patrick.net

His absolute returns with Bershire Hathaway have been impressive

Actually, he is doing so-so recently, and barely keeps up with the S&P 500. He no longer has this 25+% return.

“My teacher is actually more impressed with Buffett.”

I am more impressed with the lottery winners. They got 20000000000% return in 1 or 2 days.
Beat that, WB !

These "successful" stories are just like market tools.
The reality is that you will lose money if you chase the past winners, such as internet stocks or CA houses.

Here is a more updated article :

http://www.housingwire.com/2011/02/28/warren-buffett-sees-housing-recovery-to-start-within-a-year

And plans for him to invest?
Warrent Buffett is bullish on housing!

American in Japan says

I wonder in which states / cities he will buy?…

Berkshire isn't going to be buying houses. It will be buying businesses that supply the housing market, at regional or national scale.

xenogear3 says

His absolute returns with Bershire Hathaway have been impressive

Actually, he is doing so-so recently, and barely keeps up with the S&P 500. He no longer has this 25+% return.

All the data on this are on page one of Buffett's letter to the shareholders in the 2010 annual report so it's easy enough for people to judge for themselves. As a Berkshire shareholder I'm very happy with the performance of the business and am not expecting anything other than what Buffett has been saying for many years - modest outperformance of Berkshire book value growth relative to the S&P index. If Berkshire can't deliver that on say a rolling 5 year basis then it would be time to think about alternatives.

American in Japan says

I wonder in which states / cities he will buy?…

He won't be buying houses. Buying a house is like buying a car, a bubble gum, a washing machine. It's a consumer good that costs money to maintain and store.

Like it has been pointed out, he may invest into companies that build. Only thing I'm skeptical here is that he actually mentioned that.

As a big time investor he never lets his investment moves known ahead of time, because if he does he will only get to invest when everyone else is invested and there is no gain left. Historically, he has always invested, and than 6 month later told others to invest pumping up his own investment this way.

He knew about the housing crash, but kept a lid on it knowing BH would lose money if he did talk. It's the same thing here. So him "being bullish" is usually motivated by his previous investments into banks most likely, and nothing more.

He isn't out there to help others, he is there to make profit for BH.

Sure seems to me like he knows how to time the housing market as well as stocks, based on his Laguna Beach home purchases:

http://wikimapia.org/10402794/Warren-Buffet-039-s-Laguna-Beach-house

The investor, businessman and philanthropist owns this house since 1971, when he bought it for 150,000. Buffet owned another house next to this one, which he sold in 2004 for $3,500,000.

Buy Low, Sell High.

so BH is a ponzi.

looks like Dr. Doom on board now too

http://www.cnbc.com/id/15840232?video=3000007817&play=1

I think it's completely true that for most Americans, it makes sense to buy a house. *A* house. To live in. *MOST* meaning not all and not in all markets. Like, do you have a steady income? Does that income comfortably support the price you are paying with a 30 year fixed mortgage? Do you plan to stay at least five years? Etc.

I am quite sure it makes sense to buy in a vast majority of this country assuming the above is true. I have bought twice.

I am not buying in the SF bay area though, until and unless prices get in line with my fundamentals, i.e. I can pay something close to rent on the equivalent.

ChrisLA says

Like it has been pointed out, he may invest into companies that build. Only thing I’m skeptical here is that he actually mentioned that.

From the 2010 annual letter:

A housing recovery will probably begin within a year or so. In any event, it is certain to occur at some point. Consequently: (1) At MiTek, we have made, or committed to, five bolt-on acquisitions during the past eleven months; (2) At Acme, we just recently acquired the leading manufacturer of brick in Alabama for $50 million; (3) Johns Manville is building a $55 million roofing membrane plant in Ohio, to be completed next year; and (4) Shaw will spend $200 million in 2011 on plant and equipment, all of it situated in America. These businesses entered the recession strong and will exit it stronger. At Berkshire, our time horizon is forever.

So does this say which additional companies they'll acquire? No. But you don't have to read very far between the lines to understand that Berkshire sees the recession is an opportunity to position itself for future growth, both organic and acquisition.

Again, Buffett gives plenty of warnings to those who will listen. And he's ignored, because few people want to listen and those who do are rarely the ones causing the problems. In the tech bubble, the finance bubble, the housing bubble, in every case he made clear public statements about what was going on. In every case he was ignored by most people. And in every case he took advantage of the resulting chaos to increase value for Berkshire shareholders. My kind of CEO (and he's costing me well under $1/year in salary and benefits, too!).

Doesn't Warren Buffet also own Clayton Homes, which along with it's lending company, were found liable for civil fraud in a TX case recently? If he owns housing in any form, of course he's going to say homeownership is best. Anyone who owns housing is saying that, and it's just shilling for personal gain. I don't know why Buffet is such a hero in this country...we canonize anyone who gets rich without questioning how they did it. That is why people like Donald Trump have their own TV show. This country is is on a slippery slope.

CSC says

I don’t know why Buffet is such a hero in this country…we canonize anyone who gets rich without questioning how they did it. That is why people like Donald Trump have their own TV show. This country is is on a slippery slope.

Please don't compare Warren Buffet to Donald Trump.

SF ace says

Having said that, Buffet built Berkshire into a 100B+ empire and did it the right way and that is why he is so respected. If there is a company that is built on long term shareholders, this is it. Warren Buffet does not covet short term profits at all. The shares are 120K+ each, that eliminates 95% of potential investors.

Actually the B class shares are $85/each after they were split during the BNSF acquisition, unfortunate since it does seem to have introduced a less desirable class of shareholder.

toothfairy says

looks like Dr. Doom on board now too
http://www.cnbc.com/id/15840232?video=3000007817&play=1

why not! the people who bought his book and paid for his lectures were the ones who fueled his purchase. you think you can write a book and score a couple mill + charge several hundred a head to speak at a lecture... nice gig if you can get it.

oddhack says

SF ace says

Having said that, Buffet built Berkshire into a 100B+ empire and did it the right way and that is why he is so respected. If there is a company that is built on long term shareholders, this is it. Warren Buffet does not covet short term profits at all. The shares are 120K+ each, that eliminates 95% of potential investors.

Actually the B class shares are $85/each after they were split during the BNSF acquisition, unfortunate since it does seem to have introduced a less desirable class of shareholder.

You are talking about me, pal. But I don't really offend that easily. I bought around $75 or so. :)

Buffet, as I understand it, did and does the classic thing of investing in strong companies that are cheap, i.e. that have good return on capital and high earnings compared to price. No interest in the prevailing winds of trendy stocks. I've started a new investment strategy that is basically that, and I am confident it will do well (it has already).

I tend to object when people like Buffet are compared to Donald Trump or let's say "the Zuck". BIG difference. I use facebook every day but I don't think it would be a good investment - and by the way I think it was just a good clean version of social networks that already existed, not some genius breakthrough. It happened to be adopted by people in more than just the "kid" demographic and that had a snowball effect, nothing particularly brilliant about it.

I wish the media and the American people were less star crazy. I have met a few big celebrities and I think it's kinda cool, but then I see the people practically passing out in ecstasy and worship in their presence and I just think, "oh God please go away weirdo". I am sure that's what the celebs think too.

oddhack says

Again, Buffett gives plenty of warnings to those who will listen. And he’s ignored, because few people want to listen and those who do are rarely the ones causing the problems. In the tech bubble, the finance bubble, the housing bubble, in every case he made clear public statements about what was going on. In every case he was ignored by most people. And in every case he took advantage of the resulting chaos to increase value for Berkshire shareholders. My kind of CEO (and he’s costing me well under $1/year in salary and benefits, too!).

I have seen and heard Buffet for a long time. He never mentions what he will invest into or what is good prior to doing it himself. It's his whole model.... Invest first and than tell others to do so to raise his own investment.

He only mentions things after he invests. He didn't tell people to invest into banks after the collapse, but quickly did it himself and later mentioned it's a good time to do it.

I really will not trust Buffet to look out for America, Buffet has to look out for BH shareholders first and he certainly does. I understand that he cares to some extend, but his priorities are always going to be BH. He is going to invest into building companies maybe, he isn't going to go buying houses. Buying RE would not fit his business model, BH doesn't flip junk.

Mark_LA says

Sure seems to me like he knows how to time the housing market as well as stocks, based on his Laguna Beach home purchases:
http://wikimapia.org/10402794/Warren-Buffet-039-s-Laguna-Beach-house

The investor, businessman and philanthropist owns this house since 1971, when he bought it for 150,000. Buffet owned another house next to this one, which he sold in 2004 for $3,500,000.

Buy Low, Sell High.

PasadenaNative says

Mark_LA says

Sure seems to me like he knows how to time the housing market as well as stocks, based on his Laguna Beach home purchases:

http://wikimapia.org/10402794/Warren-Buffet-039-s-Laguna-Beach-house

The investor, businessman and philanthropist owns this house since 1971, when he bought it for 150,000. Buffet owned another house next to this one, which he sold in 2004 for $3,500,000.

Buy Low, Sell High.

Whoa, my mistake, never mind.

ChrisLA says

I have seen and heard Buffet for a long time. He never mentions what he will invest into or what is good prior to doing it himself. It’s his whole model…. Invest first and than tell others to do so to raise his own investment.
He only mentions things after he invests. He didn’t tell people to invest into banks after the collapse, but quickly did it himself and later mentioned it’s a good time to do it.

Buffett isn't touting individual stocks (and why should he? He's not a stockbroker). But he gives many very clear signals of his thinking. He warned of the dangers of financial derivatives many years before they got to be a problem, including in testimony to Congress. He gave similar warnings of the internet bubble before it burst. For that matter anyone who listened to him and was brave enough could have bought WFC around $9, or many other stocks at deeply depressed prices, and done very well for themselves.

"Telling others" has nothing to do with the Berkshire business model. Berkshire does well because it buys or owns significant fractions of businesses that have good fundamentals and because Warren is a supremely savvy allocator of the cash Berkshire throws off in such abundance.

Just as an example, this is about as clear a "stock recommendation" as Buffett ever makes, from the CNBC interview the other day:

BECKY: Well, someone else writes in— Sergio from Mexico, he wants to know, "Is there some reason not to use the elephant gun on the stock market? For instance, increasing Wells Fargo to the 10 percent limit, or buying a lot more Wal-Mart?"

BUFFETT: Yeah. Well, we've done— in the last year we've done both of those things. We bought some more Wal-Mart, some more Wells Fargo.

BECKY: Mm-hmm.

BUFFETT: And I like those businesses, and I like the prices at which they sell, and I like the managements. But if I had my choice, I would rather buy a big business if it's all our criterion. But we have 60-plus billion in common stocks, and those are pieces of businesses that I like. And most of those businesses— now, Wells Fargo we couldn't buy. We can't buy a bank. You know, Coca-Cola isn't going to sell out to us, Wal-Mart isn't going to sell out to us. So we would be very happy owning 100 percent of those businesses at the prices at which they sell, or otherwise I wouldn't buy the stock.

Is he telling anyone to buy WFC or WMT? No, but he's saying that Berkshire continues to buy them and that he is very comfortable with them as investments.

oddhack says

ChrisLA says

I have seen and heard Buffet for a long time. He never mentions what he will invest into or what is good prior to doing it himself. It’s his whole model…. Invest first and than tell others to do so to raise his own investment.

He only mentions things after he invests. He didn’t tell people to invest into banks after the collapse, but quickly did it himself and later mentioned it’s a good time to do it.

Buffett isn’t touting individual stocks (and why should he? He’s not a stockbroker). But he gives many very clear signals of his thinking. He warned of the dangers of financial derivatives many years before they got to be a problem, including in testimony to Congress. He gave similar warnings of the internet bubble before it burst. For that matter anyone who listened to him and was brave enough could have bought WFC around $9, or many other stocks at deeply depressed prices, and done very well for themselves.
“Telling others” has nothing to do with the Berkshire business model. Berkshire does well because it buys or owns significant fractions of businesses that have good fundamentals and because Warren is a supremely savvy allocator of the cash Berkshire throws off in such abundance.

So he is saying its potentially a good time to invest into companies that build?
His own words were always "invest into an industry you understand". Which is why he invests into finances, since he understands those so well.

ChrisLA says

So he is saying its potentially a good time to invest into companies that build?

His own words were always “invest into an industry you understand”. Which is why he invests into finances, since he understands those so well.

I wouldn't read that into what he's said. Only that Berkshire's own housing-related businesses are weathering the recession well and are positioning themselves for future growth at whatever time that growth resumes - which might be in a year or so, could be much later, but probably won't be much earlier.

So if you agree with Buffett that growth will eventually resume and you have reason to believe you know of a healthy housing-related business, then perhaps it is a good time to buy stock in that business.

It might be worth noting that aside from Clayton's manufactured homes biz, Berkshire does not build houses, but it owns in whole or part a variety of businesses that are suppliers to companies that build houses - brick, fastenings, structural elements, drywall, etc.

A mans character is displayed by what he does and not what he says.
The best way to judge a rich person is what he does with his money.
Buffet made billions of dollars and gave away most of it.His sense of fairness is so high that he
didn't want to give a "ovarian lottery" to his kids. How many people on this planet can do that ?
His contribution to the world in terms of asset allocation is so high compared to what he consumed from the planet.The guy single handedly produced billions of dollars of "wealth" in to the worlds economy by putting money in to right companies and probably spent less 0.001% of what he earned in his life time...indulging in burgers and driving old cars. He gives away all his money and does not indulge in any excesses.He does not keep the money for the family.He earns the money which is based on real increase in wealth. WHAT MORE PROOF DO PEOPLE NEED ?? I don't own bershire hathaway but have tremendous respect for this Guy. He told with a mega speaker to buy stocks at the exact bottom of the financial crises in 2008 but people still ignored him which shows that majority of the people are stupid!

This board use to be filled with rational people from 2004 -2008..now its just perma bears who come here for validation. I was one of the guys who use to be regular during the rational days of the board. Now, i come once a month to see what the heck is going on. No matter what you guys think, housing is not going down in bay area. I know its not going up either but if your 30 years fixed mortgage is equal to the rent you are willing to pay for a house, you should buy it. assuming you want to rent that house for that amount.

American in Japan says

And plans for him to invest?
Warrent Buffett is bullish on housing!
I wonder in which states / cities he will buy?…

Not really "housing" by itself..
buildings yes.. can be houses, apartments, commercial etc etc.

-- MiTeck: Five "bolt-on acquisitions" in the past 11 months.
-- Acme: Acquired the leading manufacturer of brick in Alabama for $50 million.
-- Johns Manville: Building a $55 million roofing membrane plant in Ohio.
-- Shaw: Planned spending of $200 million in 2011 on U.S.-based plant and equipment.

chanakya says

Now, i come once a month to see what the heck is going on. No matter what you guys think, housing is not going down in bay area.

Ever ?

Nice try Wong in trying to ignore data from 2009 and 2010

oddhack says

ChrisLA says

So he is saying its potentially a good time to invest into companies that build?
His own words were always “invest into an industry you understand”. Which is why he invests into finances, since he understands those so well.

I wouldn’t read that into what he’s said. Only that Berkshire’s own housing-related businesses are weathering the recession well and are positioning themselves for future growth at whatever time that growth resumes - which might be in a year or so, could be much later, but probably won’t be much earlier.
So if you agree with Buffett that growth will eventually resume and you have reason to believe you know of a healthy housing-related business, then perhaps it is a good time to buy stock in that business.
It might be worth noting that aside from Clayton’s manufactured homes biz, Berkshire does not build houses, but it owns in whole or part a variety of businesses that are suppliers to companies that build houses - brick, fastenings, structural elements, drywall, etc.

Thanks odd, I dont think housing will do great. I think businesses that provide services will do well though. Kind of like I don't think cars will go up in price, but I think toyota will kick butt.

Can you post any stock symbols in the investment forum? Maybe we can get something going with investment on the forums down there that works out well.

Interesting. Lots of "impugn the motives" replies. I guess you could look at it three ways (off the top of my head):

1. "Buffett is a legendary and reputable value investor. If he says home ownership makes sense for most Americans, that must mean real estate is at least a reasonable (not terrible) investment."

2. "Buffett has investments in real estate or other companies that benefit from home ownership. Therefore, he is biased and he is simply looking to boost the value of his investments in order to sell at a higher price."

3. "Buffett says home ownership still makes sense for most Americans. OK. I should do my own research, test the logic behind behind those conclusions, and see if it makes sense for me to act accordingly."

I'll go with #3. Like it says in Robert's Rules of Order:

"It is not allowable to arraign the motives of a member, but the nature or consequences of a measure may be condemned in strong terms. It is not the man, but the measure, that is the subject of debate."

chanakya says

Nice try Wong in trying to ignore data from 2009 and 2010

Thats Ok.. your ignoring the bubble pre 2000. Good Luck with that.

There is an important note in that letter. He didn't say everyone should go and buy a house.

His words were:
"But a house can be a nightmare if the buyer’s eyes are bigger than his wallet and if a lender – often protected by a government guarantee – facilitates his fantasy. Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford."

If you ignore that statement it really ignores the entire message of the letter.