Berkshire Hathaway

[clifp]

Hey no shameless promotion on my part. I was simply making sure that wonderful readers of this forum were aware of this small obscure stock, and its virtually unknown CEO.

That fact that stock is up a more than $6,000 in a week since my innocent question is surely a coincidence.

Actually I think it professor Hayek who should be concerned with his Buffett Bashing. I think that Borg Collective (aka Barak for President committee) have been alerted to his presence. They will be using the funding, from the world's greatest socialists leaders (aka Warren, Bill G, and Bill Gates Sr.) to establish a new social order, starting by raising of the marginal tax rate back up to 70% and the estate tax at 95% and will outlaw CEOs, entrepreneurship and Linux.

Alas HayekCapitalist has been targeted for assimilation (resistance is of course futile).

I will continue skipping down the road to serfdom, blissful ignorant of Warren's threat to the American Way of Life.

 

[kcowan]

One of Buffett's biographers (Lowenstein? I don't remember) claimed that Buffett didn't give money to charity because he could do a better job with it by compounding it until he died, and then giving even MORE to charity. However I think Buffett's long-term friendship with Bill Gates, seeing what Melinda's been doing with the Gates Foundation, and Susie Buffett's death changed his mind. He didn't change his mind overnight...

Susan was the one committed to charity and her death left an expertice hole that he filled with Melinda Gates. Even that offer is based on them drawing down cash from his portfolio as they had reason to spend. He still believes that he can manage the money better than anyone else.

He even relates that he gave $10,000 to each of his kids many years ago but recommended they leave it with him to invest for them. None took the offer and he commented that the money would be worth 100x as much (when the interview was held).

I find it hard to understand why anyone could find reasons to criticise Buffett. He seems very solid and principled to me.

 

[chinaco]

I have a different reason for not liking Buffet. Because I didn't get to participate in the valuation gorging that occurred over the last several years. Now the old guy is going to retire. Dang buffet heads.

Good old green-eyed envy.

 

[unclemick]

I have a different reason for not liking Buffet. Because I didn't get to participate in the valuation gorging that occurred over the last several years. Now the old guy is going to retire. Dang buffet heads.

Good old green-eyed envy.

Riiiight! My Union Pacific calender came yesterday - so is Warren still buying railroad stocks and why?

heh heh heh - Yup wish I would have bought Berkshire in 1966 - that would have been interesting.

 

[Running_Man]

There is no doubt that Warren Buffet is extremely talented in investing. I think his personal goal is not personal wealth but the eternal remebrance as the only person that ever walked the earth that is able to beat the efficient market hypothesis. He does this by consistently stating noone could do better than he, which has been true for the most part. However he is not at all interested it seems to me to helping smaller investors receive the ability to benefit from his talents. He does not as Benjamin Graham, his mentor, state that anyone with the desire to learn be able to outperform the markets.

He argues for tax hikes and uses every possible law to dodge taxes whenever possible, of course because no government could ever make better use of the money than he. In that way he reminds me of my neighbor who worked to pass a law banning yard waste in landfills and then dumped his into our local lake. When caught he pointed out there was no law against it as it was a private lake and owned by the association which had no rule against the yard waste dumping.

It seems to me he believes his shares should be hung on a wall like a fine work of art and prayed to each morning in thanksgiving to the Omaha Wizard. To sell the share(s) merely symbolizes how foolish a human being you are.

That does not diminish his investment prowess in the least but great wealth does not make a great individual.

 

[Hamlet]

This seems a little unfair. I don't know that he has argued for net tax hikes. He's argued against removing the estate tax, and he's argued for more rational property taxes in California.

He's pointed out that his secretary pays a higher percentage than him because of the 15% rate on dividends and capital gains that he pays (as well as the regressive nature of Social Security).

I don't get the impression that he has expended any extreme effort towards dodging taxes. Berkshire hasn't moved offshore or anything. He figures out his bill and pays it just like anyone else. He's just noted that the tax laws have been slanted in his favor by the recent changes.

He argues for tax hikes and uses every possible law to dodge taxes whenever possible, of course because no government could ever make better use of the money than he. In that way he reminds me of my neighbor who worked to pass a law banning yard waste in landfills and then dumped his into our local lake. When caught he pointed out there was no law against it as it was a private lake and owned by the association which had no rule against the yard waste dumping.

 

[Sam]

WB is no doubt the greatest investor. But the company stock performance in the last 5 years is at best ok, definitely nothing to write home about.

I wonder if it's wise to keep 40B cash in a company with a market cap of 190B. That 40B cash could do a lot of good in another form.

 

[Running_Man]

http://http://www.capmag.com/article.asp?ID=2813
A 2003 article that summarizes pretty well the lies Warren Buffet continues to spew. Prime among them is the reason that Bershire Hathaway does not pay a dividend because it would expose Buffet to taxes even if he were to reinvest in Berkshire Hathaway. Since he does not want to pay taxes he issues no dividends nor sells anything and pays himself little and well... I think it is obvious. If the tax laws were that dividends were taxfree and capital gains 35% Berkshire Hathaway would immediately begin paying dividends.

As for the estate tax question how does that tax increase or remaining on books ever going to effect him in his life? It will not, he pushes it because it will not.

Perhaps he should push for a net worth tax of 3% annually - think he'd be for that?

 

[Hamlet]

It may be that Berkshire has reached a size that makes market outperformance nearly impossible. Certainly, the last 5 years of performance for BRKa is actually a little lower than the S&P500.

Of course, the person with 40B in cash may be the one that benefits from a major liquidity crisis.

WB is no doubt the greatest investor. But the company stock performance in the last 5 years is at best ok, definitely nothing to write home about.

I wonder if it's wise to keep 40B cash in a company with a market cap of 190B. That 40B cash could do a lot of good in another form.

 

[Running_Man]

The only problem with that analysis is that the market is presently valuing evey dollar BH holds at $2.00.

 

[Sam]

The only problem with that analysis is that the market is presently valuing evey dollar BH holds at $2.00.

That's interesting. Do you have a link?

 

[clifp]

Running Man, I am trying to understand your logic here. Are you saying that because Warren Buffet advocates for higher taxes on wealthy Americans he should voluntarily pay more himself? All he is doing is saying that the system is highly biased in favor of the investment class (i.e. rich people) and using his tax rate vs his secretary as an example.

Looking at my own situation, I have to agree with Warren. Last year I paid no payroll tax, no federal income tax, nor any state income tax. I expect to not to pay any of those taxes for at least the next three years. So the only taxes I pay are property taxes (and I am appealing my assessment to lower those taxes), sales taxes, gas taxes, and misc. telecommunications taxes, (and last year I got a refund on the telephone taxes). I

Now I am not doing anything illegal just taking advantage of a system that seems to want to tax my income from investments at far lower rate than when I was a working stiff. I look at my standard of living, and I realize that I very fortunate and am in a much better position to pay more taxes than people around me.

Like Warren, I am not going pay more taxes than I need to and I'd rather leave my money to charity than Uncle Sam. However, looking at my situation I can't help but wonder if the Democrats (I'm not) charges that tax cuts were for the rich aren't mostly true.

 

[Nords]

It seems to me he believes his shares should be hung on a wall like a fine work of art and prayed to each morning in thanksgiving to the Omaha Wizard.

Whoa, waitaminnit. Am I working too hard here? Doesn't everyone already do that?!?

If the tax laws were that dividends were taxfree and capital gains 35% Berkshire Hathaway would immediately begin paying dividends.

I've always thought that Berkshire retains the money (instead of paying a dividend) because Buffett believes that he can invest it better than we shareholders can. And now that my cap gains are taxed at lower rates than dividends I'm even happier to let him hold the money. I haven't found anyone better at it.

It's interesting that the most Buffett-bashing article you could find was over four years old. After more than six decades of investing you'd think that he'd be almost as unpopular as Leona Helmsley.

BTW Buffett will be celebrating his 77th birthday on Thursday...

 

[Sam]

Prime among them is the reason that Bershire Hathaway does not pay a dividend because it would expose Buffet to taxes even if he were to reinvest in Berkshire Hathaway. Since he does not want to pay taxes he issues no dividends nor sells anything and pays himself little and well... I think it is obvious. If the tax laws were that dividends were taxfree and capital gains 35% Berkshire Hathaway would immediately begin paying dividends.

As for the estate tax question how does that tax increase or remaining on books ever going to effect him in his life? It will not, he pushes it because it will not.

Perhaps he should push for a net worth tax of 3% annually - think he'd be for that?

What's your point? Do you know of anyone who's willing to pay more taxes than he/she is obligated to? Do you, yourself, find way to pay more taxes? Or are you -like all of us- constantly trying to minimize the tax bite?

 

[chinaco]

Mr Buffet has a solid reason for most everything he does. You can bet it was well thought out. But I believe he does what he does for the benefite of all share holders not just himself.

Heck he is giving (and intends to give) much of his fortune to charity. He is a Philanthropist.

 

[Running_Man]

What's your point? Do you know of anyone who's willing to pay more taxes than he/she is obligated to? Do you, yourself, find way to pay more taxes? Or are you -like all of us- constantly trying to minimize the tax bite?

My point is Warren Buffet is one of the richest men in the United States and he is using his power as best he can to get taxes raised in such a way as it will NOT effect him while at the same time making it appear to the uninformed as though he is advocating the system is unfair and needs to be changed because he is not taxed. He campaigns for the estate tax raised yet he will control his estate's money after his death to be used as he wants but would deny that same procedure to anyone else who has accumulated money. Why should estate money be exempt from estate taxes upon death anyway? Should donations to improve a foreign country be a basis to avoid US taxes?

Very little of Warren Buffet's wealth has ever been taxed. Nor will it ever be, because of course he is so much better than everyone else with money. No changes made to the taxing system will of course effect the very wealthy such as Warren in this country because they make the rules, as Warren is attempting to do and the rules will always have a clause that the rich will exploit because they put the clauses in there in the first place.

That is why you will never see a net worth tax (why is there not universal support for that - wouldn't this be the most fair of taxes?) or a tax on unearned income as if it were earned. Yet there is serious talk, which will intensify when the government needs large volumes of income in the future to tax 401K balances, which will effect the middle class the most and Warren Buffet types the very least.

Because the middle class has come through one of the largest bull markets in history the retirees of today are in some of the best shape of all time and hold significant assets. That money is the money Warren Buffet through Hillary Clinton wants to tax in order to maintain the US infrastructure which the ultra rich such as himself will be able to continue to exploit to their advantage.

Instead we have people who finagle the system to take advantage of every rule to argue the system is unfair when they have no intention of paying a dime of what they argue is their fair share. To argue that a country's tax system needs to be changed for everyone but yourself is what I do not find at all appealing about Warren.

And in answer to your question I do not go out of my way to avoid taxes. Nor do I constantly try to minimize my tax bite. Are you implying that the government should design laws that would only effect people such as yourself in order to make the tax system more fair?

 

[Sam]

My point is Warren Buffet is one of the richest men in the United States and he is using his power as best he can to get taxes raised in such a way as it will NOT effect him while at the same time making it appear to the uninformed as though he is advocating the system is unfair and needs to be changed because he is not taxed. He campaigns for the estate tax raised yet he will control his estate's money after his death to be used as he wants but would deny that same procedure to anyone else who has accumulated money. Why should estate money be exempt from estate taxes upon death anyway? Should donations to improve a foreign country be a basis to avoid US taxes?

...

OK, I admit that I don't know anything about WB's influence on the US's tax policy. So I won't speculate about things I don't know.

What I do know is that he is giving away the major portion of his wealth to charity. What I do know is his wealth was built legally. The ends justify the means.

And in answer to your question I do not go out of my way to avoid taxes. Nor do I constantly try to minimize my tax bite.

Good for you.

Are you implying that the government should design laws that would only effect people such as yourself in order to make the tax system more fair?

Huh? Whatyama talking about?