- Amended Berkshire Hathaway Filing Indicates No Secret Stock Stakes at End of Q3
- Buffett's Wealth and Fame Hasn't Helped 'Warren' As a Name
- CNBC VIDEO: Warren Buffett & Bill Gates 'Walk & Talk' at Columbia University
- Warren Buffett to CNBC: Curbing Fed's Independence Could Lead to 'Mischief'
- Warren Buffett to Co-Chair Goldman Sachs Program to Help Small Businesses
- Warren Buffett: 'Reasonable Return is Good Enough' for Long-Haul Railroad Ride
- Warren Buffett's Berkshire Hathaway Almost Doubles Wal-Mart Holdings During Summer
- Warren Buffett's Berkshire Portfolio Snapshot Coming Later Today
- Warren Buffett to CNBC: 'I Haven't Bought American Express In Years'
- CNBC Video: Warren Buffett & Bill Gates - Keeping American Great
RSS FEED
MOST SHARED
- Wednesday's Economic News Crunch Could Tilt Markets
- The 'Real' Jobless Rate: 17.5% Of Workers Are Unemployed
- Obama Reiterates Commitment to Boost US-India Ties
- The Social Media Gaming Threat
- NBA D-League On The Rise
- Japan Export Rebound Eases Fear of New Recession
- Stifling Anger at Work Can Kill, Survey Finds
- Australia Wheat Exporters Face Challenges: GrainCorp
- Citi Mortgage Reveals What Treasury Won't
- S&P to Hit 1,200 by Year-End: Chief Investor
- Amended Berkshire Hathaway Filing Indicates No Secret Stock Stakes at End of Q3
- Facebook's Biggest-Ever Holiday Shopping Season
- Facebook's New Dual Class Structure - Slow Steps to an IPO
- 5 Big Bank Stocks Investors Should Consider: Strategists
- Gambling Drunk, Texting to Live And America's On Sale - Your Emails
- Nov. 24: Unusual Volume Leaders
- NBA D-League On The Rise
- AIG Board OKs CEO Pay; Benmosche Agrees to Stay
- Obama Reiterates Commitment to Boost US-India Ties
- FDIC's Bair Cautions on Risks in Bank Break-Up Plan
- Wednesday's Economic News Crunch Could Tilt Markets
- Call Me Crazy: Confessions of a Black Friday Shopper
- 'Very Blah' Christmas Is Coming for UK Retailers
- US Firms Hit by Payroll Taxes at Exactly the Wrong Time
- Citi Mortgage Reveals Something the US Treasury Won't
- In Time for Holidays: More Gloom and Doom on Economy
Warren Buffett Watch
Text Size 
 |
Under the headline Even the Oracle Didn't Time It Perfectly, Peter Eavis writes that while Buffett has won "plaudits for some canny deals," there's also an "unnerving pattern emerging."
"Mr. Buffett looks to be committing his capital too early. On some bets, waiting might have gotten him better terms or more attractive entry prices."
"Time for the Oracle to get a new crystal ball," according to Eavis.
He acknowledges that Buffett doesn't try to time his investments too closely, and says he's not launching a "cheap gibe" based on the S&P's 7 percent decline since Buffett's 'I'm Buying U.S. Stocks' op-ed piece in the New York Times on October 17.
Instead, Eavis focuses on two bets Berkshire Hathaway has placed on derivatives.
In one, Berkshire received large payments to provide default protection for "certain junk-rated corporations" in North America. The company has already booked hundreds of millions of dollars in mark-to-market losses on its exposure to these credit default swaps. "Berkshire more than doubled it notional exposure on these CDS to $8.8 billion between the end of 2006 and the middle of this year."
Eavis predicts, "Given the deterioration in the credit markets, the third quarter hit on them could be large."
 |
(Mark-to-market means the contracts are valued at what they would sell for in the current marketplace, even though Berkshire isn't selling them now. Those mark-to-market losses remain theoretical unless and until the contracts are actually sold or there's a default, but they still must be reported as losses in Berkshire's quarterly earnings reports.)
Berkshire's other growing derivatives bet involves very long-term options that will become profitable if four stock indexes around the world go higher over a period of years. Eavis notes that Berkshire added to its positions last year and into the first half of this year. Again, Buffett expects they'll make a lot of money eventually, but right now they're not much all that much.
Eavis argues that the trades suggest Buffett "was relatively comfortable about the prospects for U.S. corporations and global stocks at a time when some were predicting a bust."
While there may indeed be long-term profits, Eavis writes that Buffett has tied up money that could be have used for trades that would generate larger profits more quickly.
MORE DOUBTS ABOUT THE ORACLE
While the Journal is a high-profile skeptic, there's are other Buffett-doubters out there, especially when it comes to his public call to buy U.S. stocks now.
A common theme is that as a billionaire, Buffett can afford to put his money down now and wait for the profits, which could be years away. The rest of us have more pressing problems.
In the Times of London, Jennifer Hill argues that Buffett Is Wrong: The Market Madness Is Still Far From Over.
In Canada, the National Post's Diane Francis echoes the sentiment with Buffett Is Wrong: Avoid Stocks and Buffett Is Wrong: Part II.
On Seeking Alpha, Brian Keith Anderson lists 5 Reasons to Ignore Buffett and C.S. Jefferson asks "What If Warren Buffett Is Wrong About the Markets?"
 |
The key question, as it often is when talking about Warren Buffett and his famously long-term view of things, is whether an investor sees enough future pleasure to overcome pain in the present.
Buffett's investing record suggests we should be looking very carefully.
Current Berkshire stock prices:
Class A: [US;BRK.A
Loading...
()
]
Class B: [US;BRK.B
Loading...
()
]
Questions? Comments? Email me at
Data is a real-time snapshot *Data is delayed at least 15 minutes