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DriftingDudeSC
Joined: 13 Jul 2008
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Gooner
Joined: 11 Mar 2007
Posts: 14
Location: Arabian Peninsula
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 Posted: Sat Nov 07, 2009 5:41 am Post subject: |
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I think they could both be right. Mr. Buffett's move to purchase BNSF is a demonstration of - as Larry Swedroe puts it in his blog - "his faith in the economy's long term health." (emphasis mine)
Roubini is sounding a warning that the recovery might not be a smooth upward track (which doesn't sound like that bold of a prediction to me.)
I don't think one is incompatible with the other. I think Buffett is operating on an investment horizon that is much longer than Roubini's forecasting. |
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riskreward
Joined: 05 Jan 2008
Posts: 20
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| Posted: Sat Nov 07, 2009 6:19 am Post subject: |
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| I think the comparison of Roubini's economic analysis and Buffett's decision to buy a railroad are apples and oranges. Buffett is looking at a specific investment. |
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nisiprius
Joined: 26 Jul 2007
Posts: 6999
Location: North America; Western Hemisphere; the Earth; the Solar System; the Universe; the Mind of God
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| Posted: Sat Nov 07, 2009 6:47 am Post subject: |
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| in A Tale of Two Cities, Charles Dickens wrote: | | It was the best of times, |
...Buffett | Quote: | | it was the worst of times, |
...Roubini | Quote: | | it was the season of Light, |
...Buffett | Quote: | | it was the season of Darkness, |
...Roubini, etc. etc.
Now, I propose a game. Buffett says it's the spring of hope, Roubini says it's the winter of despair. That's level 1.
Swedroe says "Which one is right? I would say Buffett." Now, John Donovan says "I believe Roubini's premise has merit." So, that's level 2.
Then we need to find someone who says "I think Swedroe is right that Buffett is right that it's the spring of hope," and someone who says "I think Donovan is right that Roubini is right that it's the winter of despair." That would be level 3.
How many levels can we go? 
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Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. |
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Gekko
Joined: 11 May 2007
Posts: 2903
Location: USA
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| Posted: Sat Nov 07, 2009 8:09 am Post subject: |
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| excellent article. thanks for posting. |
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Adrian Nenu
Joined: 12 Apr 2007
Posts: 3760
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| Posted: Sat Nov 07, 2009 8:12 am Post subject: |
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Why didn't Swedroe write a positive article about stocks or state that they were a good value in late 2008/early 2009, if he had such strong faith in the US economy?
| Quote: | "Just ask Nouriel Roubini of New York University, who has a reputation as the most pessimistic economist in academe. He deserves it. His most recent paper, published last week, is entitled: “Can the Fed and Policy Makers Avoid a Systemic Financial Meltdown? Most Likely Not.”
Nobody is more aware of the gravity of the financial situation, and nobody has done more to point out the risks of a systemic crisis.
So how are Roubini’s own funds invested? They are 100 per cent in equities. In the long run stocks do best and he is not yet close to retirement, so he keeps putting more money into index funds each month.
Fully aware of the gravity of the financial situation, he is also aware of the futility of trying to take action or to time the market. Those tempted to make the investing equivalent of a goalkeeper’s depairing dive should take note."
Read more: http://www.marketfolly.com/200....z0WBAIIMTC
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http://www.marketfolly.com/200....folio.html
Adrian
anenu@tampabay.rr.com |
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swyck
Joined: 17 Mar 2008
Posts: 155
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| Posted: Sat Nov 07, 2009 8:44 am Post subject: |
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| nisiprius wrote: | | in A Tale of Two Cities, Charles Dickens wrote: | | It was the best of times, |
...Buffett | Quote: | | it was the worst of times, |
...Roubini | Quote: | | it was the season of Light, |
...Buffett | Quote: | | it was the season of Darkness, |
...Roubini, etc. etc.
Now, I propose a game. Buffett says it's the spring of hope, Roubini says it's the winter of despair. That's level 1.
Swedroe says "Which one is right? I would say Buffett." Now, John Donovan says "I believe Roubini's premise has merit." So, that's level 2.
Then we need to find someone who says "I think Swedroe is right that Buffett is right that it's the spring of hope," and someone who says "I think Donovan is right that Roubini is right that it's the winter of despair." That would be level 3.
How many levels can we go? |
You were right to ask this question. Is that level 4? |
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Kevinaom
Joined: 18 Mar 2007
Posts: 131
Location: Michigan
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| Posted: Sat Nov 07, 2009 5:19 pm Post subject: My response to the discussion... |
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I think there are two points which need to be mentioned: 1) I do not believe Buffet when he says the BNSF is a bet on the US Economy. Indeed, the BNSF network is West - East and specifically designed to move goods made in Asia into the United States. I was at a BNSF conference where all they talked about was the need for billions of dollars of GOVERNMENT money to shore up the rail coming out of the west coast ports.
So, the BNSF, in my mind, is a bet on the fact that cheap imports will continue to flood the US market and destroy our manufacturing base.
Second, Roubini is not saying the economy is bad what he is saying is that the growth in the economy can almost 100% be attributed to Government stimulus. As soon as that stimulus is pulled (which it must some day, we are only arguing about when) the US economy will go back to crumbling as the fundamentals have not changed at all.
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Could You Imagine The Carnage if We Had Privatized Social Security? |
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baw703916
Joined: 01 Apr 2007
Posts: 1834
Location: Northern Virginia
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| Posted: Sat Nov 07, 2009 5:59 pm Post subject: Re: My response to the discussion... |
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| Kevinaom wrote: | Indeed, the BNSF network is West - East and specifically designed to move goods made in Asia into the United States. I was at a BNSF conference where all they talked about was the need for billions of dollars of GOVERNMENT money to shore up the rail coming out of the west coast ports.
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Going back 150 years, every major rail line in the U.S. is east-west. It's a matter of geography. There simply isn't that much reason to build north-south railroads most places. You can do a lot of north-south bulk transport by ocean or the Mississippi.
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Kevinaom
Joined: 18 Mar 2007
Posts: 131
Location: Michigan
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| Posted: Sat Nov 07, 2009 6:34 pm Post subject: Re: My response to the discussion... |
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| baw703916 wrote: | | Kevinaom wrote: | Indeed, the BNSF network is West - East and specifically designed to move goods made in Asia into the United States. I was at a BNSF conference where all they talked about was the need for billions of dollars of GOVERNMENT money to shore up the rail coming out of the west coast ports.
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Going back 150 years, every major rail line in the U.S. is east-west. It's a matter of geography. There simply isn't that much reason to build north-south railroads most places. You can do a lot of north-south bulk transport by ocean or the Mississippi. |
Take a hard look at the new South to North corridor. The West - East was true as our Country expanded but with mfg continuing to move to Mexico in droves, the movement out of Mexico is huge. The Kansas City Southern has built an effective railroad that goes from the deep water port of Lazaro Cardenas through Monterrey, Houston then up to KC. KC is a perfect place to move product.
Mfgs are leaving China and moving back to Mexico. Further, with Lazaro being a natural deep water port without any of the union issues of Cali, along with being within shooting distance of Mexico City (huge growing middle class), I am betting a lot of product (both components and finished goods) will go to the port of Lazaro.
Anyway, it doesn't matter beyond the fact that Buffet is not betting on the U.S. He is betting on massive imports from China. In effect, he is betting on China v. Mexico. This one, I believe, he may be late to the party.
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Could You Imagine The Carnage if We Had Privatized Social Security? |
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unclemick
Joined: 20 Feb 2007
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Location: greater Kansas City
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| Posted: Sat Nov 07, 2009 7:24 pm Post subject: |
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Rather than bet on one versus the other - I'm sticking with the refs aka the Vanguard computers rebalancing my Target Retirement on full auto.
And no - I have not achieved the Zen like 'don't know don't care' as posted on this forum - I do have the stay the course/hurry up just stand there down fairly well even if it's the antsy version.
heh heh heh - I do kibitz Warren's stock picks when placing small bets with my side - quell the male hormones - money.   . |
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Jack
Joined: 27 Feb 2007
Posts: 1077
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| Posted: Sat Nov 07, 2009 7:58 pm Post subject: Re: My response to the discussion... |
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| Kevinaom wrote: | I do not believe Buffet when he says the BNSF is a bet on the US Economy. Indeed, the BNSF network is West - East and specifically designed to move goods made in Asia into the United States.
So, the BNSF, in my mind, is a bet on the fact that cheap imports will continue to flood the US market and destroy our manufacturing base. |
I'm not one to read Buffett's mind but isn't it equally plausible that he thinks that further devaluation of the dollar will spur exports from the U.S. and that goods will flow from the east to west coast. Either way his railroad keeps busy. |
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Adrian Nenu
Joined: 12 Apr 2007
Posts: 3760
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| Posted: Sat Nov 07, 2009 8:35 pm Post subject: |
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Buffett also owns 10.5 million shares of Union Pacific and 6.4 million shares of Norfolk Southern.
Adrian
anenu@tampabay.rr.com |
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swyck
Joined: 17 Mar 2008
Posts: 155
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| Posted: Sat Nov 07, 2009 9:18 pm Post subject: |
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| Adrian Nenu wrote: | Buffett also owns 10.5 million shares of Union Pacific and 6.4 million shares of Norfolk Southern.
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Does he get to drive the train? |
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Dan Moroboshi
Joined: 07 Jul 2007
Posts: 248
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| Posted: Sat Nov 07, 2009 10:22 pm Post subject: |
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| Adrian Nenu wrote: | Buffett also owns 10.5 million shares of Union Pacific and 6.4 million shares of Norfolk Southern.
Adrian
anenu@tampabay.rr.com |
Doesn't he already own an electric company?
Hmmmm... I'll bet his next purchase will be a water utility.
Here's what Bernie Madoff drew on his last turn:
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jsnbrnd
Joined: 11 Dec 2007
Posts: 224
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| Posted: Sun Nov 08, 2009 12:55 am Post subject: Re: My response to the discussion... |
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| Kevinaom wrote: |
Take a hard look at the new South to North corridor. The West - East was true as our Country expanded but with mfg continuing to move to Mexico in droves, the movement out of Mexico is huge. The Kansas City Southern has built an effective railroad that goes from the deep water port of Lazaro Cardenas through Monterrey, Houston then up to KC. KC is a perfect place to move product.
Mfgs are leaving China and moving back to Mexico. Further, with Lazaro being a natural deep water port without any of the union issues of Cali, along with being within shooting distance of Mexico City (huge growing middle class), I am betting a lot of product (both components and finished goods) will go to the port of Lazaro.
Anyway, it doesn't matter beyond the fact that Buffet is not betting on the U.S. He is betting on massive imports from China. In effect, he is betting on China v. Mexico. This one, I believe, he may be late to the party. |
And I think he's betting on massive exports of raw materials TO China. |
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nisiprius
Joined: 26 Jul 2007
Posts: 6999
Location: North America; Western Hemisphere; the Earth; the Solar System; the Universe; the Mind of God
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| Posted: Sun Nov 08, 2009 9:53 am Post subject: |
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One thing: I feel sure that Warren Buffett spins his comments. This is not a transparent or straightforward man. He does whatever he does for whatever good reasons he has, but he does not share his investment strategy with the general public.
He is a little too ready to present whatever he is doing as an obvious application of homespun wisdom, and a little too ready to mention creditable motives that could be seen as consistent with his actions.
Note, too, the exact language he uses. You've heard of a non-denial denial? Well, this is a non-assertion assertion. He does not say "I am betting on the United States." He states it as a hypothetical, something "you" could do, not as something Warren Buffet has done: | Quote: | | If you buy a railroad, you can’t move it to China or to India or anyplace else. You are betting on the United States. I can’t think of a surer bet. |
Notice what he does not say: | Quote: | | I am betting on the United States. |
I think he expects readers to draw that inference, hopefully without even noticing that it is an inference. But he does not actually say it. He lets Fortune's headline writers and Larry Swedroe say it.
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Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. |
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Lbill
Joined: 13 Mar 2008
Posts: 2078
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| Posted: Sun Nov 08, 2009 10:08 am Post subject: |
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| Quote: | | Felix Salmon of Portfolio went one step further and then notes that while Roubini's 401k is in equities, he has his interests in his firm as well as a lot of cash on the sidelines. |
You would have to be an idiot or a fool to believe Roubini is 100% in stocks given his viewpoint, wouldn't you? But it makes a good headline in the National Enquirer.
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"Whenever you find yourself on the side of the majority, it is time to pause and reflect." ~ Mark Twain
"A foole and his money is soone parted." - J. Bridges, 1587 |
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RobG
Joined: 28 Feb 2007
Posts: 472
Location: Bozeman, MT
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| Posted: Sun Nov 08, 2009 10:48 am Post subject: Re: My response to the discussion... |
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| Kevinaom wrote: | I think there are two points which need to be mentioned: 1) I do not believe Buffet when he says the BNSF is a bet on the US Economy. Indeed, the BNSF network is West - East and specifically designed to move goods made in Asia into the United States. I was at a BNSF conference where all they talked about was the need for billions of dollars of GOVERNMENT money to shore up the rail coming out of the west coast ports.
So, the BNSF, in my mind, is a bet on the fact that cheap imports will continue to flood the US market and destroy our manufacturing base.
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Out here BNSF is used to move coal from eastern MT and Wyo. 550,000,000,000 pounds of it in 2008. That will increase as electricity demands increase. Buffet's bet may be against cap/trade and nuclear *G* |
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thisguy1
Joined: 25 Mar 2009
Posts: 25
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| Posted: Sun Nov 08, 2009 12:01 pm Post subject: Warren Buffet Skewered this weekend |
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couple of blogs getting into it on Warren's backing of Goldman Sachs tax credit (attempted) purchase of fannie mae tax losses
Plus an amazing chart of how much Buffet's companies have been helped by all the bailouts
http://www.fundmymutualfund.co....uffet.html |
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dkturner
Joined: 25 Feb 2007
Posts: 131
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| Posted: Sun Nov 08, 2009 12:07 pm Post subject: |
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| Lbill wrote: | | Quote: | | Felix Salmon of Portfolio went one step further and then notes that while Roubini's 401k is in equities, he has his interests in his firm as well as a lot of cash on the sidelines. |
You would have to be an idiot or a fool to believe Roubini is 100% in stocks given his viewpoint, wouldn't you? But it makes a good headline in the National Enquirer. |
"he has his interests in his firm". That wouldn't be an equity investment would it? |
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Lbill
Joined: 13 Mar 2008
Posts: 2078
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| Posted: Sun Nov 08, 2009 12:15 pm Post subject: |
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| Quote: | | "he has his interests in his firm". That wouldn't be an equity investment would it? |
I believe they call it labor or human capital. You can afford to take more risk with financial investments based on the amount of labor capital you possess. If I'm a physician or a college professor, for example, it might be OK to take on more equity risk in my retirement portfolio. Zvi Bodie seems to be the exception - he's 100% in TIPS he says.
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"Whenever you find yourself on the side of the majority, it is time to pause and reflect." ~ Mark Twain
"A foole and his money is soone parted." - J. Bridges, 1587 |
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unclemick
Joined: 20 Feb 2007
Posts: 1067
Location: greater Kansas City
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| Posted: Sun Nov 08, 2009 2:58 pm Post subject: |
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| swyck wrote: | | Adrian Nenu wrote: | Buffett also owns 10.5 million shares of Union Pacific and 6.4 million shares of Norfolk Southern.
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Does he get to drive the train? |
Maybe - but I get a free calender every year for my few shares of Union Pacific.
heh heh heh - |
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stratton
Joined: 04 Mar 2007
Posts: 6233
Location: Puget Sound
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| Posted: Sun Nov 08, 2009 5:53 pm Post subject: Re: Warren Buffet Skewered this weekend |
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| thisguy1 wrote: | couple of blogs getting into it on Warren's backing of Goldman Sachs tax credit (attempted) purchase of fannie mae tax losses
Plus an amazing chart of how much Buffet's companies have been helped by all the bailouts
http://www.fundmymutualfund.co....uffet.html |
Of course companies Berkshire Hathaway holds stock in have been helped out. Every investor that holds a US index fund has been helped because they hold stock in those same companies and more.
Paul |
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stratton
Joined: 04 Mar 2007
Posts: 6233
Location: Puget Sound
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| Posted: Sun Nov 08, 2009 5:54 pm Post subject: |
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| unclemick wrote: | | swyck wrote: | | Adrian Nenu wrote: | Buffett also owns 10.5 million shares of Union Pacific and 6.4 million shares of Norfolk Southern.
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Does he get to drive the train? |
Maybe - but I get a free calender every year for my few shares of Union Pacific.
heh heh heh - |
So what happened to the Norwegian widow's dividend checks when lots of companies cut them? 
Paul |
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Lbill
Joined: 13 Mar 2008
Posts: 2078
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| Posted: Mon Nov 09, 2009 9:10 am Post subject: |
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If I were investing for infinity, as Buffet is, then I'd probably be 100% equities too. I think infinity qualifies as the "long run" doesn't it? However, I live in the real world and might need to find something in my pocket besides lint when I need a couple shekels for a cuppa Joe. 
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"Whenever you find yourself on the side of the majority, it is time to pause and reflect." ~ Mark Twain
"A foole and his money is soone parted." - J. Bridges, 1587 |
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grayfox
Joined: 15 Sep 2007
Posts: 1455
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| Posted: Mon Nov 09, 2009 10:39 am Post subject: Re: Larry Swedroe blog: Nouriel Roubini Versus Warren Buffet |
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I have read that Warren Buffett said he does NOT take macroeconomy into account when making investments. I took that to mean he doesn't have a better crystal ball than anyone else.
What Buffet has excelled at is picking superior companies and allocating capital to them. He is good at this. It allowed him to beat the broad market.
Note that his success was during the period about 1950 to 2000 when the U.S. was highly productive and growing. During that period, just buying the broad market (indexes) worked almost as well, but he did better. |
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DartThrower
Joined: 11 Mar 2009
Posts: 306
Location: Philadelphia
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| Posted: Mon Nov 09, 2009 10:40 am Post subject: |
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Noise is noise whether it's coming from Roubini, Buffett or one of those CNBC "experts" you never head of before now. Nobel prizes don't matter and ivy league pedigrees don't matter.
I guess it's fun to ponder these different points of view but in the end it should really just reinforce the need for a disciplined and sensible plan. So what has changed after considering these arguments?
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"Fallacies do not cease to be fallacies because they become fashions."
-G. K. Chesterton |
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unclemick
Joined: 20 Feb 2007
Posts: 1067
Location: greater Kansas City
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| Posted: Mon Nov 09, 2009 3:57 pm Post subject: |
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| stratton wrote: | | unclemick wrote: | | swyck wrote: | | Adrian Nenu wrote: | Buffett also owns 10.5 million shares of Union Pacific and 6.4 million shares of Norfolk Southern.
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Does he get to drive the train? |
Maybe - but I get a free calender every year for my few shares of Union Pacific.
heh heh heh - |
So what happened to the Norwegian widow's dividend checks when lots of companies cut them?
Paul |
At least for UNP she got a calender. Not so for BAC, C, JPM. A somewhat painful testimonial for diversity. Side money took a -17% hosing in dividend income vs 2007 if memory serves.
heh heh heh -   . |
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