
Squanderville vs. Thriftville - Warren Buffett (2003) - philk
http://www.pbs.org/wsw/news/fortunearticle_20031026_03.html
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dreyfiz
Good article and the principle is sound, but the postscript is that Buffett
wound up losing Berkshire Hathaway's shareholders $1 billion by betting
against the dollar. He forgot that the reason the dollar is holding its value
is that China is backstopping it because, absent any other source of political
legitimacy, it can't afford to allow its economic growth to stall.

[http://www.nytimes.com/2006/11/01/business/01leonhardt.html?...](http://www.nytimes.com/2006/11/01/business/01leonhardt.html?_r=1)

Furthermore, he's now a net buyer of US assets:

<http://www.nytimes.com/2008/10/17/opinion/17buffett.html> (about him buying
equities for his personal portfolio)
<http://www.nytimes.com/2009/11/04/business/04deal.html> (about Berkshire
Hathaway buying a railroad for $26 billion)

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xiaoma
> _"Good article and the principle is sound, but the postscript is that
> Buffett wound up losing Berkshire Hathaway's shareholders $1 billion by
> betting against the dollar."_

That's incredibly unfair. Buffet has absolutely crushed the market. The S&P500
is down 22% over the past decade, the Nasdaq is down 50% and Buffet is up
150%. Check over the past two decades and the S&P has approximately doubled,
the Nasdaq has slightly less than quadrupled what it was and Berkshire
Hathaway is worth _fifteen_ times its 1990 value.

People who bought Berkshire right after this piece was published beat 99.9% of
the market and every single widely followed pundit I know of.

[http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...](http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=Logarithmic&chdeh=1&chdet=1266236606437&chddm=998614&chls=IntervalBasedLine&cmpto=INDEXSP:.INX;INDEXNASDAQ:.IXIC&cmptdms=0;0&q=NYSE:BRK.A&ntsp=0)

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dreyfiz
It's unfair to point out that Buffett made a bad trade that lost a billion
dollars? Regardless of his status as the foremost investor of probably _all
time_, he was empirically wrong on this one, and the article was about him
talking down the dollar, so it's not unfair to point out that he lost a
billion dollars putting his money where his mouth was.

~~~
xiaoma
It's unfair to leap on a single mistake and say it was _the_ postscript of his
essay. He also bought Petro China as part of his strategy to deal with a
weakening dollar around the same time and by when he was selling it 2007, it
had earned several billion. It is also worth pointing out that the essay dealt
with China specifically, and that the RMB has appreciated against the dollar
in the time since (and will more as the government relaxes its peg).

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patrickgzill
I can't agree with the IC idea.

In practice, importers would set up fake shell companies to invoice the
imported goods at a lesser price than the actual cost - the incentives to do
so would be enormous.

Not unlike the behavior of the "re-insurance" business - which Buffett has
been involved in since 1998 or so with his purchase of General Re-insurance
and with another re-insurance company called National Indemnity.

~~~
dreyfiz
Similarly, the market in carbon emission credits is rife with fraud.

~~~
patio11
If you look at the numbers it appears that the market in fraud is rife with
carbon emissions credits. Not even joking -- one particular fraud (VAT
carousel) was generating over 90% of the exchange volume, according to
Europol.

