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Omaha, NE - World's Richest Wall Street Tycoon Sees His Stock Drop Most in at Least 23 Years |
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The stock plunged $11,550, or 12 percent, to $84,000 in New York Stock Exchange composite trading and has slipped 41 percent this year, compared with the 45 percent drop in the Standard & Poor's 500 Index. Berkshire, based in Omaha, Nebraska, rose in 17 of the past 20 years.
``There's nothing fundamentally wrong with Berkshire, what's really happening is people are wondering if there's something fundamentally wrong with the economy, and Berkshire is in some ways a bit of a proxy for that,'' said Michael Yoshikami, president of YCMNet Advisors in Walnut Creek, California, which manages $850 million including Berkshire shares.
Berkshire has posted four straight profit declines, the worst streak in at least 13 years, on falling returns at insurance businesses and investment losses. Buffett, ranked by Forbes magazine as the richest American, has committed at least $28 billion this year to acquire companies, finance buyouts and purchase securities as prices fell and competitors were hobbled by limited access to credit.
Berkshire's shareholder equity, a measure of assets minus liabilities, fell by about $9 billion in October on declines in debt and equity markets, the firm said Nov. 7. American Express Co., the credit-card company that is one of Berkshire's top 10 stock holdings, plunged 47 percent since Sept. 30 as borrower defaults increased. Wells Fargo & Co., Berkshire's No. 2 investment, dropped about 35 percent.
`Under Pressure'
``Many of the companies Berkshire owns, such as American Express, are under pressure,'' Yoshikami said. ``What you're seeing is a systematic de-leveraging process taking all financials down, including good-quality financials.''
Berkshire shareholders including Mohnish Pabrai, head of Pabrai Investment Funds, have said investors are concerned about losses on the company's $37 billion bet on world equity values more than a decade from now. Buffett sold contracts to undisclosed counterparties for $4.85 billion protecting the buyers against declines in four stock indexes including the S&P 500.
Under the agreements, Berkshire will pay as much as $37 billion if, on specific dates beginning in 2019, the indexes are below the point where they were when he made the agreements. By Sept. 30, Berkshire had written down the contracts by $6.73 billion as the S&P declined for a fourth straight quarter.
Credit-Default Swaps
The cost to protect against Berkshire being unable to meet its debt payments, based on credit-default swaps, has more than tripled in two months.
The swaps jumped to 475 basis points today from 129 points two months ago, according to CMA Datavision. That translates to $475,000 a year to protect $10 million for five years.
Jackie Wilson, a spokeswoman for Berkshire, didn't immediately return a message seeking comment.
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Read Comments (13) — Post Yours »
1
Nov 19, 2008 at 09:53 PM bitachon Says:
ok. So we are all losing some or alot of money (unless you learned the trick of shorting and this is a swell time to make globs of money learn it and prosper)
At least king warren still has billions and has a plan and a vision. It's called value investing. There are many good books analyzing king warrens mehalach of investing and it's worth reading and learning if you plan on making a buck.
Learn from the guy who did it and taught us all what to do. You don't have to reinvent the light bulb.
hutz bitachon un daven far a chaver.
2
Nov 19, 2008 at 09:41 PM AuthenticSatmar Says:
And this is exactly why companies like AIG failed. They created the complex financial instruments that made no sense, but allowed them to artificially inflate their books, allowing them to further leverage those false amounts. After Enron collapsed, these types of financial shenanigans were supposed to be stopped. Congress promised us that they put rules in place to prevent it from happening again. Obviously they failed. And we want to trust these same imbociles to bail us out? And we revoted these idiots in? We don't deserve better.
3
Nov 19, 2008 at 09:29 PM YANKEL Says:
It's reassuring to know that even the stock of the Prophet from Omaha is doing about the same as my portfolio. Now I know it's not my fault that I've lost thousands.
4
Nov 19, 2008 at 10:08 PM Anonymous Says:
“ ok. So we are all losing some or alot of money (unless you learned the trick of shorting and this is a swell time to make globs of money learn it and prosper)
At least king warren still has billions and has a plan and a vision. It's called value investing. There are many good books analyzing king warrens mehalach of investing and it's worth reading and learning if you plan on making a buck.
Learn from the guy who did it and taught us all what to do. You don't have to reinvent the light bulb.
hutz bitachon un daven far a chaver. ”
what does that have to do with him losing money
5
Nov 19, 2008 at 10:57 PM Anonymous Says:
“ And this is exactly why companies like AIG failed. They created the complex financial instruments that made no sense, but allowed them to artificially inflate their books, allowing them to further leverage those false amounts. After Enron collapsed, these types of financial shenanigans were supposed to be stopped. Congress promised us that they put rules in place to prevent it from happening again. Obviously they failed. And we want to trust these same imbociles to bail us out? And we revoted these idiots in? We don't deserve better. ”
Have no fear , no one will need investments or money next year. As long as you dont work you get free food , free housing , free daycare , free medical care, free college. Maybe as part of the bailout anyone who needs a car will get a free cadilac.
6
Nov 19, 2008 at 10:31 PM Anonymous Says:
IS HE GOING NEXT 2 CAPITAL HILL FOR A" BAIL OUT"??????????????
7
Nov 19, 2008 at 10:11 PM Anonymous Says:
I am not worried for him at all. If this would be the biggest problem in the world.............
8
Nov 19, 2008 at 11:45 PM Change is here Says:
from what I have read, he is technically bankrupt.
9
Nov 19, 2008 at 11:12 PM murray Says:
“ Have no fear , no one will need investments or money next year. As long as you dont work you get free food , free housing , free daycare , free medical care, free college. Maybe as part of the bailout anyone who needs a car will get a free cadilac. ”
You know very well that they are Not going to give out free Cadilacs, only basic , no option Cobalts. Don't think we didn't catch your subtle racism and stereotyping with the old "they drive up to their mailbox in their cadilacs to get their welfare checks"
10
Nov 20, 2008 at 04:35 AM Big Masmid Says:
any one knows if he has a good 401K plan? he might just need it in the near future.
in case he does not have one he should get one right away. this is so sad, how is he going to pay for fish for Shabbos.
11
Nov 20, 2008 at 01:34 AM Totosha Says:
AuthenticSakmer - I suggest you stop repeating the baloney you're fed on 770. What "complex financial instruments that made no sense" are you talking about ? Obviously you haven't the slightest clue what financial instruments are or aren't, so why don't you read a book for a change, or Berkshire 10-K.
By the way, now its obvious that even Buffet's own statement about derivatives being financial weapons of mass destruction was nothing but a puff of vapor.
12
Nov 20, 2008 at 07:38 AM robroy560 Says:
Buffett got nailed in the late 1990's when everyone bought tech stocks. He didn't
Also, Bershire buys a lot of private companies too. So it's hard to fully evaluate what his fund is worth.
Buffett or not, we need leadership. Not consensus. Leadersip.
13
Nov 20, 2008 at 08:09 AM Anonymous Says:
These things are always cyclical. He probably sees the low market as a buying opportunity. It always goes back up. Might take a few years, but it always goes back up. With the Eibishter's help.