{"id":370314,"date":"2010-02-27T13:55:00","date_gmt":"2010-02-27T18:55:00","guid":{"rendered":"tag:blogger.com,1999:blog-3087194156628161158.post-5363148439373798293"},"modified":"2010-02-27T14:04:42","modified_gmt":"2010-02-27T19:04:42","slug":"cnbc-warren-buffett-when-its-raining-gold-reach-for-a-bucket","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/370314","title":{"rendered":"CNBC: Warren Buffett: “When It’s Raining Gold, Reach For a Bucket”"},"content":{"rendered":"

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Published: \t\t\t\t\t\tSaturday, 27 Feb 2010 | 8:22 AM ET <\/span><\/div>\n
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By: Alex Crippen
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Executive Producer<\/span><\/p>\n

Download the 2009 Warren Buffett Letter & 2009 Annual Report to Berkshire Hathaway Shareholders<\/span><\/a>
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<\/span>Warren Buffett has a new nugget of pithy advice for investors in his new letter to Berkshire shareholders<\/strong><\/strong><\/b>:<\/a> “When it’s raining gold, reach for a bucket, not a thimble.”<\/p>\n

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Warren Buffett<\/div>\n
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<\/span>Buffett recalls that last year’s letter called corporate and municipal bonds “ridiculously cheap” compared to U.S. Treasuries. And we says Berkshire did “back” that view by making some purchases, but “I should have done far more. Big opportunities come infrequently.”<\/p>\n

<\/span>Still, it’s not all regrets. Buffett writes, “We’ve put a lot of money to work during the chaos of the last two years. It’s been an ideal period for investors: A climate of fear is their best friend. Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance.”<\/p>\n

<\/span>Berkshire ended 2009 with $30.6 billion in cash, down from $44.3 billion at the beginning of 2008. Of that roughly 30 billion, $8 billion was “earmarked” for its then-pending acquisition of Burlington Northern Santa Fe.<\/p>\n

<\/span>Buffett reports the market value of Berkshire’s common stock portfolio stood at $59.0 billion at the end of 2009. That’s a gain of just over 70 percent from the $34.6 billion purchase price of those securities.<\/p>\n

<\/span>Berkshire also has positions in non-traded securities of Dow Chemical, General Electric (CNBC’s parent company), Goldman Sachs, Swiss Re, and Wrigley. All were bought in the last 18 months. Carrying value: $26.0 billion vs. an aggregate cost of $21.1 billion. Buffett says they generate a total of $2.1 billion a year in dividends and interest, while also providing a “significant equity potential.”<\/p>\n

<\/span>Buffett notes that Berkshire’s largest sales in 2009, ConocoPhillips, Moody’s, Procter & Gamble, and Johnson & Johnson, helped pay for the Dow, Swiss Re, and BNSF purchases.<\/p>\n

<\/span>Those sales were not motivated by a belief the stocks would fall in price. “Charlie (Munger) and I believe that all of these stocks will likely trade higher in the future.”<\/p>\n

<\/span>“A PAINFUL CONFESSION”<\/strong><\/b><\/p>\n

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<\/span>In his letter, Buffett admits to what he calls “a very expensive business fiasco entirely of his own making.”<\/p>\n

<\/span>Thinking that GEICO policyholders would be good credit risks, Buffett “unfortunately” came up with the “brilliant insight” that the insurance company should market its own credit card.<\/p>\n

<\/span>Buffett writes:<\/p>\n

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GEICO\u2019s managers, it should be emphasized, were never enthusiastic about my idea. They warned me that instead of getting the cream of GEICO\u2019s customers we would get the \u2013 \u2013 \u2013 \u2013 \u2013 well, let\u2019s call it the non-cream. I subtly indicated that I was older and wiser. I was just older.<\/p>\n<\/blockquote>\n

<\/span>Total losses: $50.3 million. Almost $100 million of troubled receivables were sold for 55 cents on the dollar.<\/p>\n

<\/span>BERKSHIRE’S STRONG 2009 UNDERPERFORMS STOCK MARKET<\/strong><\/b><\/p>\n

<\/span>Berkshire Hathaway had a strong 2009, but not strong enough to outperform the benchmark S&P 500 stock index.<\/p>\n

<\/span>In his letter, Buffett reports the company’s net worth increased by $21.8 billion last year.<\/p>\n

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Current DateTime: 07:46:34 27 Feb 2010
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