From the Oracle of Omaha

berkshire hathaway letter Feb - 27

From the Oracle of Omaha


"People thought it was good news a few years back when housing starts – the supply side of the picture – were running about two million annually. But household formations – the demand side – only amounted to about 1.2 million.

"After a few years of such imbalances, the country unsurprisingly ended up with far too many houses. There were three ways to cure this overhang: (1) blow up a lot of houses, a tactic similar to the destruction of autos that occurred with the “cash-for-clunkers” program; (2) speed up household formations by, say, encouraging teenagers to cohabitate, a program not likely to suffer from a lack of volunteers or; (3) reduce new housing starts to a number far below the rate of household formations.

Our country has wisely selected the third option, which means that within a year or so residential housing problems should largely be behind us, the exceptions being only high-value houses and those in certain localities where overbuilding was particularly egregious. Prices will remain far below “bubble” levels, of course, but for every seller (or lender) hurt by this there will be a buyer who benefits. Indeed, many families that couldn’t afford to buy an appropriate home a few years ago now find it well within their means because the bubble burst."

So what does a housing recovery mean is housing prices remain far below their bubble prices? It means that those that bought a house during the top bubble years - 2003-2005 may not see a recovery in their housing prices for a good number of years. It also means that those that waited, or had the good fortune to be coming of house age now, may benefit. As Buffet point out, one person's loss is another person's gain.

Buffett looks to be predicting that the demand for affordable homes will soon catch up to the supply side of the equation, with three years of destruction of the US housing market so far, is the worlds best known value investor on the money?
 
He's always right if you can wait long enough.

(We have shares in Berkshire Hathaway. What a ride that's been).
 
the worlds best known value investor


Yeah, well, he didn't get that title by buying houses and waiting did he ??


No, he got it primarily from buying insurance companies, controlling the pot of money with a bunch of sharp people like Ajit Khan and a bunch of insurance lawyers....who have a massive appetite for saying NO to all of his insurance policy holders when they try and make a claim...to the point that he makes more money out of investing the premiums than he spends paying out in claims. Of course, the premiums themselves go straight onto his balance sheet and never come off. Noice.


Positive float, it's a beautiful concept.


If anyone wishes to throw a bunch of cash my way, in the hope of getting some of it back if my lawyers say so, at their absolute discretion, under strict orders from myself not to pay any out under any circumstances without stringing them out in an 8 year court battle....then sure, go right ahead. I'll even throw in a cute looking teddy bear and a pretty, smiling caring young thing to give you the impression I really do care about your insurance needs. hahahahaha


Is anyone still awake ??
 
No, he got it primarily from buying insurance companies, controlling the pot of money with a bunch of sharp people like Ajit Khan and a bunch of insurance lawyers....who have a massive appetite for saying NO to all of his insurance policy holders when they try and make a claim...

Then why do people continue renewing their policies if his companies have such attitude towards it's customers? Surely, all his insurance companies would have gone bust by now if it has many unhappy/dissatisfied customers.

to the point that he makes more money out of investing the premiums than he spends paying out in claims. Of course, the premiums themselves go straight onto his balance sheet and never come off. Noice.

Just proves the guy knows how to invest money and make good returns.

Cheers,
Oracle.
 
Then why do people continue renewing their policies if his companies have such attitude towards it's customers? Surely, all his insurance companies would have gone bust by now if it has many unhappy/dissatisfied customers.

i suggest you google it a little....
 
Then why do people continue renewing their policies if his companies have such attitude towards it's customers? Surely, all his insurance companies would have gone bust by now if it has many unhappy/dissatisfied customers.

Cheers,
Oracle.

I'd say that all insurance companies have customers who don't know how bad they are until (and if ever) they have to make a claim.
 
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