
Warren Buffett throws in the towel on newspaper empire - doctoroctogon
https://www.bloomberg.com/news/articles/2020-01-29/warren-buffett-throws-in-the-towel-on-his-newspaper-empire
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jumbopapa
I recently read The Snowball: Warren Buffet and the Business of Life and a lot
of that book focused on newspapers. Buffet delivered papers as a boy, had a
big legal battle to buy a local Buffalo, NY paper, won a Pulitzer at the Omaha
Sun for coverage of a scandal at Boys Town, and he was very close to Kay
Graham of The Washington Post. I'm sure this was an emotional decision for
him.

~~~
aantix
He definitely invests in what he’s familiar with.

Which is why it perplexes me when tech people are so diversified with their
holdings, there’s little opinion built in.

You have a competitive advantage. You see the tech tools that are utilized
every day in your offices. You can understand neural networks and whether
Tesla’s auto pilot OS technically reasonable.

You have the knowledge and skills to properly assess tech companies and their
products.

You’re an insider in some respects.

Make an assessment, place your bets.

~~~
BeetleB
I've found that _extremely_ few folks benchmark their active investments with
alternatives (e.g. S&P 500). Not only that, they don't even analyze their own
investment performance. Most people I know who've bought stock in a particular
company have no idea in the long run how well that investment has done, beyond
simple things like "Very well" or "decent".

I work in a tech company. And almost everyone I know who works there is
continually surprised at the stock price. They're surprised when it goes up
when there's no seemingly good reason for it to do so, and they're equally
surprised when it goes down.

While some may have the skill to analyze and predict, it's safe to say that
most people - tech folks included - do not.

~~~
sgerenser
The worst part is, even the ones that DO benchmark against the S&P500 or
similar are almost always _doing it wrong._ I have a friend who owns TSLA
stock. Of course it has done much better than the S&P over the past several
years, so he thinks "it's easy to beat the market, especially if you know a
lot about tech." But he's comparing just that ONE investment, not his entire
portfolio of other (many failed) investments, weighted by dollars. I know he
put a bunch of money on a couple of altcoins and probably several other losing
stock picks, but he never talks about any of those other investments.

~~~
arbitrary_name
More importantly (and what you're kind of alluding to) is the RISK - sure,
Tesla is beating the SP500 - but how about a week from now, or a year? He is
taking on significantly more risk compared to someone who just holds the SP500
- that's fine if it matches your risk appetite, but most people fail to
consider the other side of the risk/return coin.

Likewise, a good understanding of the overall portfolio is key - and not just
investments. For example, if you work at Tesla and hold mostly Tesla shares
you are running an even higher risk than the average Tesla investor - the risk
of you getting laid off is closely tied to Tesla shares tanking - and failing
to diversify away that risk can hit many of us very, very hard.

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monkeynotes
9% interest! Buffet thinks the industry is toast, Lee is making a huge gamble
(betting against someone who is known to make good predictions) and Buffet
might never see that money again if the business goes bankrupt. Pretty odd
transaction, maybe someone can explain how it is mutually beneficial.

~~~
nroets
Perhaps Buffett sees that bold action is needed to optimize profits e.g.
cutting jobs or asset stripping. He definitely doesn't have have time to be
make these bold decisions. And he may not want to cloud his reputation by
being in control while the jobs are cut.

A third possibility is that Lee has synergies that Berkshire doesn't have e.g.
Lee can give it scale.

~~~
soperj
All of Buffett's companies are pretty lean. They actually let go of a lot of
people, he just doesn't wear it because he doesn't run the companies directly.

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antr
Deceiving headline, here's the real transaction:

    
    
       > Berkshire is lending Lee $576 million at a 9% annual rate for the purchase and to refinance other debt.

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dsr_
Which is to say, he expects the newspaper business to not return 9% -
otherwise he would keep it.

~~~
smabie
That’s not true, it’s about risk-adjusted returns. What Buffet presumably
believes is that a 9% loan has a better reward/risk ratio than the newspaper
business. As long as a return is greater than the borrowing rate, you csn
synthetically make any return you want. This is why risk is important, because
leverage is going to multiply it as well.

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PaulHoule
Is that the same Lee Publications that makes trade publications for
agriculture and similar sectors?

~~~
jaredwiener
Among other things: [https://lee.net/markets/](https://lee.net/markets/) //
[https://www.agupdate.com/](https://www.agupdate.com/)

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neonate
[http://archive.md/pWYFr](http://archive.md/pWYFr)

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kerkeslager
I'm surprised it has taken this long, TBH.

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starpilot
Can we fix the headline typo? It's Buffett.

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hodder
Who is Warren Buffet? The submission should be edited to reflect the guy's
actual name: Warren Buffett

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thrownaway954
paywall

~~~
jumbopapa
Block Javascript.

~~~
jaredwiener
and people wonder why newspapers cannot make money

~~~
52-6F-62
We all don't like the idea of not being paid for our work, but somehow it's
the duty of these journalists, editors, publishers, prints, etc to do so.

~~~
marvin
At this point, the problem with content subscriptions is ease of use and "fuck
you, customer" experiences rather than willingness to pay. I'd gladly pay,
say, $200 per year to never see a paywall or commercial and never have to
worry about account registrations or overcharging.

But after paying $100 in for a single article I read in a Norwegian newspaper
last year, due to a weekly subscription that had "compulsory auto-renewal" in
the small print, and no payment confirmations other than the account statement
of my rarely-checked bank account... Let's say I'm not so keen on managing 30+
subscriptions to different providers, keeping up with their terms of service
and ensuring they don't screw me.

I'll gladly pay when a company is able to figure out the proper UX for this,
and the content producers get their heads out of their asses and consent to a
sane distribution agreement with them.

~~~
vertex-four
[https://about.pressreader.com/](https://about.pressreader.com/) \- $360 a
year, so a bit more expensive, but probably affordable on a tech salary if
news is important to you.

~~~
52-6F-62
Fun fact: the Toronto Public Library provides free subscriptions to
PressReader for those who live in the city limits or work or attend school
here as long as you hold a library card.

It’s worth petitioning your local libraries to do the same.

