Warren Buffett said it would be “ridiculous” for the conglomerate not to do business with gun makers, noting that he doesn’t want to impose his political views on Berkshire’s investment decisions or business operations.
.. “I think what the kids are doing is very admirable, but I don’t think Berkshire should say we’re not going to do business with people who own guns,” Mr. Buffet said on CNBC. “I think that would be ridiculous.”
.. The companies could pare health-care expenses 3% to 4% through negotiating power alone, but the initiative intends to go further. Amazon CEO Jeff Bezos and JPM CEO Jamie Dimon are perfect partners, he said, because “we can make things happen. Our companies are big, yet we can still make things happen. We don’t have the bureaucratic problems or the constituency problems” that other large companies have.
Why Corporate Tax Cuts Won’t Create Jobs
I have never heard someone say, “I would have started a company, but tax rates were too high” or “I wouldn’t have started this company, but then George W. Bush cut tax rates, so I did.”
.. While I can imagine tax regimes that would create disincentives for entrepreneurship, we don’t have that situation today in America, where tax rates on capital gains (the primary way that founders of successful start-ups make money) are already far lower than rates on ordinary income. Indeed, some of the most admired entrepreneurs — Bill Gates, Steve Jobs, Jeff Bezos — started their companies under significantly higher tax regimes.
.. As Warren Buffett notes, “I have yet to see” anyone “shy away from a sensible investment because of the tax rate on the potential gain.”
.. My team and I are already intensely motivated to expand the company we manage, and lowering the corporate tax rate isn’t going to make us create jobs any faster.
.. What a tax cut would do is increase our post-tax profitability, which effectively transfers money from the federal government to our shareholders. One consequence of this would likely be a one-time increase in our stock price, but with no impact on our operations or employment plans.
.. but with interest rates at historical lows for years, American corporations have had no trouble getting capital.
.. By 2027, when they are fully phased in, four out of every five dollars in proposed tax cuts will flow to the top 1 percent, an egregious wealth transfer to those who least need it.
.. I believe tax cuts that deepen our already severe inequality in income and wealth are not in the long-term interests of any citizens, not even the very wealthy. Extreme inequality is corroding our civil society, poisoning our politics, and undermining our effectiveness as a nation.
Asset prices are high across the board. Is it time to worry?
With ultra-loose monetary policy coming to an end, it is best to tread carefull
IN HIS classic, “The Intelligent Investor”, first published in 1949, Benjamin Graham, a Wall Street sage, distilled what he called his secret of sound investment into three words: “margin of safety”. The price paid for a stock or a bond should allow for human error, bad luck or, indeed, many things going wrong at once. In a troubled world of trade tiffs and nuclear braggadocio, such advice should be especially worth heeding. Yet rarely have so many asset classes—from stocks to bonds to property to bitcoins—exhibited such a sense of invulnerability.
.. Rarely have creditors demanded so little insurance against default, even on the riskiest “junk” bonds. And rarely have property prices around the world towered so high. American house prices have bounced back since the financial crisis and are above their long-term average relative to rents.
.. If today’s asset prices have been propped up by central-bank largesse, its end could prompt a big correction. Second, signs are appearing that fund managers, desperate for higher yields, are becoming increasingly incautious. Consider, for instance, investors’ recent willingness to buy Eurobonds issued by Iraq, Ukraine and Egypt at yields of around 7%.
.. But look carefully at the broader picture, and there is some logic to the ongoing rise in asset prices. In part it is a response to an improving world economy.
.. A widespread concern is that the Fed and its peers have grossly distorted bond markets and, by extension, the price of all assets. Warren Buffett, the most famous disciple of Ben Graham, said this week that stocks would look cheap in three years’ time if interest rates were one percentage-point higher, but not if they were three percentage points higher.
.. But if interest rates and bond yields were unjustifiably low, inflation would take off—and puzzlingly it hasn’t. This suggests that factors beyond the realm of monetary policy have been a bigger cause of low long-term rates. The most important is an increase in the desire to save, as ageing populations set aside a larger share of income for retirement. Just as the supply of saving has risen, demand for it has fallen. Stagnant wages and the lower price of investment goods mean companies are flush with cash.
Meet the woman who gives bridge tips to Warren Buffett and Bill Gates
“There’s a big difference between Bill’s and Warren’s approach to learning the game,” Osberg said. “Bill is very scientific. He reads and studies on his own. Warren enjoys playing. Warren has good instincts.”
“When I first met Warren, his game was ragged around the edges,” she said. “We would play in the evening, and I would go through teaching points. He absorbed it like a sponge. Bill is the same way. Pretty big brain capacity.”
.. Some people have paid millions just to have lunch with the Oracle of Omaha. Osberg trades gossip with him on the phone and plays bridge remotely with him three to four times a week.
.. Bear Stearns, the investment firm that failed in the 2008 crash, was known as “the bridge firm” because its top management and many of its quant geeks were players.
.. Famed value investor and Buffett mentor Ben Graham reportedly compared the strategy of bridge to the discipline of long-term investing.
.. “As Graham pointed out, playing your hand right — in bridge or in the stock market — generally leads to success in the long term. It doesn’t, however, guarantee you success right now. Sometimes, playing a hand the right way leads to failure; sometimes picking a stock for the right reasons results in a loss.
.. “Bridge can teach an investor the importance of sticking to a well-thought-out strategy.”
.. “Everyone loses more than they win,” Osberg said. “Losing is much more common. You have to develop a thick skin.”
.. But Buffett, the steely capital allocator who moves world markets with mere utterances, had enough.
Osberg recalls: “He said, ‘I can’t do it anymore.’ It was so stressful, he didn’t want to play in the finals.”
.. “I had no business being in it at all,” Buffett said. “We were playing people not as good as Sharon was, but a whole lot better than I was. I dropped out. I was on the board of USAir at the time, so I said I had to get back to a board meeting. This was not great behavior on my part. I love the game, but playing in tournaments is too many hours of concentration.”
At her peak, Osberg was one of the top players in the world.
“I am no longer a serious player,” she said. “I used to play just to win. Now I play for the beauty of the game.