Warren Buffet’s March 09 letter

No I am not reproducing the letter here. This is just some of the side lights from that letter. If the worlds richest man hires you, keeps you for 23 years that is proof that you are good.

Just see what he says “When Ajit Jain joined us..we knew we had acquired a great talent. So I quickly wrote to his parents asking them if they had one more at home…but no there is no one else like him” – if this is what your boss says about you, chances are W Buffet does not need a HR head to do “HR activities” to make the employee feel good. Lesser companies need to do that.

His description of the subprime lending is also nice “borrowers who should not have borrowed being lent money by people who should not have lent” – quite eloquent. The Indian situation is surely far better. However, in India the worry is the amount of leveraging done by people with a fixed income – and now seeing the income disappear.

He also talks about the moral hazard of government support – B Hathaway’s cost of funds is GREATER than a financial cripple standing with government support – typically what used to happen in India during the BIFR days. If bad companies are not allowed to die, good companies will suffer. If Citi took ‘risks’ and BH did not Obama is refusing to allow the market to punish Citibank. That is sad. More companies will want to look like a cripple. It is almost like the family of a farmer killing him to get the ‘suicide money’ from the government. Cruel example but appropriate I think.

This is the most telling: “Beware of geeks with Greek symbols, models and mathematics”. Using the past (history) to see what will happen in the future is perhaps the biggest crime that media loves to commit! “do not look in the rear view mirror and drive” said Peter Lynch. But ratings, rankings, ‘best 10 funds to invest’ are all media games meant to confuse the real ‘investor’ – if these words are not an oxymoron!

It is also amazing how on page 20 he asks people to buy goods made by Berkshire H’s companies. I know many CEOs who would be almost ‘ashamed’ of pushing their own products. I guess that is the difference between an bizman and an employee!

Please read the whole letter – especially if you want to get some good examples of how options work….

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