March 14, 2006
AT LEAST HE PUT HIS MONEY WHERE HIS BDS IS:
Buffett's Billion-Dollar Boo-Boo (Jerry Bowyer, Mar 14, 2006, Human Events)
In his annual letter to the shareholders of Berkshire Hathaway, Warren Buffett acknowledged that his bet against U.S. currency had collectively cost them almost $1 billion. Buffet wrote, "My views on America’s long-term problem in respect to trade imbalances, which I have laid out in previous reports, remain unchanged. My conviction, however, cost Berkshire $955 million pre-tax in 2005. ..."
Just like Walter Mondale still thinks the Japanese will eclipse us....
Posted by Orrin Judd at March 14, 2006 5:36 PM
He'll be right if we do not allow foreigners to whom we pay $s for goods to repatriate them by investing in dollar denominated assets like real estate, companies that manage ports, appliance companies and oil companies.
Posted by: JAB at March 14, 2006 6:05 PMHe puts a lot of other people's money there, too, which could get him in trouble one of these days.
This story gets me thinking--if there were an investment house or mutual fund with a Wal-Mart/Fox News strategy of combining low prices & a pitch to the middle-to-lower class with an unabashed "Bet on America" message & investment strategy, it would probably do remarkably well, and be hated desperately by the Left.
Posted by: Timothy at March 14, 2006 6:06 PMI've read that nobody's ever made any money in forex trading based on macroeconomic trends, but maybe that only applies to the "little people" - like myself.
Posted by: Noam Chomsky at March 14, 2006 7:56 PMA great book to recommend to you: China's global reach: markets, multinationals, and globalization by a Chinese commentator george zhibin gu. It gives vast cutting-edge ideas about current global affairs. A must-read for anyone interested to get a large picture about investment, economy and politics. And its stlye is fun too.
Posted by: Jack at March 14, 2006 8:33 PMTranslation: "It just cost you oodles of dollars for me to indulge in a position brought on not by changes in actual economic events, but by an irrational hatred for the current occupant of the White House. I plan to fight it out along this line to the last drop of your money."
Posted by: Mikey at March 15, 2006 7:55 AMBuffett made his money by avoiding efficient markets. He sought out inefficient markets and exploited them ruthlessly.
His bet against the dollar violated his own rules: He went into an efficient market and acted on emotion. The results vindicated his rules.
Irony sets in with unusual severity.
AOG:
Soros actually bet on a microeconomic irrationality.
The English Pound had a fixed rate of exchange with the German Deutsche Mark, but the two nations were experiencing radically different economic trends, and so there was a huge gap between interest rates in Germany and England.
Soros wagered that the currency link would have to be severed, and on September 16, 1992, he was vindicated.
If the exchange rate had not been fixed, but instead floated, then it would have been a macroeconomically-based wager.
Posted by: Noam Chomsky at March 15, 2006 1:58 PMI just hope Krugman was his adviser.
Posted by: Genecis at March 15, 2006 4:12 PMTrackBack
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» Paying The Cost To Short The Boss, Revisited from Ed Driscoll.com
In August, we linked to an American Prowler article on Warren Buffett, who was gleefully shorting the dollar on the foreign exchange markets:Warren Buffett is bearish on the United States, and he's bullish on Europe. For the first time in... [Read More]