So B & G are short the dollar...so what?

[efficiency]

Quote from Sparohok:

Bullshit.

Berkshire made $1.95 billion dollars shorting the dollar between 2002, when they entered the position, and the end of 2005.

Gains on foriegn currency forward contracts (pretax, millions), directly from Berkshire's annual reports:

2005: -955
2004: 1,839
2003: 825
2002: 297

Allright, "lost" was a poor choice of words on my part. A matter of semantics To re-phrase, Warren left some money on the table. In excess of $900 million. To quantify, of........ a 2.9 billion gain (whether booked or not) over THREE YEARS, he managed to piss away nearly a third of it in the first quarter of 2005. The only thing impressive about "it" is magnitude, not mechanics.

Since you're apparently fluent with the annual reports, then you should be able to clearly see there's a bit of a "trader" in ol Warren. Not exactly consistent with a well-crafted buy and hold Coca-Cola, Disney and McDonald's persona.

Incidently, forward contracts, hardly buy and hold, are a little inconsistent with statements on weapons of financial mass destruction.

Hmmm, maybe you can explain to me how he had a convertible position in Level Three (LVLT), NOT available to the public or how he could swoop in on Mueller Industries (MLI) and get a $5.38 "special" dividend and POOF, disappear the following quarter. Shall I tell where Oakwood Homes is or how it got there? Would you like to smooch, sweetheart? OR would you rather just shoot fish in a barrel?

And...........the most sailient point seems to have been missed. HOLDING BRK.A for the last 8 years woefully pales to cash. Relax, the thread does have some constructive elements, Savant demonstrated he can now spell Buffett.

 

[tomcole]

When you run money as large as Buffett/Gates etc, these fortunes take on an almost living quality and these "losses" are like an illness or a bruise. But lose a billion here, a billion there and sooner or later it adds up.

Buffett's rep is huge, and the rep causes many other big players to leave money there. Its like being a computer guy at a big company, you dont get fired for buying IBM equipment.

Big money cant help but survive like any big organism, think whale or elephant. The problem these type of threads have is that like any celeb, his groupies start screaming how great he is and all reasonable discussion about the topic dies.

 

[Sparohok]

<i>To re-phrase, Warren left some money on the table.</i>

Everyone leaves money on the table. Unless you sell at every top and buy at every bottom.

As for the 900+M Warren supposedly left on the table, we'll see about that. He's still short.

<i>Since you're apparently fluent with the annual reports, then you should be able to clearly see there's a bit of a "trader" in ol Warren.</i>

And that's bad how?

First you criticizing him for not trading out of the retracement of the dollar in 2005, and now you criticize him for being too much of a trader?

<i>Incidently, forward contracts, hardly buy and hold, are a little inconsistent with statements on weapons of financial mass destruction.</i>

He's been short the dollar for 3 years and counting. I call that buy and hold.

It's hardly inconsistent to criticize the derivatives exposure of others while using fully collateralized forwards to hedge a cash position.

<i>Would you like to smooch, sweetheart? OR would you rather just shoot fish in a barrel?</i>

Errrrr... shoot fish in a barrel?

You seem to be imagining that I am some sort of Warren Buffett fanboy who believes that Warren is the ultimate buy and hold investor and hates traders of every stripe. Here's the thing. I AM a trader. It just bugs me when people make stuff up to take a cheap shot at a very successful investor, apparently just to puff themselves up somehow, or to further some imagined pissing match between investors and traders. It's just lame.

Martin

 

[Sparohok]

Quote from tomcole:

The problem these type of threads have is that like any celeb, his groupies start screaming how great he is and all reasonable discussion about the topic dies.

Yeah, you're right, the screaming groupies are drowning out reasonable discussion.

Now remind me, how much did Berkshire make shorting the dollar:

A) Nearly 2 billion
B) Negative 900 million

Enough with the cheap shots, tomcole.

 

[tomcole]

Its not a cheap shot - if Buffett was forced to mark to market all his holdings, as he expects others to do, his results would be different. Your emotional outburst only confirms your groupie status.

And, anyone who can buy and hold and choose when to exit a trade on their own choosing, will always beat the market as you're not hostage to margin calls or paying tuitions/mortgages etc. There are a lot of other fund managers who consistently beat his returns and dont hold positions for years and years until something turns around. So, in a 360 degree perspective, Buffett probably underperformed his peer group if he was subject to the same standards they are.

 

[efficiency]

Quote from Sparohok:

<i>To re-phrase, Warren left some money on the table.</i>

Everyone leaves money on the table. Unless you sell at every top and buy at every bottom.

As for the 900+M Warren supposedly left on the table, we'll see about that. He's still short.

$900 million is no small chunk of change and letting a third of profits, which took 3 years to attain, evaporate in a mere thirteen weeks is not impressive. I'll spare you commentary of position size and risk management (not to be confused with insurance)

<i>Since you're apparently fluent with the annual reports, then you should be able to clearly see there's a bit of a "trader" in ol Warren.</i>

And that's bad how?

It's not necessarily bad, but it is a contradiction to the proverbial lifetime lunch ticket with 24 punches on it.

First you criticizing him for not trading out of the retracement of the dollar in 2005, and now you criticize him for being too much of a trader?

Not criticizing. Observing. What he does (or doesn't do) with his capital is HIS business. When someone comments on the retracement in a positive vein, it's worthy of quantifying it.

<i>Incidently, forward contracts, hardly buy and hold, are a little inconsistent with statements on weapons of financial mass destruction.</i>

He's been short the dollar for 3 years and counting. I call that buy and hold.

Point missed mister ......eh trader. Forward contracts are derivatives. Contingencies. The very thing ol Warren has openedly "criticized" in the limelight.


<i>Would you like to smooch, sweetheart? OR would you rather just shoot fish in a barrel?</i>

I've provided three specific examples (LVLT/MLI/OAKW) of sweetheart deals.


You seem to be imagining that I am some sort of Warren Buffett fanboy who believes that Warren is the ultimate buy and hold investor and hates traders of every stripe. Here's the thing. I AM a trader. It just bugs me when people make stuff up to take a cheap shot at a very successful investor, apparently just to puff themselves up somehow, or to further some imagined pissing match between investors and traders. It's just lame.

Seem like a groupie to me. Self-proclamation of a "trader" hints at an identity crisis. Pssst, try a Harley-Davidson T-shirt instead.

Puff myself up?????????????????????????

What have I MADE UP? Let's get specific!

As for his success, the Buffett partnership had an annualized return of roughly 26% between 1956 and 1969 when it was unwound for a lack of "opportunities". Respectable but....exclude the rather large purchase of American Express at firesale prices in 1964 resulting from the salad oil scandal and the 13 year return would be materially lower. A secular bull market from 1982 to 2000 probably didn't hurt. And yes, holding Disney at one time made sense, but ask Roy Disney whey he spent $400,000 for a one day full page ad in the WSJ. Incidently, Buffett's Disney is the remnant of the ABC/Cap Cities merger. Another sweetheart deal. Smooch.

BRK's stock price from 1998 to the present, under a promoted HOLD context more than SPEAKS FOR ITSELF. 1.26% per annum compounded. Relax, there's no divdend to complicate the computation.

Buffett's a businessman. Primarily insurance and retail. I live four miles from the largest furniture store in the world. Cash cows generate cash. Cash goes INTO the market. Berkshire Hathaway itself was bought in 1965 for the intent of purpose of OPERATING. That intent was eventually abandoned. Even Munger told him to "stop buying dinosaurs".

I don't know which is more comical Livermore groupies or Buffett groupies. Must be the latter since half of them can't spell their idol's name.

Shall we discuss US Air and Munsingwear (gee that rhymed)?

 

[Sparohok]

Quote from tomcole:

Its not a cheap shot - if Buffett was forced to mark to market all his holdings, as he expects others to do, his results would be different.

There is no hypocrisy in following industry wide accounting practices while arguing for changes to industry wide accounting practices. Until the rules are changed, you follow the existing rules. To do otherwise is grossly irresponsible to your shareholders.

Incidentally those forwards <i>were</i> marked to market, as demonstrated by the numbers I reported in my earlier post. As I understand, what Buffett is criticizing concerning derivatives is the poor methodology in marking to market, booking improper earnings based on models that are suceptible to manipulation. It's certainly not an area of expertise for me, but I think you've got the whole controversy backwards.

Your emotional outburst only confirms your groupie status.

What emotional outburst? Seriously.

Are you saying it's not bullshit that Buffett lost $900m shorting the dollar? Or that calling bullshit bullshit only occurs due to loss of emotional control brought about by sucking someone's dick backstage?

And, anyone who can buy and hold and choose when to exit a trade on their own choosing, will always beat the market as you're not hostage to margin calls or paying tuitions/mortgages etc.

That's a thoroughly inane argument. If immunity to margin calls is a benefit of big money, then the law of large numbers is a corresponding disadvantage. They are two sides of the same coin.

If Buffett takes on a large enough dollar short to materially benefit his portfolio should he turn out to be correct, then equally, he risks large losses and a margin call (either literally, or by shareholder revolt) if he's wrong. He can take a $10M short position in anything and hold it forever with utter impunity. But if he's right, what does that get him? Bupkus.

Personally, I believe (as Buffett does incidentally) that one of the greatest systematic advantages you can have in the stock market is NOT having much money. Managing a large portfolio is far more difficult than managing a small one. There is overwhelming evidence for this both theoretical and empirical.

There are a lot of other fund managers who consistently beat his returns and dont hold positions for years and years until something turns around. So, in a 360 degree perspective, Buffett probably underperformed his peer group if he was subject to the same standards they are.

Warren Buffett is the second richest man in the world. He earned it all through trading and investing. That is a performance record that cannot be beaten in five or ten years by a hedgie with a hot hand. Indeed, until someone else makes $50B in the markets, it's hard to argue that it's been beaten at all.

The reason I like trading and investing, the reason I got into this business, is because it is a strict and transparent meritocracy. Good ideas are rewarded and bad ideas are punished, not subjectively but quantitatively. Everybody knows where they stand. No favoritism, no bullshit.

Yet even in this crystal clear meritocracy, there are still those who seek to talk their way to success - or to talk others out of their success. Even to the point of calling someone else a groupie for observing facts from a balance sheet. That's lame.

Martin

 

[ElectricSavant]

Can you fellah's tell me how much money Buffett made from options?

 

[tomcole]

There is no hypocrisy in following industry wide accounting practices while arguing for changes to industry wide accounting practices. Until the rules are changed, you follow the existing rules. To do otherwise is grossly irresponsible to your shareholders.

--->>For all his hoopla, he could present two sets of numbers, one GAAP, one GAAP according to Warren. Its not a big deal to do.


Incidentally those forwards <i>were</i> marked to market, as demonstrated by the numbers I reported in my earlier post. As I understand, what Buffett is criticizing concerning derivatives is the poor methodology in marking to market, booking improper earnings based on models that are suceptible to manipulation. It's certainly not an area of expertise for me, but I think you've got the whole controversy backwards.

-->>All accounting models are subject to interpretation, and thereby, manipulation. Its the downside of GAAP.


What emotional outburst? Seriously.

Are you saying it's not bullshit that Buffett lost $900m shorting the dollar? Or that calling bullshit bullshit only occurs due to loss of emotional control brought about by sucking someone's dick backstage?

-->>Wow, such language. No one will take you seriously if you continue to post that way.


That's a thoroughly inane argument. If immunity to margin calls is a benefit of big money, then the law of large numbers is a corresponding disadvantage. They are two sides of the same coin.

-->>Not at all. There are plenty of managers who regularly outperform Buffett, but dont live in Omaha and act like a pumpkin truck driver. I think his act is very disingenuous.


If Buffett takes on a large enough dollar short to materially benefit his portfolio should he turn out to be correct, then equally, he risks large losses and a margin call (either literally, or by shareholder revolt) if he's wrong. He can take a $10M short position in anything and hold it forever with utter impunity. But if he's right, what does that get him? Bupkus.

-->>Since you mention a specific term, "materially", can you tell me what size a derivative currency position has to be to become material to his balance sheet? That exercise will help you to learn a lot.


Personally, I believe (as Buffett does incidentally) that one of the greatest systematic advantages you can have in the stock market is NOT having much money. Managing a large portfolio is far more difficult than managing a small one. There is overwhelming evidence for this both theoretical and empirical.

-->>If he felt that way, he should divest, but he doesnt. And there are plenty of firms who manage very large sums much more successfully than your hero, yet, remain quiet. Maybe the world only needs one pumpkin truck driver/portfolio manager.


Warren Buffett is the second richest man in the world. He earned it all through trading and investing. That is a performance record that cannot be beaten in five or ten years by a hedgie with a hot hand. Indeed, until someone else makes $50B in the markets, it's hard to argue that it's been beaten at all.

The reason I like trading and investing, the reason I got into this business, is because it is a strict and transparent meritocracy. Good ideas are rewarded and bad ideas are punished, not subjectively but quantitatively. Everybody knows where they stand. No favoritism, no bullshit.

Yet even in this crystal clear meritocracy, there are still those who seek to talk their way to success - or to talk others out of their success. Even to the point of calling someone else a groupie for observing facts from a balance sheet. That's lame.

-->> Very large money managers get shown deals first because if they like them, like any big organism, they can swallow it whole. Many firms, like GS, go to Buffet and Co with private deals they think they want or are mandated to find. Thats very clearly preferential treatment. Another good example is, will your securities firm put substantial amounts of their capital at risk for you? Answer your phonecall on the first ring? Hhmmm, theres lots of perks to being big. (Not to mention having groupies.)


Your views may seem very reasonable to you, but they also show you've never worked in a major firm doing real deals. Theres a very real difference between being a small spec and running big money.

 

[Sparohok]

<i>For all his hoopla, he could present two sets of numbers, one GAAP, one GAAP according to Warren. Its not a big deal to do.</i>

He could, but he doesn't, because nobody can legitimately accuse him of hypocrisy for following GAAP. Doesn't stop them from trying, apparently.

<i>All accounting models are subject to interpretation, and thereby, manipulation. Its the downside of GAAP.</i>

Yes. Buffett claims that accounting standards for derivatives routinely permit levels of manipulation that pose significant risks to the world financial system. I am not personally qualified to judge whether that is true or not, but many others from Alan Greenspan on down have made similar claims, and the shenanigans at Enron and FNM seem to support their assertions.

That does not imply (as many in this thread seem to believe) that Buffett has ever opposed financially conservative use of derivatives, conservatively accounted for and collateralized.

<i>Wow, such language. No one will take you seriously if you continue to post that way.</i>

Uhhhh, ok. Well, no one will take <b>you</b> seriously if you don't learn to quote a message properly. Nyah nyah. Now if you don't mind, can we discuss real issues?

<i>Not at all. There are plenty of managers who regularly outperform Buffett, but dont live in Omaha and act like a pumpkin truck driver.</i>

There are plenty of managers who occasionally outperform Buffett. There are few if any who consistently outperform him. If they did, they would be sitting on $45B in investment gains too.

<i>Since you mention a specific term, "materially", can you tell me what size a derivative currency position has to be to become material to his balance sheet? That exercise will help you to learn a lot.</i>

Nicely done. You both ducked the question, and gratuitously insulted me. Good move. You are a worthy opponent.

<i>Hhmmm, theres lots of perks to being big.</i>

Yes, but even more disadvantages. Are you really going to claim that a $50B portfolio is easier to trade to, say, 25% annual returns than a $10M portfolio?

Martin