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As I understand it he made some serious missteps in the recession. WP: > Berkshire Hathaway acquired 10% perpetual preferred stock of Goldman Sachs at $123[40]

by catz 17y ago

As I understand it he made some serious missteps in the recession. WP: > Berkshire Hathaway acquired 10% perpetual preferred stock of Goldman Sachs at $123[40] only for it to fall to below $60. Furthermore some of Buffett's Index put options (European exercise at expiry only) that he wrote (sold) are currently running around $6.73 billion mark-to-market losses. Warren Buffett tarnished as Main Street oracle http://www.thestar.com/Business/article/604619 http://www.thestar.com/Business/article/604619 Buffett suffers big losses at Berkshire Hathaway http://www.bloggingstocks.com/2009/02/28/buffet-suffers-big-losses-at-berkshire-hathaway/ http://www.bloggingstocks.com/2009/02/28/buffet-suffers-big-... (d Berkshire's net worth dropped a whopping $10.9 billion in the final three months of 2008. Berkshire's shares have fallen 44% since the end of February 2008. ) etc...

karl11 17y ago
Actually, the preferred stock in Goldman is an option. He has the option to buy the stock at $123 indefinitely, meaning if it ever goes above that amount he can then choose to buy it and sell it for a profit. And like I said, the stock went down with the market. Yes, at one point his stock was down 44%, but so was everything else. And if you look at the fundamentals, they have a small leverage ratio, close to zero actually if I remember correctly, lots of cash, and are one of a handful of companies still rated AAA. The guy in the article keeps saying if only he had access to more cash he would be making piles more money. Well Buffett has the cash, and he's going to rake it in when the market rebounds.
ellyagg 17y ago
You understand incorrectly, for the most part. A sinking tide lowers all boats. Buffett doesn't care what the stock market prices his company at in the short term, only how the intrinsic value of his company improves over decades. Also, the financial press loves to take pot shots, even though Buffett repeatedly and thoroughly explains that Berkshire's stock price will go through severe beatings from time to time.

by catz 17y ago

karl11 17y ago

Actually, the preferred stock in Goldman is an option. He has the option to buy the stock at $123 indefinitely, meaning if it ever goes above that amount he can then choose to buy it and sell it for a profit. And like I said, the stock went down with the market. Yes, at one point his stock was down 44%, but so was everything else. And if you look at the fundamentals, they have a small leverage ratio, close to zero actually if I remember correctly, lots of cash, and are one of a handful of companies still rated AAA. The guy in the article keeps saying if only he had access to more cash he would be making piles more money. Well Buffett has the cash, and he's going to rake it in when the market rebounds.

ellyagg 17y ago

You understand incorrectly, for the most part. A sinking tide lowers all boats. Buffett doesn't care what the stock market prices his company at in the short term, only how the intrinsic value of his company improves over decades. Also, the financial press loves to take pot shots, even though Buffett repeatedly and thoroughly explains that Berkshire's stock price will go through severe beatings from time to time.