Buffet and Dollar short
- Thread starter jasonjm
- Start date
I am 47 years old, do I have time to make 50 billion?
Tell me a story.....
Tell me a story.....
Buffett's core experience is in trading stocks, i.e. "value investing" (or buying single companies then letting their owners/founders continue to run them).
Currencies are different because you need to own one in order to sell the other.
If his focus is simply on the USD, i.e. sell it because of this or that, he may lose in the long run because the other (presumably) 6 nations he owns currency in may go down in value.
Where does that leave him in his forex bets?
Nervous.
Coinz
Currencies are different because you need to own one in order to sell the other.
If his focus is simply on the USD, i.e. sell it because of this or that, he may lose in the long run because the other (presumably) 6 nations he owns currency in may go down in value.
Where does that leave him in his forex bets?
Nervous.
Coinz
Not at all - I love companies that ID risks and act to manage them.
Buffet, OTOH, has made a fortune and rep by saying he buys under-valued corps, and is patient. Therefore, he is a long-term investor in under-valued securities - great idea - great American success story.
Now, he turns around and puts on what appears to be a multi-billion dollar short sale. Theres various ways of achieving this, but he appears to be a large spec short in the dollar. So, is he now a value investor or a currency spec? Since hes a US-dollar based balance sheet, he cant argue hes hedging his dollar value, as hes dollar-based.
So, an investor is confused. So, are his regulators. So is the Fed. Do they treat him as a spec? As a trading bank?
The dichotomy is he wants to be seen and treated like a long term value trader, but act like a big spec - who fearlessly talks his position to anyone who will listen. And listen they do. Many put on the size position he has, but have the common sense not to make public comments. So now we have a large spec, with clearly a large loss. If I was an investor, its fair to say its on the verge of requiring reg oversight. If I was a manager at one of his corps, and my quarterly earnings are going to offset the FX loss, I'd be pissed - which is what just happened this quarter.
Since the fall of Bretton Woods, FX is a tool of politics as well as economics. My concern at this point would be the Fed calls Buffet and offers to buy any dollar he wants to sell - game over.
Buffet, OTOH, has made a fortune and rep by saying he buys under-valued corps, and is patient. Therefore, he is a long-term investor in under-valued securities - great idea - great American success story.
Now, he turns around and puts on what appears to be a multi-billion dollar short sale. Theres various ways of achieving this, but he appears to be a large spec short in the dollar. So, is he now a value investor or a currency spec? Since hes a US-dollar based balance sheet, he cant argue hes hedging his dollar value, as hes dollar-based.
So, an investor is confused. So, are his regulators. So is the Fed. Do they treat him as a spec? As a trading bank?
The dichotomy is he wants to be seen and treated like a long term value trader, but act like a big spec - who fearlessly talks his position to anyone who will listen. And listen they do. Many put on the size position he has, but have the common sense not to make public comments. So now we have a large spec, with clearly a large loss. If I was an investor, its fair to say its on the verge of requiring reg oversight. If I was a manager at one of his corps, and my quarterly earnings are going to offset the FX loss, I'd be pissed - which is what just happened this quarter.
Since the fall of Bretton Woods, FX is a tool of politics as well as economics. My concern at this point would be the Fed calls Buffet and offers to buy any dollar he wants to sell - game over.