Ready For The Annual Berskhire Shareholder's Meeting?

Berkshire Hathaway’s Annual Meeting is this coming Saturday 2 May 2009 in Omaha, NE at the Qwest Center. Given the financial turmoil and all of the ruckus over Berkshire’s credit rating, it should be a very interesting affair.

In conjunction with the Annual meeting, Berkshire CEO Warren Buffett’s son Peter is hosting a unique event, a discussion really, where he talks about his life and upbringing. Details are below.

Peter’s ‘Concert and Conversation’ serves as an entertaining and informative look into the life of a man with a very unique upbringing. His open discussion about the lessons he’s learned as the son of one of the most noteworthy investors of our time and its effect on creating the man he’s become, acts as a true testament that life is never a straight road. The evening will include live performances of selections from Peter’s album releases including his latest, Imaginary Kingdom, punctuated with videos from his film/television work and philanthropic activities.

EVENT DETAILS:
An Evening of Concert and Conversation with Peter Buffett
WHEN: Saturday, May 2nd at 7:30 pm
WHERE: The Rose, 2001 Farnam Street, Omaha, NE
TICKETS: $42, with $25 of the cost being tax deductible
http://rosetheater.org/season-events.asp

Learning From Buffets Mistaks

Buffett is the Chairman and CEO of Berkshire Hathaway, and the second- richest man in the world according to the Forbes list of the 400 richest people. He's also known as the world's best investor.

So then, why is he outing his mistakes to millions?

"During 2008 I did some dumb things in investments. I made at least one major mistake of commission and several lesser ones that also hurt. Furthermore, I made some errors of omission, sucking my thumb when new facts came in that should have caused me to re-examine my thinking and promptly take action," he announced in his latest letter to shareholders.

But it's that very admission of guilt that makes Buffett what every investor should aspire to be. It's what separates Buffett from the stockerati that tries so hard to imitate him.

After all, Buffett's performance could have been much worse for the year. In 2008, Berkshire Hathaway outperformed the S&P 500 by 27.4%, meaning that the Oracle of Omaha's investments held up significantly better than the rest of the stock market.

Others would have touted the year as a success - after all, he performed better than most mutual funds, a plethora of hedge funds, and most individual investors - Buffett didn't.

Three Lessons to Learn from the Oracle's Mistakes

Because those who forget their stock market mistakes are doomed to repeat them:

Don't Seek Approval - Per Buffett, "Approval, though, is not the goal of investing. In fact, approval is often counter-productive because it sedates the brain and makes it less receptive to new facts or a re- examination of conclusions formed earlier. Beware the investment activity that produces applause; the great moves are usually greeted by yawns."

Understand What You Own - "Recent events demonstrate that certain big- name CEOs (or former CEOs) at major financial institutions were simply incapable of managing a business with a huge, complex book of derivatives. Include Charlie [Munger] and me in this hapless group," he said.

The Market Can Be Wrong - "The investment world has gone from underpricing risk to overpricing it. This change has not been minor; the pendulum has covered an extraordinary arc. A few years ago, it would have seemed unthinkable that yields like today's could have been obtained on good-grade municipal or corporate bonds even while risk- free governments offered near-zero returns on short-term bonds and no better than a pittance on long-terms."

It's hard to see the market clearly when things look as ominous as they do only three months into 2009. Sellers are overwhelmingly pushing the direction of the market today, but that pace can only be kept up for so long. Keep Warren Buffett's advice in mind, and you'll end this debacle with your head above water.

BRK Downgraded!

Fitch Ratings downgraded Berkshire Hathaway's so-called Issuer Default Rating (IDR) and senior unsecured debt ratings to double A+ and double A, respectively. Berkshire's insurance arm maintained its triple A, but all divisions are on negative watch. Fitch also said having Warren Buffett as head of the company is a risk...

Fitch views this risk as unrelated to Mr. Buffett's age, but rather Fitch's belief that Berkshire's record of outstanding long-term investment results and the company's ability to identify and purchase attractive operating companies is intimately tied to Mr. Buffett.

And yesterday, Standard & Poor's stripped GE of its triple-A rating. That leaves only five triple-A-rated companies. They are ExxonMobil, Microsoft, Johnson & Johnson, ADP, and Pfizer.

Warren Buffett on super SIV 2007-12-11

Check out this great Buffett video on Structured Investments Vehicles.

Timeless and Time-Tested Warren Buffett Watch Predictions

Timeless and Time-Tested Warren Buffett Watch Predictions

Posted By: Alex Crippen

Gerald Herbert / AP

As a new year approaches, it is customary for journalists to make predictions about the future. This time around, CNBC.com has a collection of prognostications from CNBC bloggers on a special page: Predictions '09.

Last year around this time, Warren Buffett Watch offered its Eight Predictions for '08 .. and Beyond.

In keeping with Buffett's long-term way of looking at things, the eight predictions were intentionally on the 'timeless' side of the predicting spectrum.

Here they are again, with a little bit of editing. This could be the start of a new holiday tradition!

-----------------

Warren Buffett became one of the wealthiest people in the world by making predictions and putting money behind those predictions. Every time he buys a stock or a business or some other investment, he's forecasting the future.

Judging by the incredible returns of his holding company Berkshire Hathaway, Buffett and his colleagues are very good at making those predictions.

Of course, it helps when you can give your predictions plenty of time to come true. That's one reason Buffett's favorite holding period for investments in "outstanding businesses with outstanding managements" is "forever." After all, "We don't get paid for activity, just for being right. As to how long we'll wait, we'll wait indefinitely."

With that in mind, here are Warren Buffett Watch's 'timeless' predictions.

1. Recessions can't be avoided forever. As 2007 was coming to a close, Buffett told our Becky Quick that if unemployment picks up significantly, the "dominoes" will fall and the U.S. economy will fall into recession in 2008. He was right, but not alarmed. "It is the nature of capitalism to periodically have recessions. People overshoot." (He told Becky she's young enough to expect to see 6 or 7 or them.)

AP The economic downturn takes its toll at the almost-empty Bayshore Town Center Mall in Milwaukee, Wisconsin.

2. We'll survive current and future recessions just as we've survived past problems. As Buffett told us in August, 2007, (and repeated throughout 2008): "We've got a wonderful economy... There's never been anything like that in the history of the world. We live seven times better than the people did a century ago on average... We've had problems all along. If you look at the last century, we had that Great Depression and World War Two, we had the Cold War, we had the atomic bomb, but the country does well."

3. Recessions will create opportunities. "I made by far the best buys I've ever made in my lifetime in 1974. And that was a time of great pessimism and the oil shock and stagflation and all those sort of things. But stocks were cheap." Fast-forward to October, 2008, and Buffett's Why I'm Buying U.S. Stocks Now.

4. All stocks won't be cheap. Like Ted Williams waiting for the right pitch, a successful investor waits for the right stock at the right price, and it doesn't happen every day. "What’s nice about investing is you don’t have to swing at pitches. You can watch pitches come in one inch above or one inch below your navel, and you don’t have to swing. No umpire is going to call you out." You get in trouble, Buffett says, when you listen to the crowd chanting "Swing, batter, swing!"

5. The crowd will make mistakes. Buffett cites this piece of advice from his mentor Benjamin Graham: "You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right—and that’s the only thing that makes you right. And if your facts and reasoning are right, you don’t have to worry about anybody else."

6. Investors will mistakenly think falling stock prices are bad. "If they reduce the price of hamburgers at McDonald's today I feel terrific. Now I don't go back and think, gee, I paid a little more yesterday. I think I'm going to be buying them cheaper today. Anything you're going to be buying in the future, you want to have get cheaper."

Walt Disney (1950) Cinderella rushes for the exit as midnight approaches

7. Good times will prompt bad decisions. In his 2000 Letter to Berkshire shareholders, Buffett compared the crowd that buys big when prices are high to Cinderella at the ball. "They know that overstaying the festivities - that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future - will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands."

8. There will be more dancing at another wild party followed by another painful hangover. Looking back at the Internet bubble, Buffett is quoted as saying, "The world went mad. What we learn from history is that people don’t learn from history."

Buffett's Personal Portfolio 100% in US Stocks

Warren Buffett tried to persuade demoralized investors the U.S. stock market is not falling off a cliff. Not everyone was immediately convinced.

The second-richest American and perhaps the world's most revered investor, says he is buying U.S. stocks for his personal account.

"A simple rule dictates my buying: Be fearful when others are greedy and be greedy when others are fearful," Buffett, 78, said in an opinion piece published Friday in The New York Times. "Most certainly, fear is now widespread."

As usual, he did not identify the stocks he is buying.

The piece -- titled "Buy American. I Am" -- called for confidence in U.S. business, something in short supply after the credit crisis spiraled into something resembling a market crash. Buffett has been relatively unscathed by the turmoil.

His buying excludes his stake in his insurance and investment company Berkshire Hathaway Inc (BRKa.N)(BRKb.N), which is committed to philanthropies and constitutes the bulk of his estimated $50 billion net worth.

He said if equities stay cheap, his non-Berkshire net worth will soon be 100 percent in U.S. stocks from 100 percent in government bonds.

In better times, such a clarion call from Buffett -- amplified Friday by repeated commentary on CNBC -- might spark a big stock market rally. Yet stocks ended another volatile session lower on Friday, after fresh economic data elevated worries about a potentially deep recession.

Buffett said he is not calling a market bottom. He may have company, including prominent investors such as GMO's Jeremy Grantham and BlackRock Inc's (BLK.N) Bob Doll who are betting equities have fallen below their intrinsic values.

New Interview With Warren Buffett

Addison Wiggin at Agora Financial sat down with Warren Buffett for an interview. He published that interview in his new book, I.O.U.S.A – One Nation. Under Stress. In Debt, which is out this week.

On our national debt problems...

We're transferring small bits of the country – ownership of the country, or IOUs – to the rest of the world. But our national pie is still growing.

We're like a very, very, very, rich family that owns a farm the size of Texas, and we have all this output coming from the farm. Now, because we consume a little more than we produce, we're selling bits of that farm daily, a couple billion worth. Or we're giving a small mortgage on it which we don't even notice, but it builds up over time.

So even though we own a little less of the farm, or we create these IOUs against it, our equity in the farm actually increases somewhat. That's why people will benefit over time. But they won't benefit as much as if they hadn't given the IOUs or sold off little pieces of the farm.

On gold...

Over time, people have dug up gold from the ground in far remote areas and then they've shipped it thousands and thousands of miles. And they've put it in the ground over here and hired guards to stand over it. So the real utility of gold is not that high. It's been something that people turn to, but it has not been a very good investment.

On China and globalization...

In 1790, there were about 4 million people in the U.S. and about 290 million in China. They were just as smart as we were. They had a climate that was about the same as ours. And yet we did enormously well over the next 217 years... as compared to China.

Now, why did we do that? Well, we had a market system, a rule of law, and equality of opportunity... and that system unleashed the potential of citizens in the United States to an extent far greater than in many countries including, up until recently, China.

About the risk of default of U.S. government bonds...

The U.S. government bond is absolutely certain to be paid. It's just total nonsense when people talk about the U.S. going bankrupt. I mean, the U.S. government will always pay its debts. The purchasing power of the dollar you receive is likely to be less than the dollar you invested, so you have purchasing power risk... But you should not be afraid of government bonds in terms of being paid.

The unique situation in the U.S. now...

Many years ago, when we lent a lot of money to various emerging countries and were having trouble getting paid back, somebody said that they found it very hard to imagine some Philippine or Thailand worker spending a couple of extra hours every week in the hot sun merely so Citicorp could increase its dividend twice a year. At a point, people say, "To hell with it."

It's much easier just to inflate your way out of it. If you're a South American or Asian country that owes money in dollars, it gets very binding to pay back in dollars. But if you owe it in your own currency, you just print more currency. And we have the ability to print currency. We can denominate debt in our own currency, whereas many countries can't because people don't trust them.

On government economic policies and crises...

We came fairly close to the whole system imploding in the 1930s because of economic conditions. People became very responsive to communism... When people are scared about economics, they'll listen to whoever is the most persuasive... One thing I don't like about the consequences of sustained large trade deficits is I think it makes the potential for demagoguery and really foolish policies more likely over time.

When you think about the history of this country, our economic policies have been pretty darn good. I mean, any country that delivers a seven-for-one increase in per capita living in a century has done an awful lot of things right. It's never happened before in the history of mankind.

What the right policies are...

You want a system where Mike Tyson is fighting for the heavyweight championship and Jack Welch is running General Electric. But you don't want Mike Tyson to be running General Electric and Jack Welch in the heavyweight championship. Government allocation of resources has tended, too often, to misallocate, and I think a market system does a pretty good job of allocating.

Wrapping up...

It's been a marvelous time to be alive. It wasn't really a whole lot better to live in the fourth century BC than the fourth century AD. But it's been a lot better to live in the year 2007 than it was in the year 1807.

...Even those on the low end are doing far better than people on the high end were doing 100 years ago. There're many, many things that a person earning a normal wage in this country can do and enjoy that John D. Rockefeller couldn't do and enjoy. So a rising tide has lifted all the boats... The average American is going to live better 10 years from now, 20 years from now, and 50 years from now.