Ya Know Bob, as soon as I saw this msnbc news alert go off at the bottom of my screen, I immediately thought of you. How splendid you have posted it for the viewers before I could:
< http://www.msnbc.com/news/748026.asp?0na=x2101211-
ENVY AND DISLIKE of the United States have fueled rage against the country even as the ability to build a nuclear device has spread, Buffett said Sunday at the final day of Berkshire Hathaway Inc.’s annual meeting.
“We’re going to have something in the way of a major nuclear event in this country,” said Buffett, the firm’s chief operating officer. “It will happen. Whether it will happen in 10 years or 10 minutes, or 50 years ... it’s virtually a certainty.”
Washington and New York would be the top two targets because terrorists want to traumatize the country and kill as many people as possible, Buffett said.
Chemical or biological attacks are similarly high risks, Buffett said.
Buffett is the second-richest man in the world with holdings in Coca-Cola Co., American Express and The Washington Post, but his main business is insurance.
Berkshire Hathaway’s insurance companies — particularly General Re Corp. — took a $2.4 billion underwriting loss because of the Sept. 11 terrorist attacks in New York and Washington.
The companies are now writing policies on terrorism but limiting their liability in any nuclear, biological or chemical attack. Only the federal government can ultimately insure property and other damage from a major terrorist attack, Buffett said.
The 71-year-old Buffett and vice chairman Charlie Munger met with the news media the day after they spent six hours answering questions from some of the more than 10,000 Berkshire shareholders gathered for the annual meeting.
REBOUND SIGNALLED FOR BERKSHIRE
Meanwhile, Buffet signaled a roaring return to profit Saturday for his Berkshire Hathaway Inc., but warned that frauds and sloppy accounting were rife in American business, while returns on stock investing would likely be lower over the next few years than they have been.
“You’re going to see great results from our insurance businesses,” Buffett told an estimated 10,000 shareholders at Omaha’s Civic Auditorium Saturday at the firm’s annual meeting.
Berkshire, whose main business is insurance, made an operating loss last year as it was hammered by billions of dollars in Sept. 11 insurance claims. It is now making up the ground as premium rates soar.
“He was more optimistic than we expected,” Matt Sauer, a portfolio manager at Oak Value Capital Management, told Reuters.
Berkshire’s insurance businesses, including reinsurer General Re and cut-price car insurer GEICO, made underwriting profits in the first quarter, Buffett said. Berkshire’s first-quarter results are due to be released this Friday.
But elsewhere, Buffett, and his long-time partner Munger, were less bullish on ways to make money, saying 6 percent to 7 percent was a fair return on investments in the current low interest rate environment.
“We have more money than ideas,” Buffett admitted, saying that finding good investments was not easy. Berkshire, which has grown to more than $110 billion in market value since Buffett took over in 1965, is always on the lookout for acquisitions.
“We wait for the fat pitch,” said Buffett, mentioning that he may be interested in buying firms in bankruptcy because of asbestos problems, but only if all liabilities had been dealt with. Buffett has repeatedly said he needs a single $15 billion or so acquisition to keep Berkshire growing.
ENRON ‘GROTESQUE’
Buffett and Munger were more vocal on the matter of Enron Corp., the collapsed energy trader, and other woes besetting American business.
“Enron was the most disgusting example of a business culture gone wrong,” said Munger, while Buffett called the firm’s behavior “grotesque.”
Neither showed much sympathy for Arthur Andersen, Enron’s auditor, while they also criticized Wall Street investment banks, blamed by some for fueling the Enron debacle. “Can it be sold?” is the only question banks consider now when dealing with stocks, Buffett said, with no regard for investors.
Both relaunched their familiar tirade against stock option accounting, saying options should be treated as an expense, just as other types of compensation are. When they are not, it misleadingly boosts profits and hurts shareholders by diluting the value of their shares.
“It’s shameful,” said Buffett, who is backing Federal Reserve chairman Alan Greenspan’s recent attempts to persuade regulators to insist on changes in stock option accounting. But he is pessimistic that changes will be made. “CEOs have their hands on the switch,” Buffett said. “They get what they want every year; consultants just fan the flames.”
Asked about the apparent spread of corporate fraud in the light of recent meltdowns, Buffett said he and Munger had so far avoided being fooled, but he had seen plenty of frauds in public U.S. companies.
“Many of the crooks look like crooks,” said Buffett. “Wall Street loves them as long as they are pushing out securities.”
Looking out for who uses EBITDA numbers is a good start in spotting frauds, Buffett said, referring to a style of financial reporting made popular by lossmaking Internet firms, which discounts interest, tax, depreciation, amortization and other one-time items from results. “They are either conning you, or themselves,” Buffett said.
Buffett predicted that derivatives — a major business for Enron — would also trip up other firms in the future. “There’s no place with as much potential for phony numbers as derivatives,” said Buffett. Munger went further: “To say derivative accounting in America is in the sewer is an insult to sewage.”
Buffett’s reinsurer, General Re, is currently unwinding its derivatives unit, taking some losses.
BUFFETT’S SECRET
Several Berkshire shareholders, from as far away as Hong Kong and South Africa, quizzed Buffett on his investing technique.
“There is no single metric I can give you that tells you now is a good time to buy stocks,” Buffett told one shareholder, who asked what calculations he should make to evaluate stocks. “People always want a formula;, it doesn’t work that way.”
The only way to value a stock, or a company, he said, is to estimate what cash a business will throw off over the course of its life, work out the value of that cash now, and buy it for less. “A great IQ is not needed to do well as an investor,” Buffett said. What is needed is the “ability to detach yourself from the crowd.”
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If man was supposedly created in gods image, then.....holy krap...we're all doomed.-sKallyWagger
“What a blessing such integrity keepers are to the congregation!”(5/15/02 WT magazine, pg. 27)
