No one saw bust coming, says Buffett

There were many people who saw the bust coming - I read their books and got out in time. Buffet just didn't think they were worth listening to.

Some individuals and funds made squillions in the bust because they took out el cheapo long dated put options over the Dow before everything tanked.

My partner decided to trust Buffet and his holdings in Berkshire Hathaway. :mad:
 
Agree with others that many saw the crash coming.....they saw credit growth was growing well beyond gdp growth, and the US deficit was expanding. This was bigger picture analysis, and many of these guys didn't know exactly when it would blow.

However, PIMCO got suspicious of sub prime lending and did their own field research. They were horrified to see how lax lending was. I don't know if they made a big noise in the media or to authorities, because the downside gets ignored when everyone is making money, just like on Somersoft, until the punchbowl gets taken away.

p.s. I think Buffett shouldn't be put on a pedestal. He was pumping the markets at the beginning of GFC, encouraging everyone to do the same......with no consideration of the risk to a smaller player.
 
No one saw bust coming, says Buffett
What to make of this, he may have said it to divert attention from Moodies failures, but it's true just the same, looking at Berkshire Hathaway's performance.

Absolutely!
Buffett owns >20% of Moodies (and other financial institution equity) who rated & sold bankrupt garbage as AAA to suck in the gullible investors.
He's not the "world's greatest investor", but he is good at taking advantage of the system and it's loop holes.
But as his losses show, it would'nt surprise me that he has no clue.
Many saw it, wrote about it and talked about it. He was'nt smart enough.
But he did again show how he could play the system and his influence and buy in at cheap prices with guarantees.


http://www.americanthinker.com/blog/2009/04/warren_buffett_profits_heavily.html
" Overall, Berkshire owns more than $13 billion of stock in the top recipients of TARP funds – including Goldman Sachs Group Inc., US Bancorp, American Express Co. and Bank of America Corp., all considered by analysts to be in deep trouble before the federal infusion. The more the bailout props up these financial companies, the more secure Berkshire's investments.

That total, The Bee found, ranks Berkshire fifth among all investors in TARP-assisted companies. Berkshire's TARP holdings constitute 30 percent of its publicly disclosed stock portfolio. That proportion reflects at least twice as much dependence on bailed-out banks as any other large investor.

Buffett increased his bank holdings in September, while openly pressing Congress to pass the bailout."
 
Buffett owns >20% of Moodies (and other financial institution equity) who rated & sold bankrupt garbage as AAA to suck in the gullible investors.
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But he did again show how he could play the system and his influence and buy in at cheap prices with guarantees.

Buffett bought after they did their dodgy business at depressed prices.

Play the system... when you have a small portfolio, which Buffett had many years ago, you can be more active. When your portfolio is of a more substantial size, which his is now, you have to adopt a different strategy.

I would adopt the exact same strategy that he did, given the size of his portfolio.
 
Buffett is only covering his associates. Of course they saw it coming, most even shorted the market!

I have ZERO respect for buffet. He has proven to be just another bankster!
 
Also not a fan of Buffet, perhaps moreso the idolisation of him as an investor, but recent comments like this haven't helped:
The hearing focused on how agencies, such as Moody's and Standard & Poor's, wound up assigning high ratings to complex financial products packed with risky mortgages that went bad when the housing market collapsed in 2007.
Mr Buffett, who declined to testify until he received a subpoena last week, said the ratings agencies weren't the only ones blindsided by the crisis. ''Looking back, they should've recognised it,'' he said, ''but, like I said, I didn't recognise it, and nobody I know recognised it.''
Clearly he doesn't know the right people or has chosen to lie while testifying.
Paulson was betting billions against the subprime packaging/markets before 2007.
Search youtube for "Peter Schiff Mortgage Bankers Speech 2006", I believe he did a similar speech in 2005.
Jim Rogers, Gerald Celente & Marc Faber also made similar calls and by far those listed in this post are not the only public figures that were talking about the problem or betting against US housing/loans.

Too many idolise Buffet without realising his style of investing is unlikely to work in their particular situation. Not everyone has the capital required to get the deals that Buffet does...of course he did start from scratch I believe, but not with the method that most attempting to copy his success would be using.
 
and clearly very FEW people on this forum recognised it as well.

Everyone can look smart after the event.

Those on this forum that DID recognise it got squeezed by the subsequent decline in commodity prices, ie exposure to resource shares that also got wacked.

Out of curiosity what is the change in share price of berkshire from 2000-2010?
What is the same change in the index values of the DOW and S&P over the same time frame?????

I know where i would stick my money.
 
Too many idolise Buffet without realising his style of investing is unlikely to work in their particular situation. Not everyone has the capital required to get the deals that Buffet does...of course he did start from scratch I believe, but not with the method that most attempting to copy his success would be using.

If you go through some of his finer details, you might notice that Buffett said he would be able to create significantly higher returns if he was only managing $1million instead of multiple multiple billions.
I think somewhere he mentioned 50% returns as being achievable.

The larger the pool of money, the harder it is to create long term alpha.
 
Clearly he doesn't know the right people or has chosen to lie while testifying.
Paulson was betting billions against the subprime packaging/markets before 2007.
Search youtube for "Peter Schiff Mortgage Bankers Speech 2006", I believe he did a similar speech in 2005.
Jim Rogers, Gerald Celente & Marc Faber also made similar calls and by far those listed in this post are not the only public figures that were talking about the problem or betting against US housing/loans.

In the world of finance and investment there are thousands of quacking ducks, everyone quacking away on their opinions.

Therefore with enough different different views its always possible to go back in time and choose the best quacker.
But isnt HARRY HINDSIGHT a wonderful thing.

Jim Rogers has alot of international respect.
But out of curiosity what are the long term returns generated by the above people.
Can we track their returns over 20 years, 30 years? (again from memory Jim Rogers has done quite well)

Its all very well being right for a specific point in time. But its long term returns that i am interested in.
Good long term returns enable fantastic long term compounding.

Why dont i invest in berkshire?
(a) its too big
(b) i dont know how well the organisation will perform once Buffett is no longer with us. I think Buffett is the glue that holds the organisation together.
 
Taleb (he of Black Swan fame) reckons that the only way to make serious money as an investor is to buy mispriced risk. Fortunately there's a lot of that around. However you have to be willing to eat an ongoing loss until things turn nasty, as the strategy involves buying the "wrong" end of a deal and waiting for the market to come around.

I've got a feeling that he was involved in a hedgefund that took this strategy, and ultimately made a lot of money out of the GFC.

There were a number of people who shorted the US housing market via derivatives in 2007, and made a profit out of it.

The trouble is that those who did well tended to be sophisticated industry insiders with access to information, options, derivatives and deals that most of us don't have. And they're playing with other people's money, so a loss is an inconvenience rather than painful.
 
If you go through some of his finer details, you might notice that Buffett said he would be able to create significantly higher returns if he was only managing $1million instead of multiple multiple billions.
I think somewhere he mentioned 50% returns as being achievable.

He did say that but I dont believe its true in Buffett's case (though I do believe its true in general). Buffett makes his money on inside information, he is one of those people who can get access to any ceo/cfo in the world and can glean information that none of us have. If he was only managing $1M then I doubt that'd be true. Interestingly Gurus like Buffett come second in the investment talent stakes to U.S. senators. According to a couple of studies senators share portfolios outperform any other group whos holdings are a matter of public record, I'll leave you to speculate why that is ;)

The way Buffett operates might go some way to explaining why he didn't pick thet GFC, he's a stock picker not an economist.
 
Therefore with enough different different views its always possible to go back in time and choose the best quacker.
But isnt HARRY HINDSIGHT a wonderful thing.

Jim Rogers has alot of international respect.
But out of curiosity what are the long term returns generated by the above people.
Can we track their returns over 20 years, 30 years? (again from memory Jim Rogers has done quite well)

The gangs all here. Guru Focus tracks the 'gurus' through public disclosure documents.

In a report that I read maybe five years ago, two types of information in particular can be relied apon for investing.

First it found that mutual funds have only a 4% autocorrelation (that is they dont continue doing what they were doing, inconistent). But it found that high performing stock pickers at mutual funds have about a 60% autocorrelation, so they consistently perform. But what tends to happen is when a new stock picker at one firm is shown to be a star, they are poached by another firm. So the lesson is follow the pickers.

The second type of reliable information is from insiders, not necesarily illegal inside information, but just information about what insiders are doing with their money. Company exec portfolios outperform the indicies, particularly small companies.

Large companies are very complex, and small companies are often cagy. But company execs are usually across this, especially if they are investing their own money in that company. That info is generally available ( SECform4.com in the U.S. ), but you need to know how to read it, for example many stock purchases are part of salary packages etc.
 
and clearly very FEW people on this forum recognised it as well.

Everyone can look smart after the event.

i don't think very many people picked it at all BEFORE the crash - but once it happened it was suddenly permabear territory.

i have documented proof of my actions . and have given details ..

so yes some did see it ..

many wont see it again but that is the way things are
 
The second type of reliable information is from insiders, not necesarily illegal inside information, but just information about what insiders are doing with their money. Company exec portfolios outperform the indicies, particularly small companies.
I would add the many insiders and execs would have a much better understanding of situations, events and news ramifications than average joe or the headline hunting journo who is often feed BS anyway.

Search youtube for "Peter Schiff Mortgage Bankers Speech 2006", I believe he did a similar speech in 2005.
Peter Schiff was pushing his own barrow ie his company that invested for others in the EU.
He got done on the USD, sizzled on the AUD, fried on Oil, lost his customer's A$$ in the EU (he himself takes fees) and anyone highly leveraged in gold would gotten a margin call before it went up again.
His record is worse than terrible, the money opposite to his calls.
As for the recession, well he was yelling wolf for a decade.
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