Blog Archives

Billionaire investing success Warren Buffett does not like owning bonds at this point, and he thinks the average investor should avoid them as well.

The chairman and CEO of Berkshire Hathaway, major investment conglomerate, believes that individual investors should have plenty of cash on hand so they are comfortable just in case something unexpected happens.

He also believes that they should invest the rest of their money in stocks, even though the price of stocks has risen quite higher than they were years ago when the Great Recession first hit.

On Monday while giving an interview on CNBC, Buffett told the world that bonds are a terrible investment at the current time, and he also mentioned that long-term bond owners may see large losses once interest rates eventually rise again.

The Oracle of Omaha also said that stocks are selling for very reasonable prices generally even though the Dow Jones Industrial average is seeing record high levels, along with the S&P 500 index.

Buffett, 82 years old, also mentioned that he doesn’t have any plans to retire in the near future, and he also believes the efforts of the Federal Reserve, with keeping interest rates low, have helped the stock market. Income improvements continue to play a role for stocks as well.

Buffett is a continued fan of Federal Reserve Chairman Ben Bernanke, and he mentions that he believes bond prices are artificially inflated because of the stimulus that is ongoing from the Federal Reserve. The stimulus is $85 billion worth of bonds being bought every month, which keeps the interest rates at a low level. At this time, bond yields are near historic lows, and they move inversely to prices.

On Monday, Buffett gave interviews to Fox Business News and CNBC after Berkshire Hathaway’s annual shareholders meeting this past weekend. It was a star-studded event.

At the time of this writing, Berkshire Hathaway owns more than 80 companies and has large investments in IBM, Coca-Cola and Wells Fargo, as well as other iconic brands.

Buffett also reiterated his support of Jamie Dimon, J.P. Morgan Chase chairman and CEO. He said that Chase has the right person running the show, and he also owns the stock as part of his personal portfolio.

Buffett also believes that Berkshire Hathaway will own a stake in H.J. Heinz – the ketchup maker – forever, and he said that he didn’t have any problem taking on 3G Capital as a partner. They are the Brazilian investment firm that split the bill for H.J. Heinz. He also hopes that the Berkshire Hathaway stake in Heinz will grow as time goes by.

He was also questioned about the way the Heinz deal was structured. People wonder if the 50% split is a change in the way Berkshire Hathaway will invest and do business from now on. Berkshire Hathaway typically buys a company outright, and they let the company run without any intervention whatsoever.

3G Capital is not your typical private equity firm, said Buffett, since they put a large amount of their own money in deals, and they also run businesses.

Buffett even mentioned that Burlington Northern Santa Fe railroad’s traffic is picking up, but it’s probably going to haul fewer carloads than it did before the recent recession.

Burlington Northern Santa Fe “has been a terrific acquisition for Berkshire,” said Buffett.

BNSF contributed $798 million to Berkshire Hathaway’s $4.9 billion profit for the first quarter, which the company reported on Friday. Berkshire Hathaway’s profits rose by over 51%, beating last year’s net income of $3.3 billion by a wide margin.

Warren Buffett, billionaire investor, looks at the economy as slowly improving. He has also hailed Ben Bernanke, Federal Reserve Chairman, as being “gutsy” for the central bank’s actions in which they have attempted to boost growth.

On Monday morning, he told CNBC that he really isn’t concerned with the recent record highs in the financial markets. He also mentioned that he recalls when the Dow Jones industrial average first crossed 100 points.

He then said that investors should not shy away from the markets.

“Probably in my lifetime, and certainly in your lifetime, you will see markets that are far higher than this,” said Buffett to Becky Quick of CNBC.

Buffett also said that even though stock prices are higher lately – and the Dow Jones even crossed a record breaking 15,000 during Friday’s training – he also said they’re not “ridiculously higher.”

Buffett mentioned that the housing recovery is a strong reason why economic growth is stimulated, and economic demand is also slowly returning.

“The economy is moving forward, but at a slow pace,” said Buffett.

Buffett had really high praise for the Federal Reserve chairman, leader of the controversial Fed efforts being used to stimulate the economy through near zero interest rates while dramatically expanding the balance sheet of the central bank.

For the first time last week, Fed policymakers said they are ready to increase the $85 billion a month bond buying program implemented by the central bank if the economy is in need of this.

Buffett mentions that the Fed chairman is a “gutsy guy” for the actions he has taken since the 2008 financial crisis has begun, and that the Fed chief has done “very, very well” with his efforts to keep the economy moving in a forward direction.

Buffett mentioned that he personally may have started reducing the stimulus earlier, but he also mentions that he’s not sure how he would’ve done it so that it would not hurt economic recovery and growth.

On February 21, 2013, cofounder of Rap Genius Mahbod Moghadam started up a strange feud with Warren Buffett, billionaire investor, when he tweeted from his handle @rapgenius this extremely profane message: “WARREN BUFFETT CAN SUCK MY ____.” Sending out offending tweets to those people well known in the media is nothing new, but it is rather surprising when it comes from one of the creators of a largely popular website that just received a $15 million injection in venture capital. People will pay attention to these things.

Then just a few hours later, Moghadam announced that he is holding a Warren Buffett diss track contest on Rap Genius. The contestants have to post original lyrics that badmouth Berkshire Hathaway’s 82-year-old Chairman and CEO. The winner of the contest receives a Rap Genius T-shirt. It looks like a $15 million venture capital injection didn’t do anything to improve the contest prizes! Feel free to make fun of Mark Zuckerberg as much as you want for his horrible fashion sense. For whatever reason, Moghadam looks to have taken the role of the eccentric tech entrepreneur to a strange and uncomfortable new level.

Nitasha Tiku, writer for BetaBeat published a very thorough article in regards to the strange vendetta, where she included a Google chat interview with the eccentric entrepreneur, who says of Warren Buffett during the interview, “from a philosophical perspective I hate that fool… He brags about eating at mcdonalds [sic] I loathe him.”

It turns out that Moghadam’s hatred of Warren Buffett started a few years back when Berkshire Hathaway took back their internship offer when they discovered that Moghadam wrote a blog post belittling one of their clients. And another thing, Warren Buffett is friends with his ex-girlfriend’s mother, which could also have been part of the reason he landed the internship to begin with.

This contest definitely has the sense of a public relations stunt, but it certainly feels like the bad blood is for real. There have been commenters on the message boards defending Warren Buffett because he supports higher taxes for the rich. Then again, others have bashed Moghadam because he’s a “bad publicity troll.”

So far, only a few entries have been made into the diss track contest, and all of the entries are poor. Take a look at one entry courtesy of a Rap Genius commenter going by the name jewlove: “the wizard of Omaha? Ha ha/Creating economic blizzards/and a buzzard feasting off the cadavers/of the common folk, with geico.” I can only imagine that the Notorious B.I.G. and Tupac Shakur both rolling over in their graves.

Far as I can tell, this is the first hip-hop beef Warren Buffett has been involved in. Although he does have a tendency to show up in rap lyrics every once in a while. He hasn’t responded to this as of yet, most likely because he’s so busy acquiring H.J. Heinz Co., using the ketchup company as leverage and generally being an all-around nice guy. But if Warren buffet does choose to reply, it might be in his best interest to let Jamie Dimon take over as his hype man and have Fed Chairman Ben Bernanke officiate a charitable rap battle.

Moghadam probably thinks that his hip-hop fans are going to give him massive credit for bashing the billionaire investor in this crazy contest. But let’s not forget that he’s up against a guy who threw up the diamond sign when Jay-Z’s 40/40 club opened. If you don’t know, now you know.

Warren Buffett, billionaire investor, told us on Wednesday that he definitely notices the overall global economy slowing. There has been a major decline in Asia and we are still seeing a lot of problems in Europe.

On the flipside, he noticed that the US economy is slowly improving. He believes that business is going to improve no matter which candidate wins the upcoming presidential election.

Companies are currently reporting mixed earnings financially, and they are doing everything they can to safeguard themselves against federal budget cuts that might come in the future.

Buffett mentions that even though the United States economy is outperforming both Asia and Europe, it would be a lot better if American fiscal leaders addressed our financial problems head-on. This would be a great way to improve American business overall.

This past Wednesday, when Warren Buffett made an appearance on CNBC for a two-hour segment, he said, “we’re still inching ahead, but were inching.”

Warren Buffett, founder and head of Berkshire Hathaway Inc., tells us that he can see the direction of the overall economy because of the subsidiaries that Berkshire Hathaway owns. Some of his subsidiaries are Clayton Homes, which is a large real estate brokerage, and Burlington Northern Santa Fe railroad, to name just a few.

Buffett believes that the American economy is going to improve no matter which candidate enters the White House. It could be Republican nominee Mitt Romney, or current president Barack Obama. He also mentioned that he supports Obama. He believes that the biggest difference between the two candidates is their views on social issues, and the people that they plan to appoint as judges.

“I think the economy will get better under either one of them,” said Buffett.

Buffett also mentioned that the housing industry in the United States of America is finally beginning to rebound, but it has a long way before it reaches its peak. He mentions that Clayton Homes is selling 10% to 15% more manufactured homes, and the real estate brokers of Berkshire Hathaway are currently handling about 15% more transactions recently.

He also said that the economic recovery in the housing market is going to eventually help with hiring in the job market.

During part of his interview, Jeff Immelt, current CEO of General Electric Company, joins Warren Buffett. Both of these leaders were in Columbus Ohio for the event that took place at Ohio State University. Mister Immelt mentions that the economic trends taking place overall are continuing to be positive, but due to the aftermath of the recession, business is still quite volatile.

“I think if you’re out there hustling you can find business,” said Immelt.

He also wants investors to take a look at the long-term positive trends taking place. The GE boss mentions that his company is sitting on a $200 billion dollar backlog at this point in time.

He also thinks that investments would improve in the United States if the country leaders address the supposed fiscal cliff of automatic tax increases and spending cuts that might very well take place at the beginning of 2013.

Warren Buffett believes that there is an obvious solution to this problem, and our nation’s leaders know it, but they are refusing to act because all of the upcoming presidential election. He believes that the solution is obviously going to involve spending cuts and tax increases.

“It’s going to get done,” said Buffett. “The American people won’t stand for it not getting done.”

Warren Buffett also praised Federal Reserve Chairman Ben Bernanke. He really likes what he’s been doing, and Warren Buffett even said that he would support him if he went for a third term.

Warren Buffett also mentioned that he is on the lookout for a major acquisition for his company Berkshire Hathaway. He just doesn’t plan on paying any extra so that he can compete with other bidders.

In recent years, Berkshire Hathaway has lost out on some of their major acquisitions due to private equity firms aggressively bidding against him with money that they borrowed. We learned this in the CNBC interview that Warren Buffett gave this past Wednesday. Berkshire Hathaway does not borrow any money for their acquisitions, and at the time of this writing, they have $40 billion worth of cash on hand. “Pricing is difficult, and money is cheap,” said Buffett.

He also mentioned during the interview that this past week somebody talked to him about a $6 billion deal that might interest him. He hasn’t looked over the financial statements as of yet, so he couldn’t say one way or another if he believes the deal would work.

During 2012 so far, Berkshire Hathaway has made a total of 15 smaller acquisitions. Warren Buffett calls them bolt on acquisitions because they are easily added to the existing businesses of Berkshire Hathaway. He recently added more to Berkshire Hathaway’s investments and IBM and Wells Fargo stock during the year, but his true preference is to make a large business purchase for the company.

He also mentioned this past Wednesday that he’s really feeling good now that his prostate cancer treatments have been finished for about a month.

“I feel fine. I feel great,” said Buffett.

At 82 years old, Warren Buffett mentions that his treatments were very tiring. He had six weeks’ worth of radiation treatment, and he didn’t finish them until this past September.

He told the world about his cancer diagnosis this past April, and told us that his diagnosis was not life threatening since it was caught early.

Warren Buffett gave an interview on CNBC this morning. He mentions that the companies under the Berkshire Hathaway umbrella are starting to show that “there is a slowing down going on” throughout the economy on a global scale. He mentions that the US economy is thriving more than in Asia and Europe.

Warren Buffett also tells us that US Home construction is picking up once again. The businesses that Berkshire Hathaway has tied directly into the housing market are showing more signs of profit. Shaw carpet, one of the businesses under the Berkshire Hathaway umbrella, will double in profits this year. Mister Buffett also told us that Clayton Homes, another Berkshire company, plans to build 15% more manufactured housing units in the coming months.

Due to the spike in business and profits, Berkshire Hathaway expects to add an additional 8000 people to its workforce. At the time of this writing, Berkshire Hathaway currently employs 270,000 individuals in the workforce.

Not all is perfect in the world of Berkshire Hathaway. Their Iscar metalworking business experienced a drop-off in orders from their Asian customers Buffett tells CNBC. He also mentions that Europe is still working through problems that they have yet to straighten out.

Warren Buffett is one of the most successful investors in history. There is no denying it. As such, investors follow Buffett’s views on the economy and investing closely. During the interview on CNBC this Wednesday, he mentions that the Tuesday market declines leave him “salivating” and ready to buy more stocks. He also plans to acquire another large company that Berkshire Hathaway will own outright.

On Tuesday night, someone approached Buffett about a $6 billon dollar company. Since he is already familiar with this company, he plans to learn more about it over the next few days.

Berkshire Hathaway already has a large stake in Wells Fargo bank. Regardless, they bought more shares this week and added to their already sizable investment.

He warns investors that US bank stocks will not rebound to the levels they once saw prior to the financial crisis. They no longer have the ability to use as much leverage as they once were capable of using in the past. Buffett reminds us that banking is “still a good business” in the United States.

Buffett once again endorsed Federal Reserve Chairman Ben Bernanke, saying he “has done an absolutely superb job.” He also predicts that Bernanke would most likely continue as Federal Reserve chairman if anyone asked him to stay for another term.

Although, Buffett mentions that his “instinct” tells him that the quantitative easing program from the Federal Reserve is not the correct strategy any longer.

“I get a little worried about continuously expanding” the Federal Reserve’s balance sheet, he mentions on CNBC.