Warren Buffet is a great investor, and a great CEO for Berkshire Hathaway. He regularly makes very profound investment statements regarding the investment world…and the other managers. One of the statements attributed to WB is:
‘When all you have is a hammer, the world looks like a nail‘.
This is easy to interpret. Take the case of a typical Relationship Manager working in a bank or a brokerage outfit. His bonus/ commission is decided by the amount of premium he collects in UNIT LINKED INSURANCE/PENSION PRODUCTS. Obviously these products are very profitable for the manufacturer and hence get a good commission. So the salesman thinks all the people he meets need and can afford an expensive unit linked product. Obviously the higher the charges, the greater the commission for the salesman and the organisation which he represents.
Now look at Mr. Warren Buffet’s investments – they are largely in the USA. Of course he says all his investments are in USA – but it could be companies which are present in a big way in India / China – and their growth could be coming from there. Look at Gillette, Coke, etc.
Look at the way he attacks Standard & Poor – whenever they take a decision – he said USA should deserve AAAA, not just a AAA. Fairly obviously if all your money is in USA, you want the higher ranking.
Look at the way he attacks gold – an investor in just gold over the past 10 years has beaten Berkshire Hathway. Of course I am not suggesting anybody to buy gold – just giving you an example. My views of gold are Buffet like too!
WB criticising Moody is completely unheard off! – Remember he has a stake in Moodys, but not in Standard & Poor.
It is not easy to understand what WB says and what he does, so one has to be careful. He is normally very critical of high salaries of fund managers – and the financial industry in general. However he has invested in the past in Goldman Sachs and Bank of America!
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