Back in October, Warren Buffett invested $3 billion in G.E. Stock. It was trading for about $23/share back then. G.E. is heavy in financials and lending. I absolutely was flabbergasted that he did that, and said so. One of you commented - wow GF is now criticizing Warren Buffett.
G.E. is now trading in the $8 range. He invested $5 billion in Goldman Sachs when it was trading at $142/share. I was blown away by what a stupid move that was. And it hit the 50's.
The market responded to news as it always does. In the 3Q of 2007, Countrywide's CEO said that it would soon return to profitability, and the stock jumped the next day. The stock market is just a silly game, and it is a magnet for the little guy to lose everything.
Owning stocks in the U.S. has always been a really risky game, and I have always avoided it.
The experts don't have all of the answers - look at the "Oracle of Omaha" - he has no idea what he's doing now because these markets are made of mythical I.O.U.'s that have no value.
8 comments:
Thanks for all of your great information. When I went to your blog today, there was a pop up box that said that I needed to enter my email address and password # first. I just thought you should know. I didn't do so and hit cancel, but it still let me on.
it's just funny to hear you criticize Buffett due to his buy and hold strategy which someone who is "super long term"
Berkshire didn't technically lose money, the way Buffett reports is that he shows realized and unrealized losses and gains. So he would only lose that money if he were to sell which he hasn't.
If you take a look at how they did.
If you just take actual earnings, he made $3,224 per share, so he still ended up making money and it was a terrible year.
The two investments that you mention you have to look at the whole deal. He is getting 10% on his money which is huge. He also has up to 5 years to exercise those options, so the stock prices have 5 years to rebound for them to make money all of which he will be making 10% during the meantime. So basically he was betting that the stocks would come back in 5 years, yes I don't think he expected them to drop as much as they did, getting paid 10% to wait isn't that bad of deal.
Berkshire has mountains of cash that he needs to put to work.
One of my favorite investment sayings is you don't have to make it the same way you lost it.
He has 5 years to make up those losses that he MIGHT see if those stock values don't come back up, and the don't necessarily have to be from those individual stocks.
Risk/Reward those two investments I think given the opportunity that he had he was right in pulling the trigger.
I guess only time will tell. You think the world as we know it is coming to an end, so recovery in 5 years (which I think most, even the most pessimistic think is reasonable, I think 45-90 is a joke) isn't a bad bet.
You are still coming out with new products and spending money in developments and production so deep down you think people are stil going to be spending money, espcially since your new product is consumer driven.
I'm coming up with new products and expanding our store network to increase the reach, but more importantly to make products that people love. I focus on making products that were fun and useful, and if they sell that means that they are fun and useful! (W/B should've waited)
your new product is designed specifically for the consumer market. I think it is a great product and i'm sure it will sell. I think it is useful even if you don't use the tripod, the protective case on my cell phone is wonderful and has saved it a million times.
But you are counting on 100% discretionary spending for it to work, people do not need digital cameras, and they certainly don't need a tripod/case for the camera they have. It is going to be an impulse, prob mostly last minute type purchase. I think you should spend a good chunk of your marketing money on a slick POP display
So if they economy is going to be half as bad as you predict there is no way in hell anyone is going to buy that. So I don't think you really believe that it is, or you are just wasting your money that could be used to buy gold, which you "think" is going to shoot through the roof.
On a side note if you want some feedback on your new product from someone who has not seen it ;)
Make sure it super thin when folded around the camera, the best part about my point and shoot is that is small and fits in my pocket
The head of GE is on Obama's advisory panel. GE owns MSNBC who pretty much helped Obama win the election. GE has wind possible solar energy in the future and will get enough money to be THE Co. that really gets it to market yet this will take a long time. GE long term could be the microsoft of alternative energy...just sayin' Buffett is no dummy, short term questionable move but he is a long term thinker. He could be dead before he finds out if it pays off.
I know everyone is saying Warren Buffet is investing "long term", but are you not missing the point?
If, for example he bought for $23/share....
if he waited till now,
he's be buying at $8/ share...
AND still hold that long term.
Wouldn't that make you 3X as much, (even in the long term) ?
-Rich
I know everyone is saying Warren Buffet is investing "long term", but are you not missing the point?
If, for example he bought for $23/share....
if he waited till now,
he's be buying at $8/ share...
AND still hold that long term.
Wouldn't that make you 3X as much, (even in the long term) ?
-Rich
Yes he would have been better off at $8/share however the stock market is a gamble, the stock could have just as easily jumped up as it did down. If it was that easy to determine future values of stocks, we all would be on yachts in the Caribbean.
They key is that those investments were loans in which he is making 10% on. Which is huge. Gary is the only one saying those were bad investments.
His biggest mistake was buying conoco at the height of the oil prices.
And while Gary is more than entitled to his opinion he has no skin in the game as they say, he doesn't invest in the stock market
Generally speaking commodities are far more volatile than stocks, and much more of a gamble.
The problem with the stock market is that it is no longer for the retail investor. It is now set up that it is very difficult for joe plumber make it work for them. You don't have a prayer to try and get a deal that pays you 10% a year.
Jared - I have thousands of retailers in my merchandising channel worldwide. I don't need to sell a lot of them to pay the electric bill :)
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