Buffett bashes investing 'casino game'
The famed investor says the shift from sound investments to outright trading is muddling the long-term market.
Don't let all of that hanging out with Jay-Z fool you: Warren Buffett can get as curmudgeonly as any other less well-off 82-year-old out there.
The Berkshire Hathaway (BRK.A) head doesn't refrain from grabbing the ear of the nearest news outlet when something's troubling him, and last week it was all those hedge fund kids on Wall Street focusing on trading rather than investing. During a perfectly cordial lunch with New York Times columnist Andrew Ross Sorkin in midtown Manhattan, Buffett bemoaned the state of a market so liquid that he was able to pick up a 10% stake in IBM in six to eight months.
"The idea that people look at their holdings in such a way that that kind of volume exists means that to a great extent, it's a casino game," Buffett told Sorkin.
The last time Buffett decided he felt strongly about something, he used the Times' op-ed page the Monday after Thanksgiving to shout down anti-tax activist Grover Norquist and call for increased, multi-pronged taxes on the wealthy. He also suggested that newly re-elected President Barack Obama's "Buffett Rule" for taxing the rich wasn't nearly as strong as he'd like for a rule with his name on it.
This time, it's Sorkin's own fault for getting Buffett's blood up. Buffett only swung into town from Omaha to talk up "Tap Dancing to Work," a new book about his life by Carol Loomis of Fortune magazine, and to do a spot about it on “The Daily Show.” That book already had him feeling a bit nostalgic, but being so close to the action again got him thinking about old-school hedge fund investors like Tiger Management founder Julian Robertson and how far today's crop of profit-chasing, fee-bleeding, quick-flipping hedgies has fallen from that ideal.
"They’re not as good as the old ones generally. The field has gotten swamped, so there’s so much money playing and people have been able to raise money by just saying 'hedge fund,'" he said. "That was not the case earlier on; you really had to have some performance for some time before people would put money with you. It’s a marketing thing."
No, hedge fund guy at the Stone Street Tavern ordering your third Bronx Is Burning bourbon cocktail of the evening, Buffett doesn't know who you are. If your name isn't Seth Klarman, the low-key value investor who runs Boston's Baupost Group, he hasn't heard of you and doesn't care how much you've made. If he did, would he admire you for sweet private equity moves? His answer: "No."
That's not to say he wasn't a whole lot like those young hedge fund folks at one point. The managers shorting stocks now and betting against company shares are using part of a Buffett strategy that he employed while running a hedge-fund-like private partnership in the early '70s. Why did he stop? Because he and his longtime friend and Berkshire vice chairman Charlie Munger have since found easier ways to make money.
"The whole thing about 'longs' is, if you know you’re right, you can just keep buying, and the lower it goes, the better you like it, and you can’t do that with shorts," he told Sorkin.
That's right. Not only doesn't he not care that you're making loads of expendable cash, but he thinks you're doing it wrong. While we're sure most brokers and traders will get over the disappointment and use a couple of spare hundreds to wipe away their tears, Buffett's larger point is that there's still a lot of game to be played by these folks. It's not the state of hedge fund managers and their bank accounts now, but where they and the pension funds that employ them will stand when they've seen as much as Buffett has.
Maybe Buffett would build a fund as big and as fast as some of his modern contemporaries if he started again today, but right now he's armed with a bit of information the new class of hedge fund investor still doesn't grasp: "Money starts getting self-defeating at a point, too."
More from Money Now
The top 1% pay 34% of the total income taxes. The bottom 50% pay 3% , the bottom 75% pay 12%. But you dumb dems think you're the ones carrying the load.
Grow dependency , grow the democrat base. Welfare has a been a complete failure on the war on poverty but its been a boom to the democrat base.
Warren Buffet (The Oracle of Omaha) publicly says what needs to be done. He says the rich need to pay more, he says he pays a lower tax than his secretary, he tells about the tax loop-holes he uses and if the government doesn't close them he wil continue to use them, he even once said that the price ofhis stock was overvalued and wasn't worth buying (what other CEO could get away with doing that), he even once went to get change for a quarter when public calls were a dime because he didn't want to waste the other fifteen cents. Warren Buffet is TELLING the lawmakers what needs to be done but all the politicians are worried about are their jobs, fundraising for their next re-election run and not angering their constituents. The problems the politicians create through non-action are passed down to the next generation to be dealt with after they are comfortably retired with their spoils of war (politics).
Mabye a few more facts would help us all. How about each new bill comes with an expected cost to the tax payer with it. It could come with 2 numbers. The first would be with the current tax system and the second would be with the proposed increase. My guess most people would start learning that these new programs are too expensive no matter what the tax structure is.
Buffett has played by the rules he paid for via lobbists so I guess it's fair under those rules but as for the We the Peoples rules he cheated the people so the people should be very mad at this guy and when the collapse hits should be found and tried by the people...just saying...you think that is why many rich people are leaving the United States.
Mr. Buffett is a hypocrite. First, if he thinks his taxes should be higher he should be writing a check at the end of the year to the US Treasury to help pay down the debt. The check should be for what he considers his "fair share." Second, and it's somehwat related to the first, he gives his money to various organizations rather than the government. He is acknowledging the fact that he can better invest in worthwhile causes better than what the government does with money.
It's time Mr' Buffett stop talking and starts wrting those checks for his "fair share" to the US Treausry if he thinks he's not paying enough.
Anyone that thinks Obama, or Warren Buffet has some kind of altruistic approach to fiscal/tax policy is in denial. Just today another 159 pages of explanation for taxing earning on financial gains to fund Obmacare was released. Keep warching your IRA and 401K statements, then tell me how the mddlr class is being spared this costly burden. Also, the $500 billion cuts in medicare is for establishing the 13 new govt agencies to administer healthcare-not for healthcare. It is estimated these agencies will have 113,000 new government employees. Who will pay for that? Thats aside from the thousands of additional IRS required to enforce the mandates With their tax accountants and lawyers, the 2% will not pay for this.
DATA PROVIDERS
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
Japanese stock price data provided by Nomura Research Institute Ltd.; quotes delayed 20 minutes. Canadian fund data provided by CANNEX Financial Exchanges Ltd.
RECENT POSTS
Tired of constantly dying batteries, she came up with a device that could revolutionize energy storage -- and won $50,000 from Intel.
- Detroit in hot water over proposal to sell art
- Sears spirals toward oblivion
- Why aren't heads rolling at the IRS?
- Do we pay attention to roads and bridges now?
- Yahoo may be going after Hulu
- Apple's first computer could fetch $450,000
- AT&T adds sneaky fee onto its wireless bills
- Soaring ER use adds more pain to health costs
- Netflix gets 'Arrested Development' stars cheap
MARKET UPDATE
[BRIEFING.COM] Stocks entered the weekend on a mixed note as the S&P 500 shed 0.1% while the Dow ended with a gain of 0.1%.
The major averages began the day on a lower note as nine of ten sectors saw losses of more than 0.5%.
The consumer staples sector was the lone exception as the group spent the entire day in positive territory thanks to the relative strength of Dow component Procter & Gamble (PG 81.89, +3.19). The second-largest staple stock advanced ... More
More Market News
TOP STOCKS
Try as the bears might, they couldn't break US stocks. But investors still face frothy prices and considerable headwinds.
MSN MONEY'S
- Shared
- Commented
- Viewed
