For years, I greatly admired and was almost in awe regarding the success and strategies of Warren Buffett, a man who had a discipline and stuck to it. Not only did he make himself very wealthy, he also made a lot of money for many other people as well. Unfortunately, my admiration has been dramatically altered by his actions, commentary, and investment strategy of late. Several years ago, Buffett stated the death of the financial system would be brought about by the usage of derivatives. He never actually said he wouldn’t use them, however, he implied derivatives could be like “the Sword of Damocles,” just waiting to drop and fatally wounding the worldwide economy.
Buffett ratio tells us India is currently a great long-term buy; Do PE firms agree? (VCCircle)
Even as both could be clubbed as long-term investors, what works for Warren Buffett may or may not work for PE firms. If there is one thing that I have learnt from crunching numbers for a good part of my working life, it is that the more you flog them, the higher the probability of statistics screaming and spewing out something which actually makes sense. A few years ago, I came across the term Buffett ratio, which seemed to make a whole lot of logic at first glance, but has a big ceteris paribus tagged to it. To be fair, let me acknowledge that it probably deserves a discussion only because of the person who suggested it. After all, Warren Buffett is considered by many as the god of long-term investments.
Why Warren Buffett Is Dead Wrong On Gold Prices (GLD, GDX) (ETFDailyNews)
Gold investing is one of the most popular aspects of the commodity world. In recent years it has established a cult following that swear by the hard asset as one of their favorite capital allocations. But for every gold bug that exists, there is someone else who writes the precious metal off completely. One of the biggest gold-haters our there is Warren Buffett, as the Oracle of Omaha has been adamant about his lack of interest in the asset as well as its complete lack of use to him as an investor. Buffett once stated that gold is “dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head”.
Media General loss widens on newspaper sale charge (Reuters)
Media General Inc reported a higher quarterly loss on charges incurred from the sale of some of its newspapers to Warren Buffett’s Berkshire Hathaway Inc, but revenue from its broadcasting operations rose. Media General agreed to sell almost all its daily and weekly newspapers to a Berkshire unit in May. The company is shutting down or selling off its remaining print assets.
Investors continue to seek safety (CBSNews)
Warren Buffett once said this about market timing: “Our stay-put behavior reflects our view that the stock market serves as a relocation center at which money is moved from the active to the patient.” Unfortunately, it seems that investors are still harming themselves by ignoring his call for investor patience. The price-to-earnings ratio of the S&P 500 Index is now around 14 (its historical average), while the return of one-month Treasuries is around 0 percent (when its historical average is around 3 percent). These figures indicate that the equity risk premium, or the expected return of stocks above riskless one-month Treasures, appears quite high compared with the historical average.
Coca-Cola can’t shuck rising corn costs (MSN)
Coca-Cola (KO -0.88%), one of the most ubiquitous brands in the world and one of Warren Buffett’s favorite stocks, is a powerhouse in the business world. But there are some forces even more powerful than Coke. Namely, a force of nature. Drought has caused rising corn prices and taken a bite out of Coke’s bottom line. Rising costs held back the soft drink maker in its second quarter — though higher sales volume meant impressive revenue numbers — in a sign that higher costs are taking a bigger chunk out profits for major corporations. Coca-Cola posted second-quarter earnings Tuesday that tallied $2.79 billion in profits, or $1.21 a share. That was down from $2.8 billion ($1.20 a share) a year earlier.
Berkshire Hathaway’s Premium: Confidenc (InvestorPlace)
Back in February, InvestorPlace Editor Jeff Reeves asked if the best days of Berkshire Hathaway (NYSE:BRK.A, BRK.B) and its legendary leader Warren Buffett were just a fading memory. After all, Berkshire hasn’t delivered the type of earnings investors and the Street have become accustomed to over the years. Indeed, full-year 2011 results fell 21% against 2010, and the company returned a mere 2.36% annually in the past five years.
