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Buffett loses top credit rating
Old 04-09-2009, 06:48 AM   #1
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Buffett loses top credit rating

The sky is falling! The sky is falling!

Buffett loses top credit rating

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Ratings agency Moody's cut the debt rating from Aaa, the highest, to Aa2, meaning that it thinks the company is less likely to pay back its debt.
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Now, there are only four US companies with Moody's top Aaa debt rating - Exxon Mobil, Microsoft, Johnson & Johnson and Automatic Data Processing.
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Old 04-09-2009, 10:11 AM   #2
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And yet Berkshire is up 4% today. I know a lot of that is due to Wells Fargo's news (which is a major holding of Berkshire), but it's also a case of "sell on the rumor, buy on the news"). Now that the market is more sure that more of the potential "bad news" on Berkshire has come out -- now that the shoe has dropped -- it looks like that brings the buyers in.
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Old 04-09-2009, 10:51 AM   #3
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I'm not selling my one share of BRKB.
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Old 04-09-2009, 01:24 PM   #4
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I wonder what Buffett's going to do with the 20% of Moody's shares that he owns.

Oh, gosh, look, they're up over 5% today too: http://www.google.com/finance?q=NYSE%3AMCO

I guess he'll probably cry, once again, all the way to the bank.

At this rate maybe he's hoping for another downgrade next week.
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Old 04-09-2009, 03:44 PM   #5
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Would this be the same Moody's that upgraded Enron's long term debt ratings 9 months before they folded?
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Old 04-09-2009, 04:04 PM   #6
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"Let's see, a company I own 1/5 of does my credit rating. Hmm."

If BRK was a normal company... this sounds like a backdoor plan to cheapen the share price in order to repurchase shares.

Doh! That backfired.

-CC
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Old 04-09-2009, 05:08 PM   #7
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Well, I started buying Berk. B. shares when they came out and 1 share a yr therafter until I retired.. Since it doesn't pay a Dividend, I'd have to sell a share to get the $ out of it... So, I sold it Last yr..

I think it's days are Numbered anyway.. He's made some ( self Admitted) serious mistakes of late and Me thinks it's time to hang it up and retire Warren.. for those still owning it? Hold till If and When it gets back to 07's $4k per share and then Dump it.. It prevous 15 yrs or so has been marginal at best..and disappointing as far as I'm concerned..
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Old 04-09-2009, 07:39 PM   #8
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Hmmm, I can think of at least 4 US life insurers which still have Aaa ratings from Moody's, so I think the article is a tad, um, light on facts.

Just a guess, but I think that Uncle Warren couldn't care less about the downgrade.
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Old 04-09-2009, 08:28 PM   #9
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Well, I started buying Berk. B. shares when they came out and 1 share a yr therafter until I retired.. Since it doesn't pay a Dividend, I'd have to sell a share to get the $ out of it... So, I sold it Last yr..

I think it's days are Numbered anyway.. He's made some ( self Admitted) serious mistakes of late and Me thinks it's time to hang it up and retire Warren.. for those still owning it? Hold till If and When it gets back to 07's $4k per share and then Dump it.. It prevous 15 yrs or so has been marginal at best..and disappointing as far as I'm concerned..
I think if someone believes in an investment they should hang on, if they don't they should sell. It's better to cut the losses than hope it gets back to a certain price and then sell. I did that a few times during the high tech crash; it didn't end well.
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Old 04-09-2009, 08:51 PM   #10
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Hmmm, I can think of at least 4 US life insurers which still have Aaa ratings from Moody's, so I think the article is a tad, um, light on facts.
Just a guess, but I think that Uncle Warren couldn't care less about the downgrade.
He's starting to get a lot of blogger second-guessing for owning 20% of Moody's and apparently ignoring the whole situation. I guess some want to see an op-ed in the NYT.

Less than a month until the annual meeting. I suspect he's trying to line up a timely acquisition announcement...
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Old 04-10-2009, 04:15 AM   #11
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Wasn't he already downgraded by S&P and Fitch?
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Old 04-10-2009, 09:05 AM   #12
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I have heard him talk briefly about the difference in the price decline of Moody's and Wells Fargo. He felt that Moody's franchise was damaged severely, while Wells Fargo was actually increasing its intrinsic value, and that its price decline was a short term problem.

I do have to question the value of the ratings agencies going forward. Does anyone still care what they think? It seems to me that using them to decide on the riskiness of investments is incredibly foolish.

I own BRK, but I really hope that Moody's (and the rest of the ratings agencies) cease to exist. They are terrible companies that shouldn't continue to exist after their complicity in this disaster.


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He's starting to get a lot of blogger second-guessing for owning 20% of Moody's and apparently ignoring the whole situation. I guess some want to see an op-ed in the NYT.

Less than a month until the annual meeting. I suspect he's trying to line up a timely acquisition announcement...
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Old 04-10-2009, 10:15 PM   #13
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Wasn't he already downgraded by S&P and Fitch?
S&P has not downgraded but IIRC has Berkshire "on watch".

From Brewer's past comments, few care what Fitch thinks.
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Old 04-11-2009, 07:29 AM   #14
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Originally Posted by Nords View Post
He's starting to get a lot of blogger second-guessing for owning 20% of Moody's and apparently ignoring the whole situation. I guess some want to see an op-ed in the NYT.

Less than a month until the annual meeting. I suspect he's trying to line up a timely acquisition announcement...
Ownership of part of a company does not grant clairvoyance, unfortunately.

In any case, the ratings agencies remain cash machines as businesses, so I imagine that he will continue to make money with that particular investment.
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Old 04-11-2009, 10:47 AM   #15
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From Brewer's past comments, few care what Fitch thinks.

That's a US-centric view. Fitch's is taken pretty seriously on the other side of the pond.
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