Posted on 03/06/2005 10:57:13 PM PST by nickcarraway
Warren Buffett has warned that the US trade deficit risks creating a “sharecropper’s society” as his letter to shareholders sounded an increasingly bearish tone about the value of the dollar.
The billionaire fund manager said his own performance as chairman of Berkshire Hathaway was “lacklustre” because he struck out in his quest for new investments. Annual results showed the book value of Berkshire shares underperformed the stock market for the second year in a row while full-year profits fell 10 per cent.
But his sceptical view of current market valuations continued as Berkshire’s holdings of cash rose from $36bn in 2003 to $43bn by the end of December – equivalent to nearly all the “float”, or excess cash, generated by its insurance businesses.
Mr Buffett’s bet against the dollar also grew. Foreign exchange contracts – mostly short positions against the US dollar – nearly doubled over the year to $21.4bn, generating $1.8bn in gains as the greenback fell against other major currencies.
These currency profits were partly responsible for a sharper than expected rise in fourth quarter earnings from $2.39bn to $3.34bn, although Berkshire earnings are notoriously volatile due to the timing of investment gains.
Mr Buffett stepped up his warning about the US trade deficit and the need to finance it with foreign investment, devoting more than two full pages of the annual report to the topic.
“This force-feeding of American wealth to the rest of the world is now proceeding at the rate of $1.8bn daily, an increase of 20 per cent since I wrote you last year,” he said. “Consequently, other countries and their citizens now own a net of about $3,000bn of the US”
In particular, he warned that this meant a sizeable portion of what US citizens earned in future would have to be paid to foreign landlords.
“A country that is now aspiring to an “Ownership Society” will not find happiness in – and I’ll use hyperbole here for emphasis – a “Sharecropper’s Society,” added Mr Buffett. “But that’s precisely where our trade policies, supported by Republicans and Democrats alike, are taking us.”
Nevertheless, Berkshire’s chairman and chief executive conceded he did not do his job very well last year in finding ways to profit from the unusual market conditions
“My hope was to make several multi-billion dollar acquisitions that would add new and significant streams of earnings to the many we already have. But I struck out,” he said “Additionally, I found very few attractive securities to buy. Berkshire therefore ended the year with $43 billion of cash equivalents, not a happy position.”
Berkshire’s net earnings, which are subject to volatile swings in realised investment gains, fell from $8.15bn to $7.31bn for the year. Total assets rose from $181bn to $189bn and shareholder equity increased from $77.6bn to $85.9bn.
Mr Buffett added little new information about an ongoing investigation into potentially illegal trading practices in the insurance industry.
“Berkshire cannot at this time predict the outcome of these investigations, is unable to estimate a range of possible loss, if any, and cannot predict whether or not that outcome will have a material adverse effect on Berkshire’s results,” said the report.
And those people "believe" that the Donald made it all on his own. LOL
When he came to this city -- from Queens -- he had nothing but the clothing in his back and $10 million.
Buffet is correct on this.
Read his entire 2004 annual report
http://www.berkshirehathaway.com/2004ar/impnote04.html
True,so true and something that is VERY well known;except by the morons.
No, but it is not as terrible as they claim. Not even close.
They are using it for their own purposes.(protecting their Chi-com investments, or at least trying like hell. Same thing with Gates.
I remember twenty some years ago when some people were screaming that the sky was falling because the awful Japanese were buying up the entire country.
But it was all an illusion. The markets adjusted to reality, and the Japanese were left holding a very large empty bag.
Although this current situation is not exactly like that, it has enough similarities to be worth mentioning.
America will survive and go on.
And Buffett will pass from the scene, leaving his billions to Planned Barrenhood.
Missouri foreign exports are UP across the board.
That weak dollar also makes our products more attractive to foreign buyers.
I find the idea of guys reading Trump books to learn how to get rich rather touching. There's an innocence to it.
Maybe that is because your investments, unlike Warren Buffett's, have not outperformed the S&P 500 36 out of the last 40 years......
I'm leaving all my billions to Unplanned Parenthood, a little known organization that distributes condoms made of rice paper.
And WHY anyone watches his show,is quite beyond me.
In the words of Jack Nicholson, "Is there any other kind?"
Maybe I should leave my billions to the non-homeless. hehehehehe
Ummm...Ed Koch and Zell Miller.
Our dollar policies have been intentionally somewhat vague. (even misleading)
There is a method to the madness, as Buffet calls it.
His real concerns have more to do with his commitments in China, just like all the rest of the complainers.
They have good reason to be worried, because they never though we would get aggressive with our financial weight. A policy that Clinton never considered because they were in it for the short term gain..
What is going on is that the U.S is using it's leverage to make create a better environment and to counter what Europe and China planned to do to us.
It is not surprising that some Dem's got caught with their butts exposed to this. They always go where they think the money is, regardless of whether it hurts the U.S. or not.
I think this subject, like Iraq and Afghanistan, Palestine and the rest of the difficulties, will become more clear as time passes and the desired effects begin to manifest themselves for all to see.
The guys who read the Trump books are optimists. They firmly believe in the American Dream. They're trying to improve their business savvy.
On the other hand, I used to say the same thing about conspiracy theorists. I thought they were optimists as well, since they thought the world would be fine if six guys stopped screwing around with things. Then I met one and found him really, really annoying. Changed my mind instantly.
In the words of Jack Nicholson, "O.K., I'll give you that one."....in As Good As It Gets.
The thing is,some people either ignore facts,or never knew any.
Look at Soros's massive losses in going long in oil futures around the time of the GOP Convention last summer. He sold something or other (I don't remember just what right now)at that time,which shot up and made tons of money,to try to derail the president,just as the price of oil went down,got out and oil futures then shot up,after a bit. LOL
It seldom pans out,when someone invests with emotion and a political agenda against someone/a political party.
It's a pity that Warren's parents didn't subscribe to his planned barrenhood (good term!) fascination; but then,neither did Warren.
What this country needs is more billionaires like Huntingtom Hartford!
Warren buffet has currency invested in the euro. The higher it goes the better he does. The more depressed the dollare the more money he makes.
Think there is an incentive for him to talk down the ecconomy?
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