make it to an annual meeting. I'm not sure if this year's
circus will be better or worse.

Thank you for elaborating on the dividend comment. I certainly was not trying
to imply that it was a negative. It just emphasizes that while Mr. Buffett may
have as much money as anyone in the world, he does not have it in a private or
liquid form outside of his role at Berkshire Hathaway. Like many growth of
company-based Billionares (Gates, Bezos, etc), there is a great deal of
transparency (an annual report!) in investment philosophy. Contrast with
someone like Stephen Schwarzman.

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jimbokun
Warren Buffet is a national treasure.

~~~
known
I second it.

------
richcollins
Had you followed that advice after the Japanese crash of 1990, you would still
be down almost 75%:

<http://finance.google.com/finance?q=^N225>

~~~
ksvs
He's not saying buy stocks after any crash, just after this one. The Japanese
crash was a unique one because a corrupt old boy network of companies holding
one another's stock and banks refusing to write off bad debt caused the fall
to be artificially prolonged.

~~~
mynameishere
Good point. And in Japan the government responded with massive public spending
and rate reductions.

~~~
asdf333
haha good one.

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floozyspeak
I bet he's gettin something on the side to basically step into the ring of
fear here and fire the flare of "now's the time". I don't think people really
dispute that now is the time. The problem is the view point.

You basically have to put money in and swear not to look at it again until
2013. Because the day by day view of that investment is heart attack unfolding
as the bad news isn't going away, the affects of the 700 billion dollar
crisis, job losses, sub prime this, abused and reckless that, and so on is
going to be on the fear radar for a bit.

You whacked the consumer with $140 oil a few months back saying hard times are
ahead, and then you backed it up with current credit crisis, and then you
watched wallstreet get bought by the government as everyone in their money
proceeded to get to cash as fast as they could. You've told the consumer to
stop spending get back to basics and thats happening.

Folks in lots of cash, aka Buffet are in hog heaven right now. He can throw a
bunch of money in, go back in cryogenic freeze with Elvis and pop back out in
2013 or so and bathe himself in cristal. Day traders hanging out with cash are
making by the minute deals only to cash out and get back in on the highs and
lows of the game, cautiously as they are, they are doing that.

If you have funds to play, play, or throw it in there and rent out buffets
cryo chamber, probably a good bet really.

~~~
jhancock
I mostly agree. You have two choices with buying American stocks now: 1 - play
the day trade game and squeeze out margins as the market is wild from day to
day 2 - play long, buy great deals and hold for years.

The only people that can play option 1 well are serious traders that have tons
of time, cash, and really know what they're doing (or just have dumb luck, but
applies to anything you might do with money).

The only people that can play option 2 well are serious investors that have
people that work for them to analyze which are best long term buys and mange
them, oh yeah, and also have lots of cash on hand; cash you don't need to use
a for a long time.

So although I do try to pay attention to when people like Buffet dish out
advice, I also understand that few can play at his game.

~~~
jimbokun
Aren't the people who play game number 1 largely responsible for the current
financial mess? Maybe not day traders per se, but that sort of mentality of
everyone thinking they are in the top few percent of investors and able to
beat the market.

~~~
fauigerzigerk
No, because this time it's not a stock market bubble that burst. It's a credit
bubble caused by very low interest rates. You could say that the stock market
bubble of 2000 lead to the low interest rates, but it's not true. Money supply
has sharply increased in the US since the 1980s. Now it's payback time for a
few years I'm afraid.

------
avdempsey
All respect to Buffet in his success and this op-ed's general message. But its
simplicity reminds me of George Bush's call to "go shopping" after 9/11. Do
you want to overcome fear and build America's future? Then entrepreneurs lets
get building. If you don't have the self-esteem to invest in your own efforts
(we need them now more than ever) then follow Buffet's advice and buy a slice
of the companies that will rebuild America. If you have the chutzpah though,
don't "go shopping," "get building."

------
binarray2000
I have a huge amount of respect for Buffet and this article has some sound
advice. But, I still don't understand if it applies only to stocks or to
anything US. This sentence (2nd paragraph) "I've been buying American stocks.
This is my personal account I'm talking about [...]" sounds like, I've done my
share in helping out by buying equity and [I imply] you see how you do yours
with buying whatever US. Correct me if I'm wrong.

------
gscott
Buffett was heavily invested in the Euro. When the stock market crashed he
simply took his Euro's, cashed them in for dollars, and bought US Assets that
were down. Most regular US citizens were invested at the top of the market and
just can't afford to go buy more.

------
fleaflicker
Don't forget that Buffett now has billions of dollars riding on the recovery
of American stocks. His motives for releasing this aren't all patriotic, are
they?

------
known
Goldman Sachs has negative Operating Cash Flow (-$14.57 billion)
<http://finance.yahoo.com/q/ks?s=GS>

And Buffett brought $5 billion worth preferred stock of GS.

Is this a rational investment?

------
known
Stock markets oscillate between Facts, Hope and Hype.

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comatose_kid
This is exactly why I would wait. Words from Buffet will reduce fear in the
market. I'd rather invest when fear is at a maximum (eg, next bad quarterly
report, or bad economic numbers).

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haasted
Short summary: "Time to talk up the market. I have already placed the money I
wanted to place while it was down." :)

~~~
ksvs
Not merely nasty, but false as well. He says explicitly that he hasn't
finished buying.

~~~
jumper
Uh.... How does what he say prove what he will do? If he were being dishonest
here, maybe he would be... I dunno, dishonest?

I personally have no idea what Buffett's really thinking, but maybe you left
some points out of your argument there?

