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2/28/09

Warren Buffett quotables from the new 2008 annual letter


The master is always good for a homespun phrase or two and as usual I've enjoyed reading his 2008 review letter (available on this link). Here are a few of the pearls that he's come up with this year.

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"This debilitating spiral has spurred our government to take massive action. In poker terms, the Treasury and the Fed have gone “all in.”"

"...our $58.5 billion of insurance “float” – money that doesn’t belong to us but that we hold and invest for our own benefit – cost us less than zero. In fact, we were paid $2.8 billion to hold our float during 2008. Charlie and I find this enjoyable."

"When investing, pessimism is your friend, euphoria the enemy."

"As we view GEICO’s current opportunities, Tony (Geico CEO) and I feel like two hungry mosquitoes in a nudist camp."

"At the moment, it is much better to be a financial cripple with a government guarantee than a Gibraltar without one."

"Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the symbols. Our advice: Beware of geeks bearing formulas."

"When I read the pages of “disclosure” in 10-Ks of companies that are entangled with these instruments (derivatives), all I end up knowing is that I don’t know what is going on in their portfolios (and then I reach for some aspirin)."

"The First Law of Corporate Survival for ambitious CEOs who pile on leverage and run large and unfathomable derivatives books: Modest incompetence simply won’t do; it’s mindboggling screw-ups that are required."