Warren Buffett

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    • Mon Aug 11th 11:56 AM | Rating: 0 0
      Commented on:
      Gold: The Commodity Bull Market Isn't Over
      Idiots continue to make comparisons with Oil and Gold and miss the biggest point of gold

      i) Oil is Used, Consumed and is a direct driver of GDP
      ii) Every Gold ever mined just adds up to the pile of existing gold (not getting consumed).

      You don't need Gold to create the next Google
      View article »
    • Mon Apr 28th 09:39 AM | Rating: 0 0
      Commented on:
      Let's Think Long and Hard About Extending Those Bush Tax Cuts
      When any article mentions US$ exchange rates without even talking about productivity, you can bet your depreciating dollar the author is half-ignorant.
      The best way to combat inflation, dollar depreciation and all the other armagaddon scenarios is to increase productivity.

      Mass Internet is only 10 years old. We havn't even begun to explore its full potential on the business economy. Communications cost are falling like crazy and most business havn't even harnessed 1% of its full potential. Smart Ideas which improve productivity are disseminated more quickly than ever before. All this means is there is higher chance that productivity growth has a better chance of crushing inflation.
      The Silicon Valley is still the forefront of many Business Innovations and US productivity growth relative to Advanced countries will be higher. India/China are coming of a really low base and they will continue to grow at double digits. But, that only means that US can export more stuff to these countries and correct the trade deficit

      I have yet to see one article even scratching this issue. The problem with all these authors is they have a view that
      i) George Bush is an idiot
      ii) Americans are idiots

      and will always look around to pull data to support that ignoring everything else

      Last checked the Googles, the iPhones, the Facebooks, are still coming out of USA and not these super smart countries who are so perfect and whose currencies the market has blindly appreciated
      View article »
    • Sun Apr 27th 22:07 PM | Rating: 0 0
      Commented on:
      Stock Market Overvaluation and the Passive Investor
      Only Clueless idiots compare absolute P/E ratios.

      P/E ratios should always be normalized to a Risk-Free Rate (10 Year Treasury for Eg)

      An investor can
      i) Buy a $100 Bond and earn $3.5 perpetually (Current 10 Year Yield) or
      ii) Buy $100 S&P 500 and earn $5 (If forward P/E is 20) plus a growth of historic 7%

      Any smart investor will find stocks cheaper than bonds.

      OTOH, if Interest Rates go up to say 10%, then the same P/E of 20 becomes expensive

      Bottomline, P/E should be normalized to underlying Risk Free Rate.
      (Of course just like future earnings, you have to take future expectations of Interest rates)

      If you are conservative, you can even compare dividend yield to check the valuation

      And to the second set of idiots who insist on buying Gold,

      Asset = Stuff that produces Cash Flow
      Real Estate is an asset (Produces Rent Dividends)
      Stocks are assets (Produces Earnings which stockholders have claim to)
      Bonds are assets (Gives out coupons)
      Gold, Commodities produces no revenues let alone Cash Flows. Gold/Commodities are like Tulip Bulbs and Internet Companies. Its only worth is what the next idiot is going to pay for it.

      Anything that produces cash flow can be fairly valued (It is a different issue that it may trade at a different price). But stuff that produces no cash flow can never be valued and invariably clueless investors pay a higher price and when the price comes crashing down blame George Bush and the Fed
      View article »
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