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Thursday, September 25, 2008

Bob Brinker on Warren Buffet

Bob Brinker is a big fan of Warren Buffett's and has often sung his praises.

This is from my March 2, 2008 Summary:
Brinker completed his monologue by talking at length about Warren Buffet -- whom Brinker said is a “national treasure.” He said that Buffet had issued his annual letter and discussed some points with which he agreed. Firstly, that the housing market had been operating under the false premise that housing prices go up every year, which simply isn’t true. Buffet’s letter also said that some companies make excessively high return-rate assumptions on their pension investments. Buffet likened this to the queen in Alice in Wonderland, who said: “Why sometimes I’ve believed as many as six impossible things before breakfast.” Another point that Buffett made which Brinker agreed with is that the taxpayers will end up having to pay for those fat labor union pension plans. And when the money comes due, the politicians who agreed with the labor union's fat pension plans will be “on a beach with a mint julep.”

And speaking of "sages stepping in," I think Brinker will jump on Buffett's bandwagon for his big Goldman Sach's purchases like he did in on June 14, 2008:

Brinker said: “He (Buffet) has said today that the Federal Reserve was correct when it made the decision to step in on the Bear Stearn’s Company in Wall Street in the month of March. Of course, Bear Stearns the Wall Street Investment Bank – fifth largest at the time – that was looking at bankruptcy before agreeing to be acquired by J.P. Morgan Chase and Company in March, with the help of the Federal Reserve, led by the Chairman, Ben Bernanke. The Fed stepped in and provided a $29billion guarantee against Bear’s Assets. And J.P. Morgan, the third largest bank in the United States, agreed to pay $10 per share for Bear Stearns in the final deal……..

So there you have it, Warren Buffet’s opinion, quote, ‘I think the Fed did the right think in stepping in on Bear Stearns.’ Quote, ‘Just imagine the thousands of counter-parties around the world having to undo contracts.’ Mr. Buffet went on to say, quote, ‘The big investment banks………they’re almost too big to manage effectively from risk standpoint in the way they have elected to conduct their business. You need someone at the top whose DNA is very, very much programmed against risk,’ unquote.

And that’s an interesting comment from the Sage because we’ve commented on Moneytalk so many times about the fact that these Wall Street mucka-mucks, with the big paychecks and the fancy packages, the reality is they can’t manage risk in many cases and the firms end up writing off……literally tens of billions of dollars. And the only way your company writes of then of billions of dollars on failed investments is management incompetence, in my opinion. And I think that is exactly how Warren Buffet feels when he makes those comments. I could not agree with him more……..”

No doubt, if Brinker is on Moneytalk this weekend, he will have much to say about Buffett's $5billion investment in Golden Sachs.

There is an short, but interesting video commentary about Buffett's Goldman purchases at

This is a "snail plant" growing in oleander in my daughter's back yard


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