Warren Buffett: Das "Orakel" hat es gewusst ! .... lesenswert

[Ralph]

The Oracle Told You So

By Christopher Edmonds
Special to TheStreet.com
3/10/01 1:12 PM ET

The Oracle told you so.

While subdued in his message, choosing to use Aesop's "A bird in the hand is worth two in the bush" parable as his vehicle, Warren Buffett's annual letter to Berkshire Hathaway (BRK^A:NYSE - news - boards) shareholders admonished investors who didn't believe his thesis last year that stocks were wildly overvalued. "Last year, we commented on the exuberance -- and, yes, it was irrational -- that prevailed, noting that investor expectations had grown to be several multiples of probable returns," Buffett wrote in the letter released with Berkshire's annual report Saturday morning.

He cited a PaineWebber-Gallup poll from December, 1999 indicating that investors expected the annual equity return over the next decade to average 19%. "That, for sure, was irrational expectation: For American business as a whole, there couldn't possibly be enough birds in the 2009 bush to deliver such a return."

Buffett's actions in Berkshire's common stock portfolio suggest he took his advice to heart. After a year of sidestepping questions on his views about government criticisms of both Freddie Mac (FRE:NYSE - news - boards) and Fannie Mae (FNM:NYSE - news - boards), Buffett revealed that Berkshire sold nearly all positions in both organizations. At the end of 1999, Berkshire owned 59.5 million shares of Freddie Mac worth over $2.8 billion. Berkshire did not disclose its position in Fannie Mae in the 1999 report, as Buffett does not disclose specific equity positions smaller than a billion dollars.

Buffett's view of his other financial holdings appears mixed. Disclosures in his annual report indicate that Berkshire's stake in American Express (AXP:NYSE - news - boards) remained unchanged after the company's three-for-one stock split in April. He decreased Berkshire's position in Wells Fargo (WFC:NYSE - news - boards) from 59.1 million shares to just over 55 million.

And, while Berkshire's positions in Coca-Cola (KO:NYSE - news - boards), Gillette (G:NYSE - news - boards) and [/b]The Washington Post[/b] (WPO:NYSE - news - boards) remain unchanged, Buffett isn't enamored with his portfolio or equities in general. "We see our equity portfolio as only mildly attractive," Buffett wrote. "We own stocks of some excellent businesses, but most of our holdings are fully priced and are unlikely to deliver more than moderate returns in the future. We're not alone in facing this problem: The long-term prospect for equities in general is far from exciting."

Instead, Buffett appears to have focused on the debt market, indicating that Berkshire bought the high-yield bonds of a few issuers -- "very few, the category is not labeled junk without reason" -- as well as additional positions in "high-grade, mortgage-backed securities."



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"We have embraced the 21st century by entering such cutting-edge industries as brick, carpet, insulation and paint," Buffett wrote. "Try to control your excitement."
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In the letter he acknowledges Berkshire's involvement in the Finova Group FNV:NYSE - news - boards), yet chastises The Wall Street Journal for reporting that Berkshire purchased bonds issued by Conseco (CNC:NYSE - news - boards). Citing "people familiar with the matter," the Journal reported that Buffett purchased "several hundred millions dollars" of both Finova and Conseco debt.

"Well, not that familiar," Buffett quips regarding the Journal's sources. "True, we had purchased bonds and bank debt of Finova -- though the report was wildly inaccurate as to the amount. But to this day neither Berkshire nor I have ever bought a share of stock or a bond of Conseco."

Buffett also says Berkshire "established 15% positions in several midsized companies," although he does not reveal specifics, suggesting that all of the positions were under $1 billion. In SEC filings, Berkshire indicated that it recently established positions in H&R Block (HRB:NYSE - news - boards), Sealed Air SEE:NYSE - news - boards) and Mueller Industries (MLI:NYSE - news - boards).

A Solid Year for Operating Businesses

According to Buffett, Berkshire's book value increased 6.5%, outpacing the S&P 500 by nearly 16%. "Over the past 36 years, per-share book value has grown from $19 to $40,442, a gain of 23.6% compounded annually," he wrote.

That average annual gain bested the S&P by an average of nearly 12%. Buffett notes the year-over-year gains may remain small but will add up over time. "Charlie [Munger, Berkshire's vice-chairman] and I continue to aim at increasing Berkshire's book value at a rate that, over time, will modestly exceed the gain from owning the S&P 500," he wrote. "[A] small annual advantage in our favor can, if sustained, produce anything-but-small long-term advantage."

As we noted Friday, the major contributor to Berkshire's growth is its stable of operating companies. Buffett says the shift in focus has been profitable. "Lately the most promising 'bushes' have been negotiated transactions for entire businesses and that pleases us," he wrote, again invoking Aesop. "Many people assume that marketable securities are Berkshire's first choice when allocating capital, but that's not true."

Last year, Berkshire completed two acquisitions started in 1999 and initiated six. Combined, those eight companies accounted for nearly $13 billion in sales. Berkshire funded the purchases with 97% cash and only 3% in Berkshire stock. "We incurred no debt in making these purchases, and our shares outstanding have increased only one-third of 1%," He notes. "Better yet, we remain awash in liquid assets and are both eager and ready for even larger acquisitions."

What kind of businesses is Buffett courting? In typical Buffett style they are mundane businesses with one common theme: They make money. "We have embraced the 21st century by entering such cutting-edge industries as brick, carpet, insulation and paint," he wrote, noting the thrill of such purchases. "Try to control your excitement."



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A pin lies in wait for every bubble. And when the two eventually meet, a new wave of investors learns some very old lessons.
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And his strategy isn't likely to change anytime soon. If anything, the past year has added more ammunition to his anti-tech stance, although Berkshire operating companies such as Geico, Borsheim's and his home furnishings units have embraced technology and the New Economy to leverage traditional sales.

"At Berkshire, we make no attempt to pick the few winners that will emerge from an ocean of unproven enterprises," he wrote, alluding to technology companies. "We're not smart enough to do that and we know it. I'm the fellow, remember, who thought he understood the future economics of trading stamps, textiles, shoes and second-tier department stores."

Two factors helped push the acquisition pace last year: a sense by business owners that a cooling economy would prompt slowdowns in their businesses, and a lack of speculative -- or junk bond -- financing that pushed valuations down. Buffett acknowledged that many of the businesses bought by Berkshire last year may experience slower sales this year, but said he isn't concerned. "The declines make no difference to us, given we expect all of our businesses to now and then have ups and downs."

Buffett suggested Berkshire's most significant acquisition last year was Shaw Industries, a Georgia-based carpet manufacturer. With annual sales of about $4 billion, Shaw is second only to Berkshire's insurance business. Quipped Buffett: "Now, if people walk all over us, we don't mind."

The insurance business presented challenges in 2000. "Policyholder growth at Geico slowed to a halt as the year progressed," Buffett said. Still, things are looking up. Ajit Jain, Buffett's reinsurance guru, landed a reinsurance policy with a $2.4 billion premium from a British company. He also revealed that the company wrote a disability policy for the Texas Rangers on Alex Rodriguez, or A-Rod, a policy Buffett said "probably also set a record for disability insurance." The Rangers are paying a record $252 million to their new shortstop in hopes he can lead them to the World Series.

Absent from the letter is Buffett's view on Berkshire's potentially expanding role in the electric power business. In 1999, Berkshire acquired Mid-American Energy, an electric utility and independent power producer. Last year Buffett indicated that Berkshire might "make additional commitments" in the field. Buffett's letter mentioned the Mid-American purchase, but is surprisingly quiet about the business.

Source: TheStreet.com
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Ralph

[Ralph]

Gestern habe ich ein Posting über das "Orakel aus Omaha" ins Amerika-Forum gestellt. Ich hoffe jeder hat ihn gelesen, denn er enthält sehr interessante Einsichten in die weitere Entwicklung der Märkte.

Heute nun, bringt Bill Meehan eine sehr gute Einschätzung dessen, was im zweiten Halbjahr vielleicht NICHT passieren könnte ..... aber was viele so sehnlichst erwarten.


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Don't Look for a Second-Half Miracle

By Bill Meehan
Special to TheStreet.com
3/12/01 8:52 AM ET

Amid an increasing number of earnings warnings, topped off by Intel's warning and Cisco's announced layoffs, the Nasdaq Composite Index continued to plunge, after a meager attempt to break above and hold the 2250 area failed. No amount of gibberish by still-bullish strategists and optimistic blather from Fed officials could stem the bubble's aftermath.

The broader market has been performing much better than it had been throughout most of the past few years. However, value has already caught up with growth for the most part on a five-year basis, after having lagged so substantially for so long. Traders continued to flock to cyclicals in anticipation of an economic rebound, but it seems premature to think that the folks who got it all wrong before now have got it right. Yes, the employment data and, to a lesser extent, retail sales indicate that the economy hasn't collapsed.

Not the Season to Turn

However, with the economy shedding 190,000 manufacturing jobs in January and February and tech companies aggressively cutting costs, it's a bit much to believe that the economy will turn come the second half -- especially when one considers that the plunge in consumer confidence began well before the tech sector was clearly in such dire straits. (I know most economists disparage confidence as a leading indicator, which is one of the reasons it's apt to be very important.)
And, lest we become too secure in the fact that apart from tech stocks, things are just swell, that wasn't the case on Friday. Valuations are now such that things won't be so swell in the immediate future, either.

In Warren Buffett's annual letter to Berkshire Hathaway shareholders were these words of wisdom: "Nothing sedates rationality like large doses of effortless money. ... The fact is that a bubble market has allowed the creation of bubble companies, entities designed more with an eye to making money off investors rather than for them." He also stated that the business model for many IPOs was too often "the old-fashioned chain letter." "We own stocks of some excellent businesses, but most of our holdings are fully priced and are unlikely to deliver more than moderate returns in the future," he wrote. "We're not alone facing this problem: The long-term prospect for equities in general is far from exciting." Ending with the statement that Berkshire Hathaway is eager to hear from businesses that meet its six acquisition criteria, he also stated, "We are not interested, however, in hearing suggestions about
purchases we might make in the general stock market."

Potential Downside

I was most taken by the fact that much of Buffett's large Fannie Mae and Freddie Mac positions has been distributed to the masses, which is what most prudent investors should also consider. Financials and retailers continue to look very vulnerable to significant downside, as both will suffer from a worse-than-expected economic environment and have been aggressively bought by funds recently. These groups are also apt to be for sale if we continue to see net outflows from equity mutual funds, as was the case last month.

We're in the initial capitulation stage, as industry analysts have, for the most part, thrown in the towel. However, until the selling pressure spreads throughout the broader market and volume picks up substantially, a real bottom won't likely be made. It's going to be very ugly once the Wall Street clowns try to climb over themselves to get out of the Volkswagen, but then it'll be time to drive away with some juicy bargains.

Let's hope my targets of the Nasdaq Composite at 1500 and the S&P 500 at 985 aren't too optimistic. It's good to be back, and Tuesday I'll try to share some impressions that I got from overseas investors.

Source: TheStreet.com
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Die Meinung von Bill Meehan, der alles andere als ein sturer und ausgemachter "Bär" ist, ist sehr interessant und wirft schon das eine oder andere Fragezeichen auf den Markt.

Könnte es sein, dass es Jahre dauern wird, bis sich die Aktienmärkte wieder erholen ? .... einige Indices könnten/müssten dann noch gewaltig unter die Räger kommen !

Ich weiss, in einer Zeit, in der nur Negatives um einen herum zu hören ist, greift man vielleicht öfters solche Artikel auf, aber fundamental betrachtet, gibt es im Moment KEINEN Grund, in Aktien zu investieren ! ..... selbst Trader haben es zunehmend schwerer.

Was meint Ihr ? .... sind wir alle zu negativ eingestellt ? .... suchen wir jetzt nur noch das bewusst schlechte ? .... kann es sein, dass Aktien auf Jahre hinweg schlecht laufen werden (wie damals in den 60ern) ?

Ralph

[Ralph]

Ich führe den Waren-Buffett-Gedächtnis-Thread mal mit einer weiteren Meldung heute fort:

Buffett Says He's Not Buying Stock
By Jeffrey Hodgson

LONDON (Reuters) - Legendary investor Warren Buffett on Tuesday said his Berkshire Hathaway investment company had been doing little buying in stock markets and suggested shares remained overvalued even after recent falls.

The billionaire stock picker also said the U.S. economy was in the grip of sharp slowdown which had already begun to hit some of Berkshire's businesses.

``We're not doing a lot of buying. We're buying more planes than we are stocks,'' Buffett told a press conference here to promote Berkshire's Executive Jet unit.

Asked when it would be a good time to begin buying stocks following recent falls, Buffett said ``When businesses sell in the market for less than they're worth.''

Dubbed ``the sage of Omaha,'' Buffett has became one of the world's wealthiest men through savvy investments he made as head of Nebraska-based Berkshire, which holds large stakes in Coca-Cola Co., Gillette Co. and Washington Post Co..

Buffett owns just over 30 percent of Berkshire, which made him No. 4 on Forbes magazine's global rich list last year, behind Bill Gates and Paul Allen of Microsoft Corp. and Larry Ellison of Oracle Corp..

The Berkshire chief executive drew heavy criticism in recent years for his decision not to invest in technology, which he saw as overvalued and due for a fall. Instead, he opted to stick to businesses with solid earnings which he felt were out of favor.

His decision was vindicated when Berkshire reported net profits up 114 percent for 2000 even as tech markets crashed.

Buffett told reporters he had not bought any technology stocks despite the sharp fall in their prices.

Asked about the prospects for the U.S. economy, Buffett said he did not know if there would be a recession, but that U.S. was in the grip of a ``sharp'' slowdown and he would ``be surprised if it ends tomorrow.''

``There's no question there's been a significant slowdown in the American economy which hits a great many of the Berkshire Hathaway businesses,'' Buffett said.


OLD ECONOMY CUTTING EDGE

Those businesses include such unfashionable ``old-economy'' businesses as paint, carpet and insulation manufacturers which Berkshire bought at the end of 2000 and early this year.

In his most recent letter to shareholders, Buffett described them as ``cutting-edge industries'' and jokingly urged shareholders to ``control your excitement.''

Buffett said the wide holdings of the firm gave the company insight into the direction of the wider economy.

He said Berkshire's jewelry retailers had begun to see a slowdown last November and that had carried through to its furniture businesses earlier this year.

But he said the slowdown had not yet begun to impact the NetJets program of Berkshire's Executive Jet Inc. unit. NetJets is a program of fractional aircraft ownership, a sophisticated form of time-sharing in which buyers share a pool of planes, buying as big or small a block of access as they want.

``It hasn't hit so far, and I can tell you it has hit our other businesses,'' Buffett said.

``The real money in this business will be if anybody cancels a plane and I find about it early, it would be a good stock to short probably...it's a great leading indicator,'' he added with a laugh.

Asked if he had any advice for investors, Buffett suggested they follow his example and ``do what you understand.''

Ralph

[Ralph]

Auch an diesem Wochenende gibt es wieder Interessantes vom Omaha'schen Orakel, Warren Buffett !

Buffett Warns of Financial 'Dream World'

OMAHA, Neb. (Reuters) - Warren Buffett told his followers to scale back unreal expectations of his firm Berkshire Hathaway Inc. (NYSE:BRKa - news), as the billionaire investor warned that corporate America's hopes for profit growth, and investors' assumptions of returns, were entering a ``dream world.''

``The probability of us achieving 15 percent growth in earnings over an extended period of years is so close to zero it's not worth calculating,'' said Buffett, known as the ``Oracle of Omaha'' to the 5,000-or-so Berkshire shareholders packed into his home town's Civic Auditorium for the firm's annual meeting on Saturday.

``And nor do we think any large company in the United States is likely to (post such growth),'' said Buffett, reckoning that only two or three Fortune 500 firms might be able to hit 15 percent profit growth consistently over a long period.

Investors, pumped up by advisers after a decade-long bull market, and led on by grand promises from companies, now have unreal expectations of returns, warned the 70-year-old Buffett, who has built up his $100 billion Berkshire by slowly patching together old-line businesses and making canny stock investments.

``Fifteen percent (return on stock investments) is a dream world,'' warned Buffett.

``It's simply crazy to have such very high expectations,'' added Charlie Munger, Buffett's 77-year-old partner at Berkshire, and respected investment sage in his own right. ''Years ago 15 percent return was regarded as impossible, now they say 'so what'''

A return of 6 percent a year was more realistic, the pair warned, rather than the 9 percent or more that pension fund managers now promise.

For Buffett, that means a natural slowing in the phenomenal growth of his combined insurance firm, holding company and investment vehicle that has made thousands of shareholders millionaires and made him an investing legend.

Since 1965, when Buffett bought a small textile mill called Berkshire Hathaway to use as the base for his investments, the book value of its shares has increased about 24 percent per year -- twice the rate of growth of the S&P 500.

In that time, Berkshire's stock price has risen from $12 in 1965 to $67,005 a share at the close of the New York Stock Exchange on Friday, making Buffett one of the most revered, and emulated investors.


BIG DEAL ON THE HORIZON

The problem for Berkshire now, Buffett said, is finding enough firms to buy to keep growing.

``The bigger you are, the fewer opportunities there are,'' said Buffett, who is now looking for a major acquisition.

``What we'd really like is a $10 or $15 billion acquisition,'' he said, but warned that finding good deals that size was not easy.

Buffett's only purchase that large so far was U.S. reinsurer General Re, which he bought for about $22 billion in 1998.

The U.S. utility sector was now a likely target for their money, said both Buffett and Munger, assuming that current laws restricting ownership of publicly held utilities are removed, as is expected.

``The production of electricity is an enormous business -- its not going away,'' said Munger. ``Its not at all inconceivable that may do something in that field.''

Europe, too, was a promising place for deals, Buffett suggested, though he said that he had received no offers to buy businesses when he was in Europe last month.

``We don't have a masterplan,'' said Buffett. ``We'll do whatever comes down the pipe,'' adding that he expected Berkshire to make on average two deals a year as it looks to grow, envisaging as many as 40 deals over the next decade and a half. That could more than double the size of Berkshire, which at present owns about 30 businesses.

Buffett repeated his preference for buying whole companies rather than stocks, and took a sideswipe at the confused state of stock investing in the U.S. today.

``Anyone who says you should be in 'growth' or 'value' (stocks) doesn't understand investing,'' said Buffett. ``I cringe when I hear it; it just doesn't make any sense''.

Growth is a natural result of value, said Buffett, who plans to stick with his tried and tested method of buying companies with distinct advantages over competitors -- what he calls a ``moat'' to protect them -- and watching the value in the businesses convert itself into growth over time.

This ``get rich slowly'' method of investing, said Buffett, has few followers these days, as many lacked the patience, or the ability to value businesses in the right way.


ANTI-TECH TRIUMPH

One Berkshire shareholder thanked Buffett at the meeting for avoiding technology stocks, marking a reverse from last year's meeting, when some questioned Buffett's anti-tech stance, as Berkshire's returns fell way behind the soaring Nasdaq.

Since then, Berkshire's stock has climbed, while many high-flying technology stocks have lost more than 90 percent of their value.

Buffett defended his position by saying very few internet-based firms will generate any real wealth over the long term -- beyond the instant riches nabbed by promoters and Wall Street.

Many new tech firms simply ``monetized the hopes and dreams of millions of people,'' said Buffett, as they raised huge amounts of cash from the stock market. ``Lots of money was transferred from the gullible to the promoters,'' he said, as investors chased after ``easy money''.

Wall Street was the main benefactor of this ``huge trap'', said Buffett. ``Not by great performance, but by great promotion''.

Buffett attacked a conspiracy between companies, their consultants and Wall Street analysts in manufacturing earnings to suit unreal growth expectations, particularly in 'new economy' firms, charging that some current accounting practices were deceptive. ``A lot of companies don't want to account for expenses,'' he said.


THE SUCCESSION PLAN

Buffett told his shareholders not to worry about his health, and said even if he should die, the business was in safe hands. :ek

Rumors that Buffett was seriously ill spooked investors last year, though he only had an operation to remove a benign colon polyp.

``I feel great,'' Buffett answered one shareholder, who quizzed him about his cholesterol level, given his steady diet of Dairy Queen ice cream, See's candies and Coke.

Even if he were to die, Buffett told shareholders that his succession plan -- revealed to a select few last year -- would ensure the future of the business.

Under that plan, his joint role of overseeing Berkshire's operating subsidiaries and looking after investments would be split into two jobs, thought the likely successors were not named.

``There's no point saying who those people would be,'' Buffett said. ``It might change.''

Berkshire watchers expect Lou Simpson, the 64-year-old controller of investments at GEICO, Berkshire's cut-price car insurer, to take over the all-important role of looking after Berkshire's $30 billion or so in stock investments.

Whatever happens, the majority of Berkshire's investments would do well, said Munger, who at 77, is not part of any succession plan. ``We have a lot of momentum that would go on very nicely with the present management gone.''
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Ralph