Warren Buffett - A Housing Moron Too!

Apparently in the past he said that housing would have bottomed by now.

Single family homes only look cheap in Florida and other places that have been over-developed. And they only look cheap because of record-low, unsustainable mortgage rates.

NYC had 3 housing crashes in the 1970s alone. Meanwhile all these bull-market housing Morons think that today, somehow, the housing market correction is going to happen without NYC-area real estate dropping hardly at all - which it hasn't!

Here's the link for his latest.

See also - Warren Buffett - STEALING From Taxpayers!.

Warren Buffett - STEALING From Taxpayers!

Okay, first of all, even though BAC stock is on sale for less than $7 a share....the guy, this RESCUER, would only buy 6%-dividend-paying PREFERRED STOCK.

That means the common shares, what the lumpen masses own, can and most likely will be diluted all the way down to zero and he'll still be in line to be paid his 6% dividend.

And who'll be paying it?

TAXPAYERS!!!

With all the backdoor bailouts we're already funding Bank of America to the tune of billions per year. Buffett's first dividend is essentially already coming from us.

The idea that this guy is a genius is nonsense. Recall he sold ALL OF HIS SILVER around $5 or $6 - at the bottom! (Silver is $43 today.)

And from the article I cropped above....it looks like this Moronic 'old coot' is still averaging up on his shares of Wells Fargo.

Mark my words that stock will be his undoing - his ignominious swan song.

The guy is nothing short of a complete jerk.  Not only is he *managing down* his own taxes and *talking them up* for the rest of us....he has to basically STEAL from the kitty too!

Learn From Buffett

So I see that silver hit $50 an ounce recently.

A lot of sages have been vindicated on that one - notably Jim Rogers who's long been saying that silver (and palladium) had better ROI prospects than gold.

Check out that chart. Do you see that low in the mid-late 90s?

Around $5 an ounce is where Warren Buffet dumped a ginormous silver investment. That was when breakthroughs in digital photography destroyed the old camera technology which had constituted huge industrial demand for silver. Recall Eastman Kodak's stock (a Dow Jones Industrial component) got absolutely crushed.

So what else is that *sage* doing now that we can learn from?

I say take a good look at Wells Fargo. Buffett, while a long-time investor, arrogantly added to this investment in the high 20s.

To be clear for a few Morons....I'm saying to short the stock just as I am via long-term puts. It's probably time for me to buy some more now that I think of it. (I just did today actually.)

Two Familiar Fools - John Mauldin And Warren Buffett

From MSN Money:

Buffett's Huge Derivatives Bet Proves Costly

Shares of Warren Buffett's insurance holding company are on the ropes this month, plunging 30% in part because the famed investor dabbled in an area of the market he has long publicly derided: derivatives. And due to a tangled web of financial relationships, they may be taking Goldman Sachs shares down with them.

Investors are concerned about a $37-billion bet that Buffett made last year that U.S. and world equity values would be higher in 15 to 20 years than they were then, when the Dow Jones Industrials were trading around 13,000. Through his firm, Berkshire Hathaway, Buffett sold option contracts, known as "naked puts" to an undisclosed group of investors for around $4.85 billion, reportedly using Goldman as broker.

Because of its solid-gold credit rating, Berkshire Hathaway was not required to put up collateral to make this trade. But now rumors are flying on Wall Street that the owners of the contracts have demanded that broker Goldman Sachs put up collateral for the rest of the amount due. Since the value of the trade could be infinite, the collateral demands are said to be large, and fears that Goldman will struggle to make good on its obligation has panicked shareholders. Indeed one theory making the rounds this week is that Buffett put $5 billion into Goldman at around $125 per share in September not as an investment but to help provide funds for the collateral.

Okay, and this is the only slight *defense* of Warren Buffett I'll put forth, selling *naked puts* is not equivalent to credit derivatives and CDOs - those are what Warren was referring to by "weapons of mass destruction". He's not a hypocrite, just a foolish perma-bull.

Why would Warren want to add a *$37 billion long* to his portfolio. HE'S ALREADY FREAKING LONG THE MARKET. No doubt his insurance companies are already FREAKING LONG THE MARKET via their investments.

Warren simply made a large bet, levering up his portfolio - AND he did it at bad prices. He should have at least waited until this year, when the Dow was 5,000 points lower. Do y'all even think he'll be alive in 15-20 years?

Now here's John Mauldin:

"Isn't this the oracle that called derivatives, 'financial weapons of mass destruction'?"

I personally think that Warren made a very good bet. I would be shocked if the Dow was not at 13,000 in 20 years. Inflation will do most of that heavy lifting. But it does make for an interesting discussion now.

Okay, John. It most certainly WAS NOT A GOOD BET. His timing sucked. So not only did he get a sh*t strike price, now that the market is substantially lower, instead of buying *oversold* stocks, he has to deploy his capital to a margin call.

Why do these guys all lick each other's jocks?

The Hilarious Jim Cramer

"My record of being right from 1980 to 2007 is, I think, unparalleled." - Jim Cramer, 11/07/08.

Hah! Very funny, Jim.

You really have to watch people with their *track records*. In 2006-2007, all you saw advertised by mutual funds and money managers was their *5 year returns*. Not a one was touting their *10 year returns* because those included the 2000 NASDAQ crash.

Similar to Jim Cramer, other bulls like Rich Karlgaard and Ken Fisher have also based their bullish bias upon the slender reed of their own 25 years of market experience.

What they failed to understand or account for, was the fact that interest rates have been declining over that time period. They overlooked the importance of multi-year bull market in bonds on their equity returns.

We're all biased by personal experience and we're all prone to get swept up by the momentum of short-term success....

So we must read history for intellectual ballast.

Note that Jim's buying Wachovia - which is the same as buying Wells Fargo - my biggest short position.

Wells just floated a secondary last week at $27.

Short term history tells us that not a single bank this year has *raised capital* and not fallen substantially lower.



The most recent example is Goldman Sachs who, in late September, sold a preferred stake to Warren Buffett, gave him warrants at $115, and then after the public waxed euphoric about the *genius's* blessing, Goldman peddled $2.5 billion in stock to the sheeple at $123.

Right now Goldman is trading 71.82 - only a month and a half later.

Wells Fargo and that turd Wachovia are going down, hard.

My record in the past 6 weeks is UNPARALLELED - if I do say so myself.