Warren Buffet needs own medicine?

 

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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7 Responses to “Warren Buffet needs own medicine?”

  1. NIMBY. Fly overs all over the city but not on Pedder Road. Any wonder our ‘captains of industry’ admiring Buffet? May be Buffet can build something opposite Antilla. To be fair, Mukeshbhai does not pretend to be the Oracle of anywhere – just the treasurer of Reliance. No sanctimonious white man hypocrisy, just good old loot! Welcome to 4G.

  2. Nice article. It is many times mentioned in news papers, blogs that highly successful people in business always talk different than what they do.
    WB-BofA deal was highly criticized because of 6% dividend offered. People are asking why US govt could not get such a deal and why WB could.
    WB gives out folk wisdom to all but he is finally a crony capitalist.

  3. People need to stop looking at Warren Buffet as a saint who speaks permanent truths. What’s the big deal? Why would you expect him to be perfect in his statements or actions? He might have a personal view that is contrary to what is a good decision in professional life. So?

  4. Subra sir

    Isint it our fault how we look at it? He is running a bussiness house and not charity and through his words and actions he is only trying too boost it.

    Recently a very good comment similarly heard was when the US was downgraded. China was “advising” US how to run its finances…. The biggest communist country “advising” the biggest capitalist country how to take care of the capital. Very funny indeed.

  5. i have no problems with businessmen talking like businessmen, they should not pass judgement on the whole world. ‘Investment bankers are over paid’ – WB says that. I prefer the Azim Premji model of talking only about his company – unlike the other guy who has a view on everything that the govt does….LOL

  6. I think that at end of the day, everyone is here to make money and has got a right to protect his investment. What Warren is doing is that he is protecting his investments by his verbal statements. Totally justified.

  7. Subra Sir, What ever said and done. I have learnt a lot from WB. But we need to understand that he is a business man first and should take his words with a pinch of salt. His first duty is to be truthful to his shareholders.
    @ Sanjay – I beielve there is nothing wrong in being capitalist. Arent we all ? :). I beleive misguided socialism is the root cause of all evil ( By the way I have grown out of Ayan rynd .. But dont think communism is the way forward though ) :)

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