Warren Buffett: He would love to buy those bundled mortgages, but only at "at market prices..."

[Juddog]

Warren Buffett is having a field day with the market right now. He'll be making hundreds of millions, if not billions, as even rock solid companies have had their stock price drop over the past couple weeks.

 

[chess9]

Warren Buffet supports the bailout because it will help him, particularly now that he has an interest in Goldman Sachs. LOL. He's playing you people like a fish.

-Robert

 

[mshan]

"IF THEY BUY THE ASSETS AT MARKET PRICE, I WOULD LOVE TO HAVE 1% OF THE PROFIT OR LOSS THAT RESULTS FROM BUYING THESE ASSETS FROM TROUBLED FINANCIAL INSTITUTIONS. THEY'RE COMPETITION IN BUYING THESE IS A BUNCH OF HEDGE FUNDS AND THE GOVERNMENT WITH ITS BORROWING COSTS, IF THEY BUY THEM AT MARKET, THEY WILL REALIZE A SIGNIFICANT PROFIT OVER TIME." (sorry for all capital letters, but I just copied and pasted from above)

The they Buffett is referring to is the governmment, I believe, and he again says if they buy at market prices, they will make money, and how much you actually pay for that specific investment / debt / toxic waste / whatever label is most appropriate.

Though again, I would guess it really depends upon what specifically you are buying.

I listen to what Barney Frank said on PBS, and even reading through some comments Obama made on the Senate floor yesterday, and it still sounds like they all think most likely hopeful outcome is to get most of our money back, or to break even (interest free loan?) at best.

 

[Juddog]

Originally posted by: mshan

"IF THEY BUY THE ASSETS AT MARKET PRICE, I WOULD LOVE TO HAVE 1% OF THE PROFIT OR LOSS THAT RESULTS FROM BUYING THESE ASSETS FROM TROUBLED FINANCIAL INSTITUTIONS. THEY'RE COMPETITION IN BUYING THESE IS A BUNCH OF HEDGE FUNDS AND THE GOVERNMENT WITH ITS BORROWING COSTS, IF THEY BUY THEM AT MARKET, THEY WILL REALIZE A SIGNIFICANT PROFIT OVER TIME."

(sorry for all capital letters, but I just copied and pasted from above)

The they Buffett is referring to is the governmment, I believe, and he again says if they buy at market prices, they will make money.

Though again, I would guess it really depends upon what specifically you are buying.

I listen to what Barney Frank said on PBS, and even reading through some comments made on the Senate floor yesterday, and it still sounds like they all think most likely hopeful outcome is to get most of our money back, or to break even (interest free loan?) at best.

Makes me wish I had a few million bucks lying around right now to sink into the market.

 

[mshan]

Charlie Rose interview of Warren Buffett is up on their website: http://www.charlierose.com/sho...on-with-warren-buffett


edit #1: about 12 minutes in, he again says "they very much need to tie it to market prices..."

edit #2: at 13:20, Charlie Rose asks question about getting most money back... (and Buffett keeps qualifying statements, at market, at market, distressed prices, ...)

edit #3: at about 14:20, Charlie Rose kind of starts to asking about preferred shares (why not do what Berkshire is doing)

edit #4: about 20:19: "innovators, imitators, and idiots" (Buffett's take on bubble psychology) :thumbsup:

edit #5: about 25:00: $700 billion could buy $2 trillion face value, IF you buy at right price... (indirectly, can we infer he just say $0.30 on the nominal dollar is right ball park number?); he previously said 20% drop in $20 trillion dollar residential market equated to $4 trillion in total losses, which could gum up system if fell in wrong places. Then specifically says "you don't want to pay artificial prices"

edit #6: about 29:00: starts asking about real "rescue" plan under new Obama administration; also makes comments that best case scenario is 6 month - 2 year recession; worst case scenario around 5 years (could be worse)

edit #7: about 35:00: Buffett says he believes in "mark to market"

edit #8: about 50:55: Buffett commenting on how well the Fed structured AIG deal, and then says they are likely to get their money back, maybe more, speaking very enthusiastically and not hedging his comments in any way with any market prices type comments.

edit #9: about 51:40: consequences of waiting "another 6 months"; unemployment bottoming at 9% vs. 7% (3 million additional job losses)


IMO, it now seems very obvious that Cramer is being very disingenuous when he keeps screaming about the next Great Depression and 30% unemployment (I think that's the number he claims). It also seems pretty obvious that when push comes to shove, he is advocating for his real constituents (his billionaire friends), and not his loyal viewers who sadly hang on his every word...

 

[LegendKiller]

Originally posted by: Juddog
Warren Buffett is having a field day with the market right now. He'll be making hundreds of millions, if not billions, as even rock solid companies have had their stock price drop over the past couple weeks.

He just bought preferred stock yielding 10% on a AAA company, where he'd get a fraction of that even weeks ago. Then he did the same thing with GS. That's 8BN in cash yielding $800MM annually, not even including appreciation of the stock, or options for common conversion.

 

[LegendKiller]

Originally posted by: Juddog
Warren Buffett is having a field day with the market right now. He'll be making hundreds of millions, if not billions, as even rock solid companies have had their stock price drop over the past couple weeks.

He just bought preferred stock yielding 10% on a AAA company, where he'd get a fraction of that even weeks ago. Then he did the same thing with GS. That's 8BN in cash yielding $800MM annually, not even including appreciation of the stock, or options for common conversion.

 

[LegendKiller]

Originally posted by: chess9
Warren Buffet supports the bailout because it will help him, particularly now that he has an interest in Goldman Sachs. LOL. He's playing you people like a fish.

-Robert

He supports the bailout because he has $50BN of his *OWN* money and billions of BRK invested in this country. He is so long this country that it makes anybody else look stupid.

He, and every other person in this country, has a vested interest in this country not falling off of the precipice.

 

[GTKeeper]

For all you Buffet Haters everywhere....

You should listen to the man if you want to LEARN something.

Back in the late 1990s during the internet bubble everyone was saying how Buffet is dumb by staying out of the market. He said that he didn't see anything of value to buy.... and he was right.


As for these market prices.... well to put it simply. If the government can purchase these assets at 22 cents on the dollar (which is what Meryll Lynch off-loaded THEIRS for) they will make a killing on this in the long run.

What he is NOT advocating, is the government going in there and buying these things at 50 or 60 cents on the dollar.....

He doesn't want the government overpaying. I don't see why people don't get that.

 

[chess9]

Originally posted by: GTKeeper
For all you Buffet Haters everywhere....

You should listen to the man if you want to LEARN something.

Back in the late 1990s during the internet bubble everyone was saying how Buffet is dumb by staying out of the market. He said that he didn't see anything of value to buy.... and he was right.


As for these market prices.... well to put it simply. If the government can purchase these assets at 22 cents on the dollar (which is what Meryll Lynch off-loaded THEIRS for) they will make a killing on this in the long run.

What he is NOT advocating, is the government going in there and buying these things at 50 or 60 cents on the dollar.....

He doesn't want the government overpaying. I don't see why people don't get that.

That's your interpretation of what he's saying, but Buffet benefits regardless of the price paid by the US Government, particularly now that he has a big stake in GS. Also, he's not saying any of these assets have ANY market value. What he isn't saying is more important than what he is saying.

The government should not be making it's policy based upon what one private investor is doing anyway. Buffet has given several Congressmen the benefit of his views, but his views are tainted by self-interest.

-Robert

 

[rchiu]

Originally posted by: chess9

Originally posted by: GTKeeper
For all you Buffet Haters everywhere....

You should listen to the man if you want to LEARN something.

Back in the late 1990s during the internet bubble everyone was saying how Buffet is dumb by staying out of the market. He said that he didn't see anything of value to buy.... and he was right.


As for these market prices.... well to put it simply. If the government can purchase these assets at 22 cents on the dollar (which is what Meryll Lynch off-loaded THEIRS for) they will make a killing on this in the long run.

What he is NOT advocating, is the government going in there and buying these things at 50 or 60 cents on the dollar.....

He doesn't want the government overpaying. I don't see why people don't get that.

That's your interpretation of what he's saying, but Buffet benefits regardless of the price paid by the US Government, particularly now that he has a big stake in GS. Also, he's not saying any of these assets have ANY market value. What he isn't saying is more important than what he is saying.

The government should not be making it's policy based upon what one private investor is doing anyway. Buffet has given several Congressmen the benefit of his views, but his views are tainted by self-interest.

-Robert

Self interest? You think he really needs more billions in his bank account? Please, he is one of the most generous philanthropic person in the whole world. Warren Buffet is absolutely correct, many of those asset at the current market valuation, is a good deal and can provide good return. If I can get my hands on a non-alt-a, non-subprime mortgage backed security for 50 cents on a dollar or less, I'd through 100k on it without hesitation.

 

[GTKeeper]

Originally posted by: chess9

Originally posted by: GTKeeper
For all you Buffet Haters everywhere....

You should listen to the man if you want to LEARN something.

Back in the late 1990s during the internet bubble everyone was saying how Buffet is dumb by staying out of the market. He said that he didn't see anything of value to buy.... and he was right.


As for these market prices.... well to put it simply. If the government can purchase these assets at 22 cents on the dollar (which is what Meryll Lynch off-loaded THEIRS for) they will make a killing on this in the long run.

What he is NOT advocating, is the government going in there and buying these things at 50 or 60 cents on the dollar.....

He doesn't want the government overpaying. I don't see why people don't get that.

That's your interpretation of what he's saying, but Buffet benefits regardless of the price paid by the US Government, particularly now that he has a big stake in GS. Also, he's not saying any of these assets have ANY market value. What he isn't saying is more important than what he is saying.

The government should not be making it's policy based upon what one private investor is doing anyway. Buffet has given several Congressmen the benefit of his views, but his views are tainted by self-interest.

-Robert

I am not sure you know what is at stake here. Unless you are an economist of some sort, I will believe Buffet over you.

The reason he bought GS and GE is because he got REALLY good terms on those purchases.

If we don't do anything, I will not feel sorry for you when you lose your job (if you have one) or are affected by this one way or another.

We are in the middle of a recession and either (like Buffet said) we will hit 7-8% unemployment or 10-11% potentially if we just sit on our hands. A 2 % difference is 6 million jobs.

 

[chess9]

Originally posted by: GTKeeper

Originally posted by: chess9

Originally posted by: GTKeeper
For all you Buffet Haters everywhere....

You should listen to the man if you want to LEARN something.

Back in the late 1990s during the internet bubble everyone was saying how Buffet is dumb by staying out of the market. He said that he didn't see anything of value to buy.... and he was right.


As for these market prices.... well to put it simply. If the government can purchase these assets at 22 cents on the dollar (which is what Meryll Lynch off-loaded THEIRS for) they will make a killing on this in the long run.

What he is NOT advocating, is the government going in there and buying these things at 50 or 60 cents on the dollar.....

He doesn't want the government overpaying. I don't see why people don't get that.

That's your interpretation of what he's saying, but Buffet benefits regardless of the price paid by the US Government, particularly now that he has a big stake in GS. Also, he's not saying any of these assets have ANY market value. What he isn't saying is more important than what he is saying.

The government should not be making it's policy based upon what one private investor is doing anyway. Buffet has given several Congressmen the benefit of his views, but his views are tainted by self-interest.

-Robert

I am not sure you know what is at stake here. Unless you are an economist of some sort, I will believe Buffet over you.

The reason he bought GS and GE is because he got REALLY good terms on those purchases.

If we don't do anything, I will not feel sorry for you when you lose your job (if you have one) or are affected by this one way or another.

We are in the middle of a recession and either (like Buffet said) we will hit 7-8% unemployment or 10-11% potentially if we just sit on our hands. A 2 % difference is 6 million jobs.

I never said to do nothing. I'm only saying that Buffet is going to do what is best for Buffet and policy should be made based upon what is best for the country as a whole. This idea that what is good for GM or Buffet is good for America died about 30 years ago. I listened to Nobel Prize winning economists, Stieglitz in particular. We have other ways to deal with these issues and the bailout is like rabbit hunting with a Howitzer. Congress is full of self-interested paid off wimps who fold at the earliest sign of a foul wind. Wall Street has probably bought enough of them to get this deal through.

-Robert

 

[Juddog]

Originally posted by: GTKeeper
For all you Buffet Haters everywhere....

You should listen to the man if you want to LEARN something.

Back in the late 1990s during the internet bubble everyone was saying how Buffet is dumb by staying out of the market. He said that he didn't see anything of value to buy.... and he was right.


As for these market prices.... well to put it simply. If the government can purchase these assets at 22 cents on the dollar (which is what Meryll Lynch off-loaded THEIRS for) they will make a killing on this in the long run.

What he is NOT advocating, is the government going in there and buying these things at 50 or 60 cents on the dollar.....

He doesn't want the government overpaying. I don't see why people don't get that.

I don't hate him at all - I admire him. I wish I had his level of market knowledge.

 

[GTKeeper]

Originally posted by: chess9

Originally posted by: GTKeeper

Originally posted by: chess9

Originally posted by: GTKeeper
For all you Buffet Haters everywhere....

You should listen to the man if you want to LEARN something.

Back in the late 1990s during the internet bubble everyone was saying how Buffet is dumb by staying out of the market. He said that he didn't see anything of value to buy.... and he was right.


As for these market prices.... well to put it simply. If the government can purchase these assets at 22 cents on the dollar (which is what Meryll Lynch off-loaded THEIRS for) they will make a killing on this in the long run.

What he is NOT advocating, is the government going in there and buying these things at 50 or 60 cents on the dollar.....

He doesn't want the government overpaying. I don't see why people don't get that.

That's your interpretation of what he's saying, but Buffet benefits regardless of the price paid by the US Government, particularly now that he has a big stake in GS. Also, he's not saying any of these assets have ANY market value. What he isn't saying is more important than what he is saying.

The government should not be making it's policy based upon what one private investor is doing anyway. Buffet has given several Congressmen the benefit of his views, but his views are tainted by self-interest.

-Robert

I am not sure you know what is at stake here. Unless you are an economist of some sort, I will believe Buffet over you.

The reason he bought GS and GE is because he got REALLY good terms on those purchases.

If we don't do anything, I will not feel sorry for you when you lose your job (if you have one) or are affected by this one way or another.

We are in the middle of a recession and either (like Buffet said) we will hit 7-8% unemployment or 10-11% potentially if we just sit on our hands. A 2 % difference is 6 million jobs.

I never said to do nothing. I'm only saying that Buffet is going to do what is best for Buffet and policy should be made based upon what is best for the country as a whole. This idea that what is good for GM or Buffet is good for America died about 30 years ago. I listened to Nobel Prize winning economists, Stieglitz in particular. We have other ways to deal with these issues and the bailout is like rabbit hunting with a Howitzer. Congress is full of self-interested paid off wimps who fold at the earliest sign of a foul wind. Wall Street has probably bought enough of them to get this deal through.

-Robert

Thats just the nature of our inneficient government. What I like about Buffett is that he never points fingers, but focuses on the solution. He is not saying who's fault it is or what, he basically states that the housing bubble allowed for this kind of economic enviornment and the 'bailout' is a step we need to take to get back on track.

If he profits from this, then great, it will leave even more money for the charities, which I think is a much more honorable way of spending the massive money as opposed to many other 'rich guys' out there.

 

[Wonderful Pork]

why should anybody pay OVER market value for these assets? If the market value is 20c, then buy it for 20c. The banks still get the assets off the books and the taxpayer isn't completely hosed.

Of course the banks would want us to pay $50 for something worth 20c.

Currently I don't support the bailout (I agree something is needed). I would support it if it had mark-to-market and language stating the 700B will pay the market rate based on mark-to-market. Which will be calculated with oversight on the numbers.

If banks fail after that, they weren't meant to be anyway. They knew what they were getting into, or should have done the HW to find out before purchasing the MBS. It certainly should not be my problem (I know, I know...it IS my problem now and all that).

 

[GTKeeper]

Originally posted by: Wonderful Pork
why should anybody pay OVER market value for these assets? If the market value is 20c, then buy it for 20c. The banks still get the assets off the books and the taxpayer isn't completely hosed.

Of course the banks would want us to pay $50 for something worth 20c.

Currently I don't support the bailout (I agree something is needed). I would support it if it had mark-to-market and language stating the 700B will pay the market rate based on mark-to-market. Which will be calculated with oversight on the numbers.

If banks fail after that, they weren't meant to be anyway. They knew what they were getting into, or should have done the HW to find out before purchasing the MBS. It certainly should not be my problem (I know, I know...it IS my problem now and all that).

One thing that I hope they DO NOT suspend is mark to market accounting.

I mean changing accounting rules just to make the numbers 'look good' is stupid IMHO. Banks will be happy to offload this stuff at 20 cents on the dollar.... they would have already offloaded them if there were other banks that had capital to buy them. Yea they will get beat up over it, but some will survive.

 

[Wonderful Pork]

Originally posted by: GTKeeper

Originally posted by: Wonderful Pork
why should anybody pay OVER market value for these assets? If the market value is 20c, then buy it for 20c. The banks still get the assets off the books and the taxpayer isn't completely hosed.

Of course the banks would want us to pay $50 for something worth 20c.

Currently I don't support the bailout (I agree something is needed). I would support it if it had mark-to-market and language stating the 700B will pay the market rate based on mark-to-market. Which will be calculated with oversight on the numbers.

If banks fail after that, they weren't meant to be anyway. They knew what they were getting into, or should have done the HW to find out before purchasing the MBS. It certainly should not be my problem (I know, I know...it IS my problem now and all that).

One thing that I hope they DO NOT suspend is mark to market accounting.

I mean changing accounting rules just to make the numbers 'look good' is stupid IMHO. Banks will be happy to offload this stuff at 20 cents on the dollar.... they would have already offloaded them if there were other banks that had capital to buy them. Yea they will get beat up over it, but some will survive.

That is my point exactly. The bailout money should be used to buy assets at current market value based on the mark-to-market assesments done NOW. And with oversight so they don't try and flim-flam us.

Then the 700B can be used to buy up the toxic assets, allowing a much higher chance for profitability. As Buffet said, that would be a great deal. What would NOT be a great deal is buying for 3-5x market value and either selling at break-even or for a slight loss. Rule#1 is buy low ,sell high.

 

[zephyrprime]

Originally posted by: Wonderful PorkThat is my point exactly. The bailout money should be used to buy assets at current market value based on the mark-to-market assesments done NOW. And with oversight so they don't try and flim-flam us.

Then the 700B can be used to buy up the toxic assets, allowing a much higher chance for profitability. As Buffet said, that would be a great deal. What would NOT be a great deal is buying for 3-5x market value and either selling at break-even or for a slight loss. Rule#1 is buy low ,sell high.

The whole point of this bailout bill is to authorize paulson to buy stuff at above market rates. Otherwise, why doesn't the bill specify what price paulson will pay?

 

[LegendKiller]

Originally posted by: chess9

Originally posted by: GTKeeper

Originally posted by: chess9

Originally posted by: GTKeeper
For all you Buffet Haters everywhere....

You should listen to the man if you want to LEARN something.

Back in the late 1990s during the internet bubble everyone was saying how Buffet is dumb by staying out of the market. He said that he didn't see anything of value to buy.... and he was right.


As for these market prices.... well to put it simply. If the government can purchase these assets at 22 cents on the dollar (which is what Meryll Lynch off-loaded THEIRS for) they will make a killing on this in the long run.

What he is NOT advocating, is the government going in there and buying these things at 50 or 60 cents on the dollar.....

He doesn't want the government overpaying. I don't see why people don't get that.

That's your interpretation of what he's saying, but Buffet benefits regardless of the price paid by the US Government, particularly now that he has a big stake in GS. Also, he's not saying any of these assets have ANY market value. What he isn't saying is more important than what he is saying.

The government should not be making it's policy based upon what one private investor is doing anyway. Buffet has given several Congressmen the benefit of his views, but his views are tainted by self-interest.

-Robert

I am not sure you know what is at stake here. Unless you are an economist of some sort, I will believe Buffet over you.

The reason he bought GS and GE is because he got REALLY good terms on those purchases.

If we don't do anything, I will not feel sorry for you when you lose your job (if you have one) or are affected by this one way or another.

We are in the middle of a recession and either (like Buffet said) we will hit 7-8% unemployment or 10-11% potentially if we just sit on our hands. A 2 % difference is 6 million jobs.

I never said to do nothing. I'm only saying that Buffet is going to do what is best for Buffet and policy should be made based upon what is best for the country as a whole. This idea that what is good for GM or Buffet is good for America died about 30 years ago. I listened to Nobel Prize winning economists, Stieglitz in particular. We have other ways to deal with these issues and the bailout is like rabbit hunting with a Howitzer. Congress is full of self-interested paid off wimps who fold at the earliest sign of a foul wind. Wall Street has probably bought enough of them to get this deal through.

-Robert

I think you're a bit jaded. Buffet has tens of billions invested in this economy, the same as Americans have trillions invested. Isn't it in all of our best interests to keep our investment safe?

 

[chess9]

Originally posted by: zephyrprime

Originally posted by: Wonderful PorkThat is my point exactly. The bailout money should be used to buy assets at current market value based on the mark-to-market assesments done NOW. And with oversight so they don't try and flim-flam us.

Then the 700B can be used to buy up the toxic assets, allowing a much higher chance for profitability. As Buffet said, that would be a great deal. What would NOT be a great deal is buying for 3-5x market value and either selling at break-even or for a slight loss. Rule#1 is buy low ,sell high.

The whole point of this bailout bill is to authorize paulson to buy stuff at above market rates. Otherwise, why doesn't the bill specify what price paulson will pay?

LOL. Yes, you are right! How else would Congress pay back all its buddies who donated millions to their campaigns? This is such an obvious paypack to contributors, no wonder most of America is appalled. But, this is how democracy works when it doesn't work.

-Robert

 

[StageLeft]

True market I could buy half of them. I still am lawls over the idea that some still think the US can actually make money on this $700B.