Bernanke vs. Buffett: Who's Right on the Economy?

Bernanke vs. Buffett: Who's Right on the Economy?

Moody's cut its rating on Warren Buffett's holding company two notches,

Buffett's Berkshire loses top rating
Moody's cut its rating on Warren Buffett's holding company two notches, saying investment losses were hurting the company's ability to meet its funding needs.

(Source CNN Money)
NEW YORK (Reuters) -- Moody's Investors Service cut its credit ratings on Berkshire Hathaway Inc. from Aaa, the top rating, saying the recession and investment losses at insurance operations of investor Warren Buffett's holding company reduced its ability to support funding needs.
Wednesday's cut to Berkshire's rating means Moody's no longer has a Aaa rating on any company with significant financial-services operations.
Moody's cut the ratings on Omaha, Neb.-based Berkshire (BRK-A) to Aa2, the third-highest investment grade, and cut to Aa1, the second-highest, its ratings on Berkshire's reinsurance subsidiary National Indemnity Co and bond insurance arm Berkshire Hathaway Assurance Corp.
The downgrades come more than a month after Berkshire reported a 62% drop in profit, the worst year since Buffett took over 44 years ago. The outlook for all the ratings is stable, Moody's said, indicating an additional rating change is not anticipated over the next 12 to 18 months.
http://money.cnn.com/2009/04/08/news/companies/berkshire_moodys_downgrade.reut/index.htm?postversion=2009040908

Update April 8, 21.00 CET

Berkshire's Class A shares were up $2,330, or 2.6 percent, at $91,290 in afternoon trading after earlier rising to $92,880, their highest since January 16, Reuters data show.
Wells Fargo said on Thursday it expects quarterly profit excluding preferred stock dividends of 55 cents per share, more than twice what analysts expected.
The San Francisco-based bank said it benefited from a surge in mortgage lending, lower credit losses than analysts feared, and strong results from newly-acquired Wachovia Corp.
As of December 31, Berkshire said it held 304.4 million Wells Fargo shares, for a 7.2 percent stake.
Wells Fargo shares rose as much as 32.6 percent on Thursday, which would give Omaha, Nebraska-based Berkshire an instant paper profit from that stake of close to $1.5 billion.

Berkshire net sinks; Buffett says economy in shambles

Berkshire net sinks; Buffett says economy in shambles

NEW YORK (Reuters) - Berkshire Hathaway Inc, Warren Buffett's insurance and investment company, barely broke even in the fourth quarter because of losses on derivatives contracts tied to the stock market, which caused its net worth to tumble $10.9 billion.
Buffett also offered a gloomy outlook for the economy, saying in his annual letter to Berkshire shareholders: "The economy will be in shambles throughout 2009 -- and for that matter, probably well beyond."
Quarterly net income for Omaha, Nebraska-based Berkshire sank 96 percent to $117 million, or $76 per Class A share, from $2.95 billion, or $1,904, a year earlier, based on company filings. Revenue fell 12 percent to $24.59 billion.
Results were battered by $4.61 billion of pretax losses on about 251 derivative contracts largely tied to the longer-term performance of four stock market indexes and the creditworthiness of higher-risk "junk" bonds. The losses were twice what Berkshire suffered in the prior nine months.
A deteriorating economy and tight credit led to steep declines in stock prices and an increase in junk bond defaults, resulting in losses for Berkshire. While the losses exist on paper, accounting rules require Berkshire to report them with earnings.
Berkshire's net worth fell to $109.27 billion at year end from $120.16 billion at the end of September, and $120.73 billion at the end of 2007.
For all of 2008, profit at Berkshire fell 62 percent to $4.99 billion, or $3,224 per share, from $13.21 billion, or $8,548. Earnings were the lowest since 2002. Revenue fell 9 percent to $107.8 billion.

Warren Buffett loses billions
Berkshire Hathaway drops $10.9bn in investor's worst year since 1965.

(Source The Telegraph.co.uk)
Mr Buffett described derivatives as "dangerous", but he remained convinced that they were a good bet. "I believe each contract we own was mispriced at inception, sometimes dramatically so. If we lose money on our derivatives, it will be my fault," he wrote.
Nineteen of top 20 stocks in Berkshire's US portfolio, valued at $51.9bn, fell last year. Coca-Cola, its top holding, dropped 26pc and American Express plunged 64pc.
Mr Buffett, 78, said he would maintain Berkshire's "Gibraltar-like financial position" during 2009 by retaining "huge amounts of excess liquidity, near-term obligations that are modest and dozens of sources of earnings".
But he offered a gloomy outlook, saying: "The [US] economy will be in shambles throughout 2009 – and probably well beyond."
He also upped his attack of the US government's bail-out of his insurance and banking rivals. "Though Berkshire's credit is pristine – we are one of only seven AAA corporations in the country – our cost of borrowing is now far higher than competitors with shaky balance sheets but government backing," he wrote. "At the moment, it is much better to be a financial cripple with a government guarantee than a Gibraltar without one."

Warren Buffett's Letters to Berkshire Shareholders
Updated February 28, 2009
BERKSHIRE HATHAWAY INC. SHAREHOLDER LETTERS (Link Download PDF)

Buffett prefers to release the annual report and shareholder letter on Saturdays, when markets are closed and investors can digest his thoughts slowly and in peace.

About Warren Buffett and his Portfolio

Many people are interested in Warren Buffet, we noticed it also at this blog when people search for Warren Buffett. It is quite logical, there is a recession, the stock markets have slumped, Warren Buffett is one of the wealthiest people in the world, and he speaks to the imagination.
Mr Buffett is sometimes called: "The Oracle of Omaha". A lot of people simply want to know what he buys and why. An answer may be in the following quote.

"Be fearful when others are greedy and greedy when others are fearful."

(Warren Buffett)

That's why we give a few links, there are many on the Internet.

Warren Buffett's Stock Portfolio simply attempts to provide you with the current holdings for Mr. Buffett, so that you can then research those stocks for yourself.
We all know how successful Warren Buffett has been, and tracking his company's holdings at Berkshire Hathaway (BRK-A) has been thought to be a good strategy for investing your own hard-earned money.

Berkshire Hathaway - The official Homepage of Mr Buffett's Investment Company