Monday (Tuesday) Thoughts – Warren Buffet


Sorry folks about getting out my Monday thoughts a day late again – my schedule has been a bit full with non-business events (charity stuff and helping friends). I know with my huge salary from ($0) I should be more attentive:).

Anyway, my thoughts this week include none other than Warren Buffet. He has made billions for his shareholders over the years using his astute ability to spot good companies and having the discipline to buy them at good prices, especially when everyone else fears (I would like a bit more of his investing fortitude!).

I have had a problem recently, though, with his comments in the press. He has been very pleased with the government actions to this point (since he owns Wells Fargo, American Express, and Goldman Sachs securities it could be viewed as biased) which I wonder about, and more interestingly, he feels that tax rates have to rise in the future. Now I am not disagreeing that with the way we are spending, taxes will have to rise. I just have a problem with him saying that after he has enjoyed years of relatively low taxes. And by the way, he made much of his billions in the way that hedge fund managers are maligned for making money now – carried interest (basically, having a partnership structure, and taking a share of fund profits as compensation – the part that gets people all up in a muck is that the manager doesn’t take a cash paycheck as profit sharing, he simply increases the value of his partnership share by that amount which looks to tax authorities like an UNREALIZED capital gain, not income).

I haven’t seen him come to the defense of these hedge fund managers – not because it’s right or wrong but because it’s what HE DID – basically, when I see incongruity, I point it out – that’s all. And I never see him chastise government for spending too much. They really do – which is why taxes must go up (AFTER he made his fortune and closer to the twilight of his life – and I don’t care if he is donating it to charity – he still made all that money to go to the charities HE chooses). What about young people today? Why doesn’t Buffet tell the 22 year old college graduate that he will face tough career choices and ridiculous taxes because people like Buffet, with the influence he has, never calls out government on their INCREDIBLE (i.e. unbelievable) spending patterns. All he has to say is government is on the right path now. (NY Times Article on borrow & spend policies and their dangers)

Please – he should give everyone a break and just stick to his investing – something he is actually good at. He falls short in my book, as as economic planner (not that I’d want anyone in that role), ethicist, and politician.

Sorry folks I was just so frustrated by his off-hand attitude towards tax increases I had to spout!

Chris Grande