Thursday, October 23, 2014

A Holiday Present From Warren Buffett

At one time in my life I would never have recommended what I am about to suggest to you, dear reader, pick the pocket of someone else. However, if you believe in karma, you will have no trouble at all. The mark is Warren Buffett.
Because he is a hypocrite. Like many rich people, he will say all the right things in public, but his private actions are just the opposite. The man loves to be the center of attention and there is nothing wrong with that except when Warren has nothing to say, he will talk about things that he doesn't do, but offers advice to do these things. He recently backed President Obama's call to raise taxes on the rich and stated that he thought that workers in America needed a raise, especially those on the lower earning ladder. I have just made a few accusations, here is the basis of those claims.
Burlington Railway
He bought it, but the workers feared that he would cut hours, benefits and jobs. He publically reassured them that he only had positive ideas for growth. All would be well.
One year into ownership, he lobbied for Congress to permit engines and transport cars to be able to go into Mexico where he would center his repairs, thus killing jobs, hours and benefits for American workers. This action would also weaken the union which is his ultimate purpose.
He stated that renting is the better choice because a mortgage is based on interest rates that are higher than inflation, which means that you are over-paying for shelter.
He once said, "that derivatives are weapons of mass financial destruction." I happen to agree with that statement. I feel that this category of financial insurance needs to be regulated to the point that each party has the reserves to enter into the agreement. To put that into perspective, no one has any idea how much leverage is at stake in this market. Consider this: if an alien came to earth and wanted to buy it, the total GDP of all the plant's economies totals around $64T and the derivative market already exceeds $500T. No company can repay the damage if a chain reaction of bad events happen. This is why it is a weapon of mass destruction. By the way, Warren now uses them.
Do you need anymore reasons to take advantage of this rich boy? If there ever was a sure thing, this is it.
Earning Season
is here on Wall St. Warren's company trades under the stock symbol, BRK/B.  His two biggest holdings are Coca Cola and IBM. Both of these companies have reported declines in earnings and their stock prices have declined severely. It is estimated that Warren lost over $2.5b last week due to the two companies poor earnings. This is what I suggest: His stock is high and trades around $137 to $139 a share. I can't afford those prices, but an option is much cheaper. I would buy the next quarter in time because the recent price action won't be reflected in this quarter's report. I see his stock falling to around $120 per share which would make a nice Christmas present. Don't worry about Warren. His stock will eventually go back up and as of 2013, he was estimated to be worth over $58.5b. He can afford to give us all something and clear up his karma. Peace.