Warren Buffet’s Unwavering Optimism
Published in La Tribune
(France) on 4 May 2010
by Philippe Latorre (link to original)
(France) on 4 May 2010
by Philippe Latorre (link to original)
Translated from
by Elsa Lantier.
Edited by Piotr Bielinski.
This weekend, like every year since 1969, Warren Buffet, 79 years old, third-richest man in the world, convened the shareholders of his investment company, Berkshire Hathaway. Little known to the general public, the company nevertheless holds the record of the most expensive stock in the world: 115,000 dollars. This year, a record of 37,000 shareholders made the trip to this Woodstock of capitalists.
The unusual duration of this general assembly is due to the fact that, after a one-hour film presentation about Berkshire — one that blends publicity with humor — instead of a formal discussion, there were five long hours of Q & A. Three topics are hardly mentioned: the economic crisis, consumption and unemployment. The recovery is happening now. Little is said about currencies or the difficulties plaguing the Euro zone. And the optimism of Warren Buffett and his associate, Charlie Munger, is such that, even if one or two questions bring up the environment issue, their answer is that mankind will always find solutions. The two main preoccupations here are Goldman Sachs and the derivative market, both of which lie at the heart of capitalism.
How does Berkshire, who invested 5 billion dollars in Goldman Sachs in September 2008, feel about the crisis of confidence afflicting this institution? At the time, Warren Buffet praised the exceptional quality of its management. Now, following a complaint lodged by the SEC, the authority regulating the American stock markets, Goldman Sachs’ president is being subjected to unrelenting criticism.
And yet, in a long speech, Warren Buffet reaffirms his support of Goldman Sachs and its managerial expertise. He pays tribute to and fully backs the president. He says he doesn’t believe the validity of the accusations. According to him, if some of Goldman Sachs’ clients got tricked into losing hundreds of millions of dollars by investing in complex financial instruments, he has nevertheless no compassion for bankers who were naive enough to take such a stupid gamble. The leaders of ABN AMRO, among the victims, will appreciate this stance. Warren Buffet reminds us that Goldman Sachs remains a very good investment, bringing in $15 every second to Berkshire!
The topic of derivatives allows the oracle of Omaha to express the position of this Midwestern guru: when it comes to risk insurance coverage products, they are legitimate (for example, for currency or raw materials); but not when the risk is taken at the casino. The most stimulating are the novel positions or the ones that bring us back to the foundation of the free market economy. On the question of deficits: we mustn’t be afraid to tax capital. On the question of education: McDonald’s is the best school to teach discipline and responsibility to the youth. On the question of faith in America and capitalism: as long as entrepreneurs exist — men and women who are honest and motivated — confidence will remain strong.
Berkshire’s shareholders left Omaha strengthened by these timeless lessons that have made the success of Warren Buffet. They have only one wish: that the master stay healthy, that he continue to make his investments prosper, and that they may all meet again on April 30, 2011, for a new general assembly. As for us, this pilgrimage to Omaha was faithful to what we had expected, and we return to Paris impressed by the spirit of simplicity, yet ever so conquering, that reigned. We feel that we have spent an exceptional weekend and feel completely refreshed, despite the 30-hour trip. A radical remedy to be prescribed in these morose times!
The unusual duration of this general assembly is due to the fact that, after a one-hour film presentation about Berkshire — one that blends publicity with humor — instead of a formal discussion, there were five long hours of Q & A. Three topics are hardly mentioned: the economic crisis, consumption and unemployment. The recovery is happening now. Little is said about currencies or the difficulties plaguing the Euro zone. And the optimism of Warren Buffett and his associate, Charlie Munger, is such that, even if one or two questions bring up the environment issue, their answer is that mankind will always find solutions. The two main preoccupations here are Goldman Sachs and the derivative market, both of which lie at the heart of capitalism.
How does Berkshire, who invested 5 billion dollars in Goldman Sachs in September 2008, feel about the crisis of confidence afflicting this institution? At the time, Warren Buffet praised the exceptional quality of its management. Now, following a complaint lodged by the SEC, the authority regulating the American stock markets, Goldman Sachs’ president is being subjected to unrelenting criticism.
And yet, in a long speech, Warren Buffet reaffirms his support of Goldman Sachs and its managerial expertise. He pays tribute to and fully backs the president. He says he doesn’t believe the validity of the accusations. According to him, if some of Goldman Sachs’ clients got tricked into losing hundreds of millions of dollars by investing in complex financial instruments, he has nevertheless no compassion for bankers who were naive enough to take such a stupid gamble. The leaders of ABN AMRO, among the victims, will appreciate this stance. Warren Buffet reminds us that Goldman Sachs remains a very good investment, bringing in $15 every second to Berkshire!
The topic of derivatives allows the oracle of Omaha to express the position of this Midwestern guru: when it comes to risk insurance coverage products, they are legitimate (for example, for currency or raw materials); but not when the risk is taken at the casino. The most stimulating are the novel positions or the ones that bring us back to the foundation of the free market economy. On the question of deficits: we mustn’t be afraid to tax capital. On the question of education: McDonald’s is the best school to teach discipline and responsibility to the youth. On the question of faith in America and capitalism: as long as entrepreneurs exist — men and women who are honest and motivated — confidence will remain strong.
Berkshire’s shareholders left Omaha strengthened by these timeless lessons that have made the success of Warren Buffet. They have only one wish: that the master stay healthy, that he continue to make his investments prosper, and that they may all meet again on April 30, 2011, for a new general assembly. As for us, this pilgrimage to Omaha was faithful to what we had expected, and we return to Paris impressed by the spirit of simplicity, yet ever so conquering, that reigned. We feel that we have spent an exceptional weekend and feel completely refreshed, despite the 30-hour trip. A radical remedy to be prescribed in these morose times!