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Friday, October 30, 2009

BLOOMBERG: Buffett’s Berkshire Cuts Moody’s Stake Third Time in 3 Months

By Andrew Frye

Oct. 31 (Bloomberg) -- Warren Buffett’s Berkshire Hathaway Inc., the biggest shareholder in Coca-Cola Co. and Wells Fargo & Co., reduced its stake in credit-rating company Moody’s Corp. by 2.9 percent, the third cut in just over three months.

Berkshire sold 1.15 million shares and remains Moody’s biggest stockholder with 38.07 million, according to a regulatory filing yesterday. The stake sold for about $28.7 million, Berkshire said. The Omaha, Nebraska-based firm cut its Moody’s holding by 17 percent in July and 2 percent last month.

Moody’s, whose founder John Moody created credit ratings in 1909, is suffering from reduced demand for debt analysis after the economic decline curbed fixed-income issuance. The firm and rival Standard & Poor’s have been criticized by regulators and lawmakers for not foreseeing the wave in homeowner defaults that brought down the value of securities once awarded gold-standard AAA credit grades.

Moody’s fell 59 cents, or 2.4 percent, to $23.68 yesterday in New York Stock Exchange composite trading. It has slipped 20 percent in the past six months, trailing the 19 percent gain in the S&P 500 Index. Berkshire declined $1,180 to $99,000 and has gained 5.3 percent in six months.

Buffett didn’t respond to a request for comment e-mailed to his assistant, Carrie Kizer, after normal business hours.

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BUSINESSWEEK: Book review - "Too Big to Fail" by Andrew Sorkin

Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System---and Themselves
Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System---and Themselves by Andrew Ross Sorkin
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There's no paucity of books about the financial crisis. Journalists, academics, economists, and pundits seem to have chronicled every event surrounding the drama on Wall Street. Some bite off just a piece, as did Wall Street Journal reporter Kate Kelly in Street Fighters, which looks at the last three days of failed investment bank Bear Stearns. Others, such as journalist Duff McDonald's biography of JPMorgan Chase (JPM) CEO Jamie Dimon, Last Man Standing, consider a single player's role. And a raft of works chronicle the roots of the meltdown, including the forthcoming How Markets Fail by New Yorker writer John Cassidy.

But Too Big Too Fail by New York Times (NYT) columnist Andrew Ross Sorkin is among the first to tackle the broad crisis, starting with the days after JPMorgan agreed to buy Bear and ending shortly after the government decided to inject tens of billions of dollars into the country's largest banks in October 2008. The book is exhaustive—if somewhat exhausting in its length—and details the fascinating interplay between Wall Street and Washington in the eight critical months that brought the financial system to the brink of collapse.

Sorkin's reporting chops show. He interviewed more than 200 people, spending some 500 hours with top government officials, Wall Street luminaries, and others privy to critical moments. He also gained access to personal e-mails and confidential documents. Among these is the resignation letter Lehman Brothers CEO Richard S. Fuld sent to the chairman of the Federal Reserve of New York, relinquishing his position on the regulator's board in the days before the investment bank filed for bankruptcy.

As a result, readers feel as though they're in the midst of the action. Sorkin recreates intimate conversations and high-level discussions. For example, the author describes a Saturday morning meeting in July 2008 at the Rye (N.Y.) mansion of Morgan Stanley (MS) chief John Mack, during which Lehman's Fuld drops hints about the possibility of a marriage between the two firms. After Fuld departs, a bewildered Mack asks: "Was he offering to merge with us?" Obviously no deal was ever consummated, and Lehman went under just two months later.

The author seems to enjoy unusual access to sources. For instance, Too Big to Fail contains little-known accounts of how legendary investor Warren Buffett dispensed homespun wisdom to top Wall Street chieftains during critical moments. We read that talks between the Oracle of Omaha and Fuld over a potential investment in Lehman fizzled out in March 2008. Months later, we learn, Buffett sent a four-page letter to then-Treasury Secretary Henry "Hank" Paulson, outlining how the U.S. could buy up banks' toxic assets and make that effective.

Despite its 600 pages, Sorkin's work is highly readable and easily understood. Amid the detailed account of events, he weaves in quirky personal details and amusing anecdotes about the main characters and supporting players. These don't necessarily add a lot of insight, but they do keep the story lively—and make the work appealing to an audience wider than just Wall Street buffs.

In one instance, a longtime colleague of Paulson describes him as having no social skills. The point is later illustrated in a summer staff meeting at the Treasury Secretary's $4.3 million Washington (D.C.) home. When Paulson's wife interrupts the gathering to offer refreshments, Paulson shoos her away, saying "they don't want anything to drink." When she returns with water anyway, nobody takes any for fear of crossing their boss.

These strengths, however, may also be the book's weaknesses. Events are still fresh in the minds of those who have closely followed the financial crisis since 2008—and readers may feel little need for such an in-depth look right now. Some passages may even seem familiar. Sorkin relies heavily on magazines, blogs, and newspapers, including his own reporting for The New York Times. The "notes and sources" section runs to nearly 40 pages. There's also plenty of overlap with other accounts of the crisis: Several stories about Lehman, for example, also show up in A Colossal Failure of Common Sense by Lawrence G. McDonald, a former vice-president at the investment bank, and Patrick Robinson, co-author of the recent best-seller Lone Survivor.

Still, Too Big to Fail may have more staying power than other works. It could easily end up as required reading in college history or business courses—once the smoke has cleared a few years from now.

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REUTERS: Warren Buffett is Bullish on America's Future, but Says That a Full Economic Recovery Will Take a While

Final Segment of Business Wire's Exclusive Interview with Warren Buffett Now
Available

SAN DIEGO--(Business Wire)--
Although the U.S. economy is no longer in the "emergency room," a full recovery
isn't imminent, noted Warren Buffett, CEO of Berkshire Hathaway Inc., in a
recent Business Wire interview to promote the launch of PYMNTS.com, a portal for
the global payment industry.

Buffett's remarks came in a wide-ranging video interview with Cathy Baron
Tamraz, Business Wire's president and CEO. PYMNTS.com is a joint venture of
Business Wire and Market Platform Dynamics. The interview was conducted on Sept.
16, 2009.

Acknowledging that the financial markets were gripped in a "real panic" during
the height of the economic crisis, Buffett praised government authorities for
taking the appropriate measures to quell the fear, and to prevent the economy
from "going over the cliff." Buffett warned that while we are out of immediate
danger, remedial action is still needed to cure broader systemic issues.

Consumer and investor confidence were casualties of the panic mentality in late
2008, Buffett continued, and it will take a while for confidence to be restored.
Buffett reiterated his firm belief that the American economic system is sound
and works extremely well, and that the long-term prognosis for the U.S. standard
of living remains very favorable.

Unemployment will continue to be an issue, as companies are extremely cautious
in adding to their payrolls. Buffett was optimistic that three years from now
many of his own companies will have more employees than they do currently as the
economy continues to rebound.

A greater reliance on government regulation will not eliminate future bubbles or
free falls, Buffett warned, noting that human behavior is the unmanageable
variable in the economic cycle. Although reforms may mitigate future economic
gyrations, human emotion is a wild card that defies regulation.

Criticizing Wall Street's current compensation model, Buffett argued for a more
balanced system that included "sticks" as well as "carrots." Buffett called for
the creation of a "downside" for individuals who have walked away rich from the
messes they've created, not only for their own financial institutions, but for
society. "There have to be incentives," Buffett said, "not only to get rich, but
to behave well."

Reflecting on the painful lessons of the past year, Buffett observed that it has
reaffirmed that the customer is king, and that companies that are committed to
client service will do well in the long term.

Business Wire video interview: http://client.dssimon.com/bw1

About Business Wire

Business Wire, a Berkshire Hathaway company, is utilized by tens of thousands of
member companies and organizations worldwide to functionally enhance and
communicate investor relations and public relations content to target audiences.
As a recognized disclosure service in the United States, Canada and a dozen
European countries, Business Wire facilitates the simultaneous flow of
market-moving press releases from corporations to financial markets and their
audiences, including regulatory authorities, media, investors, financial
information systems and consumer news services. Business Wire also handles XBRL
tagging, document formatting and regulatory filing into EDGAR, SEDAR, FSA and
other systems.

Communications professionals turn to Business Wire to optimize and issue press
releases, photos and multimedia to news organizations, journalists, trade
publications, search engines, and individuals, with full-text posting to web
sites, online services and databases. A range of distribution options enables
members to target by geography, industry, news theme and audience demographics.

Founded in 1961, Business Wire has dual headquarters in San Francisco and New
York, with 30 bureaus in cities including Los Angeles, Chicago, Boston, Miami,
Paris, Frankfurt, London, Brussels, Tokyo, Toronto and Sydney and reciprocal
offices throughout the world. Business Wire's patented NX data platform supports
XML, XHTML and XBRL code that enhances news release interactivity, social media
sharing and search engine optimization. More information about Business Wire and
its services is located on its website at http://www.BusinessWire.com.

Photos/Multimedia Gallery Available:
http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6086563〈=en

About PYMNTS.com

PYMNTS.com is an online media channel that captures user-generated and
expert-driven commentary, information, news and analysis on "what's next" in the
payments sector worldwide. The site provides a platform for industry
professionals to share content related to their latest company and product
developments, to tap into the collective commentary and analysis from experts,
bloggers and industry pundits, and to interact with industry thought leaders and
other influentials on topics of critical importance to the future of the sector.


PYMNTS.com. provides an innovative new platform for emerging players to "pitch"
their venture and companies in the sector to launch new products. The PYMNTS.com
wiki provides a first-ever country-specific payment information repository,
created and maintained by professionals in those countries with access to and
knowledge of their local payments environment. Breaking news is provided by a
direct feed to the site from Business Wire.

Photos/Multimedia Gallery Available:
http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6086563〈=en

Business Wire
Laura Sturaitis
Senior Vice President, Media Services & Product Strategy
800-770-9473 or 954-474-8833

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REUTERS: Moody's results top Street view on ratings pickup


* Q3 EPS 42 cents; Street view 38 cents

* Revenue up 4 percent

* Shares down 1 pct in afternoon trading (Adds detail on S&P, comments from analyst and Moody's CEO)

NEW YORK, Oct 29 (Reuters) - Moody's Corp (MCO.N), parent of Moody's Investors Service, reported better-than-expected quarterly earnings Thursday on a pickup in bond issuance, and raised its outlook for the full year.

Moody's, whose main business is providing ratings for debt, and its main rival McGraw-Hill Cos' (MHP.N) Standard & Poor's were hit hard by a slump in debt issuance during the recession, but a pickup in corporate financing activity in the third quarter boosted both companies' results.

Third-quarter revenue at Moody's climbed 4 percent to $451.8 million, while profit attributable to shareholders fell less than analysts had expected to $100.6 million, or 42 cents per share, from $113 million, or 46 cents per share, a year earlier.

Analysts on average expected earnings of 38 cents a share, according to Thomson Reuters I/B/E/S.

Revenue from rating corporate bonds soared 32 percent from a year earlier, while revenue from rating structured finance fell 17 percent.

Citing the strength of the corporate debt market, New York-based Moody's raised its full-year profit forecast to a range of $1.60 to $1.68 a share. It previously forecast $1.45 to $1.55.

"This speaks to how significantly the credit market conditions have improved," said Peter Appert, analyst at Piper Jaffray & Co, noting that in the past the company has tended to be conservative with its guidance.

McGraw-Hill's Standard & Poor's on Monday reported its first quarterly increase in revenue in almost two years and it also cited the pickup in corporate activity. [ID:nN26178422]

Moody's shares were down 1.1 percent to $24.35 in Thursday afternoon trading. The shares are up 23 percent this year.

Shares of McGraw-Hill, which also has media and education businesses, were up 2.7 percent at $30.

REGULATION

Both Moody's and Standard & Poor's, along with their smaller rival, Fimalac SA's (LBCP.PA) Fitch Ratings, have come under fire for fueling the financial crisis by assigning high ratings to mortgage-related securities that later defaulted.

Regulators globally are stepping up scrutiny of credit ratings and a U.S. House of Representatives Financial Services Committee on Wednesday approved legislation that would more tightly regulate the agencies.

"We remain focused on playing a constructive part in the discussion of these issues with Congress, the (Securities and Exchange Commission), and other regulatory authorities and market participants," Moody's Chief Executive Raymond McDaniel said on a call with analysts.

Moody's in particular has been in the spotlight in the last few months after two former executives alleged that the credit agency favored revenues over ratings quality. McDaniel defended the company on the call and said independent investigations have shown the criticism was unfounded.

Moody's has seen a pickup in lawsuits, McDaniel said, adding that while Moody's is not concerned it is going to have a litigation loss, its legal costs are rising as a result of the litigation.

Warren Buffett's Berkshire Hathaway Inc (BRKa.N) is the largest Moody's shareholder. In July, Berkshire Hathaway said it had cut its stake to 16.98 percent from 20.4 percent, the first reported reduction since 2000. (Reporting by Elinor Comlay; editing by John Wallace and Tim Dobbyn)

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VANITY FAIR: Are Warren Buffett's Kids Really Deprived?

Every Tuesday on VF.com, filmmaker Jamie Johnson offers a glimpse into the secret lives of the super-rich.onepercent.jpg

When journalists write about the family of Warren Buffett, one of the world’s richest men, they almost always discuss his unconventional decision not to pass the bulk of his fortune on to his children and grandchildren. In 2006, the iconic investor announced plans to leave the greatest portion of his fortune—a sum estimated in the tens of billions—to The Bill and Melinda Gates Foundation. This widely publicized gift, along with numerous reports that have emerged over the years detailing Warren’s outspoken views on limiting inheritance, have established him as a model of dynastic restraint. People value his philanthropic initiative and perceive his wealth-transference policy as a great equalizer, or at least an initial step towards leveling the social and economic playing field.

And it’s hard to argue against Warren’s choices for redistributing the fortune he built through entrepreneurial ingenuity and hard work over time. But it would be a mistake to think that the Buffett children haven’t received any ancestral wealth and power from their pragmatic father. The public often overlooks the $1 billion gift Warren made to each of his three kids for use in charitable foundations. Most recently a profile of Warren’s son, Howard Buffett, in Saturday’s edition of The New York Times reinforced the familiar theme of Buffett-family modesty. While the article does acknowledge Warren’s sizeable contribution to his children’s philanthropic endeavors, it also leaves the reader feeling somehow that nothing grand has been handed down from the patriarch to his offspring.

Nonetheless, a billion dollars, even when held by a charitable foundation and managed in accordance with laws governing such foundations, is an extremely powerful tool. Any private foundation holding $1 billion worth of securities, for example, is required by law every year to give away a minimum of five percent of that total sum, which comes out to $50 million. Anyone who makes annual donations of that size is guaranteed to wield immense influence. And it should also be noted that there is nothing preventing the trustees, or governors, of any foundation from making contributions to not-for-profit projects of their own creation. An art lover could start an art institute, a nature lover could build a wildlife sanctuary—the possibilities for personal gratification through foundation work are abundant.

Affluent people who run private foundations get to direct funds toward causes that are interesting and meaningful to them. These foundations give away billions of dollars and play a critical role in society. To undermine their significance would be foolish. But it would be equally irresponsible to suggest that those at the helm do not possess entrenched power.

Personally, I believe that much of the publicized work done by the Buffett charities is important and substantial. What I do not believe, despite the well-accepted media narrative, is that Warren Buffett has in any way pushed his children to the margins of society.

(On an incidental note, I interviewed Warren Buffett’s granddaughter, Nicole Buffett, for a documentary film I made in 2008. The film reveals that Warren, in fact, gives his granddaughter no personal funds or money for charitable giving. However, this is largely a separate issue, and bears no relation to this post.)

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REUTERS: Swiss Re rally raises allure of early Buffett buyout

Thu Oct 29, 2009 9:54am GMT

By Jason Rhodes

ZURICH (Reuters) - Swiss Re's share price rebound gives Chief Executive Stefan Lippe a chance to raise capital, then use it to buy back a costly convertible investment from Warren Buffett and write new business.

Swiss Re (RUKN.VX) wrote down billions of Swiss francs on illiquid assets in the financial crisis and was forced to turn to Buffett's Berkshire Hathaway (BRKa.N) for support in February, triggering panic selling of the stock to record lows.

"If they chose to raise capital now it would provide an indication that they are back and in a position to pay back Warren Buffett," said A.M. Best analyst Vasilis Katsipis.

"It would improve their financial flexibility and performance. It's going to be a step in the right direction."

Lippe, chosen early this year as a boring but safe alternative to unpopular risk-taker Jacques Aigrain, has brought stability to the reinsurer by reducing risk, cutting losses and concentrating on the core reinsurance business.

Analysts wonder if veteran insurer Lippe also has the strategic vision to use the company's higher share price to deliver capital needed to buy back the convertibles and have the financial flexibility to chase new business more aggressively.

The shares plummeted to 11.88 francs in March shortly after Buffett pumped in 3 billion francs (1.8 billion pounds) at a hefty 12 percent coupon, with the option to convert into equity after three years that would hand Berkshire around 25 percent of Swiss Re.

At close on Tuesday, Swiss Re traded at 44.58 francs, almost double the Buffett conversion price of 25, meaning the reinsurer could even reduce share dilution by issuing equity and using the money to prevent Buffett from converting at the lower price.

"The shares are currently trading nearly four times higher than after the Berkshire deal and when you have luck like that, you should use it," said Kepler Capital Markets analyst Fabrizio Croce. "Nobody knows where the markets are going to go."

CLOSING THE GAP

A boost to capital could help Swiss Re, the world's second-biggest reinsurer, claw back ground on Munich Re (MUVGn.DE), which knocked it off the top spot in the crisis.

But Munich Re has since failed to turn the screw further on its closest rival, which under Lippe's stewardship is rebuilding the confidence of clients previously worried about Swiss Re's stability and its ability to pay up if hit by major claims.

---------------------------------------------------------

For graphic showing performance of Swiss Re and Munich Re:

here

---------------------------------------------------------

In the last two months, Swiss Re has said reinsurance prices are rising overall and that it is well positioned for the January 2010 renewals season, but will remain conservative on writing new business.

The company could write more new business with the backing of higher capital and a better credit rating, comfortable in the knowledge it can repay Buffett.

Reinsurers need to hold a large amount of capital to cover potential claims.

"The franchise of the company is still strong. Capital is the only constraint to regaining past glory," said Croce.

"They should do a capital increase and try to recover their AAA rating and write business," he said, adding the likely third-quarter strengthening of Swiss Re's capital base could deter the company from taking such bold action.

In March, shareholders approved the possibility of Swiss Re creating up to 180 million shares, equivalent to around 8 billion francs at Tuesday's closing price.

"They could issue up to 3 billion Swiss francs now and then think about a second similar step in a second phase," said Croce.

CLOSING THE DOOR ON BUFFETT

Swiss Re would need around 3.6 billion francs to repay Buffett, including a 20 percent repayment premium in a window between two and three years after Buffett made the investment.

Alternatively, the company could choose to pay a higher 40 percent repayment premium and clear the costly debt early in a show of strength to investors and rivals.

"The higher the share price goes, the more likely we will see an early redemption of the 3 billion Swiss francs Berkshire loan, potentially financed by a capital hike or similar measures," said Vontobel analyst Stefan Schuermann.

Ratings agency Standard and Poor's cut Swiss Re's credit rating, an indication of financial strength, to A+ from AA earlier this year. The Buffett investment and other factors enabled Swiss Re to recover its capital position to 4.5 billion francs in excess of that required for a AA rating by the end of the first half.

Hence some analysts see Swiss Re, once rated with the top AAA most often reserved for stable Western governments, sitting tight for the time being as the company's capital position likely improved further in the third quarter.

"We expect Swiss Re to repay Berkshire convertible in 2011 without the need to raise further capital," analysts at Goldman Sachs said in a note.

(Additional reporting by Paul Arnold, Editing by Sitaraman Shankar)

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Thursday, October 29, 2009

BLOOMBERG: Buffett Beats Gross in Global Poll as Investor With Most Wisdom


By Mike Dorning

Oct. 29 (Bloomberg) -- The Oracle of Omaha retains his pre-eminence as a market visionary, outshining a new wave of financial strategists and the best-known central bankers.

Billionaire investor Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., is regarded as the best assessor of financial markets by a plurality of almost one-fourth of respondents to the quarterly poll of investors, traders and analysts who subscribe to the Bloomberg terminal.

The closest runner-up, Bill Gross, the founder and co- chief investment officer of Pacific Investment Management Co., is chosen by 16 percent. Billionaire investor George Soros gets 10 percent, followed by Nouriel Roubini, the New York University professor who in 2006 predicted the financial crisis, and Marc Faber, publisher of the Gloom, Boom & Doom Report.

Fewer than 1 in 10 cited Federal Reserve Chairman Ben Bernanke, despite high marks for his performance as a central banker. Only 3 percent pick Alan Greenspan, the former Fed chairman.

“The other people in the list have their merit, but I think consistency -- which does not mean total absence of mistakes -- is the key to rating Buffett,” says poll respondent Frédéric Bach, 46, a partner and head of fixed- income investments at London-based Falcon Money Management LLP, which manages $4 billion. “I would add a non-financial element: there is some humility in the man, as when he opted out of tech stocks because he didn’t understand them. Who in finance nowadays will admit they are wrong, or they don’t understand something?”

Obama Rating

Investors’ confidence in President Barack Obama and his economic team dropped sharply during the past three months, even as the Standard & Poor’s 500 Index rose about 7 percent and Obama was awarded the Nobel Peace Prize. Among global investors, 57 percent say they hold a favorable opinion, down from 73 percent in a July poll.

Among U.S. investors, two-thirds hold an unfavorable opinion of Obama. Treasury Secretary Timothy Geithner and Lawrence Summers, head of the National Economic Council, also get negative grades from U.S. respondents.

The quarterly Bloomberg Global Poll of investors and analysts in six continents was conducted Oct. 23-27. It is based on interviews with a random sample of 1,452 Bloomberg subscribers, representing decision makers in markets, finance and economics. The poll has a margin of error of plus or minus 2.6 percentage points.

The Bloomberg Global Poll is conducted by Selzer & Co., a Des Moines, Iowa-based public-opinion research company.

Buffett Missteps

Buffett’s lofty standing follows some recent high-profile setbacks, among them an investment in Houston-based ConocoPhillips, the third-largest U.S. oil company, which the billionaire called a “major mistake,” and the purchase of shares in two Irish banks that soon afterward plummeted in value as the financial crisis struck.

Berkshire Hathaway showed a 9.6 percent decline in book value last year, only the second time the measure has fallen since Buffett took over in 1965, and the company’s stock price underperformed the S&P 500 during the year ended Sept. 30.

Still, Buffett also seized advantage of the financial panic last fall to make big purchases in well-known companies at depressed prices, extending $8 billion in financing to New York- based Goldman Sachs Group Inc. and Fairfield, Connecticut-based General Electric Co. at 10 percent yields after the Lehman Brothers Holdings Inc. failure froze credit markets.

Jeff Matthews, author of “Pilgrimage to Warren Buffett’s Omaha” and founder of the hedge fund Ram Partners LP in Greenwich, Connecticut, says the long arc of Buffett’s investing career makes him stand out.

‘One-Hit Wonders’

“There have been a lot of one-hit wonders over the last 40 years,” Matthews says. “Warren Buffett has outlasted them all.”

Among U.S. investors, Pimco’s Gross rated as highly as Buffett. Newport Beach, California-based Pimco, the world’s biggest manager of bond funds with $840 billion in assets, has called for a “new normal” in the global economy that will include heightened government regulation, lower consumption, slower growth and a shrinking global role for the U.S. economy. Pimco is a unit of Munich-based insurer Allianz SE.

“While not always on-point, he brings a rigorously analyzed yet pragmatic perspective that yields some value at any point in time,” says poll respondent Michael Martin, senior vice president and general counsel of MDAdvantage Insurance Co. of New Jersey. “The facts, as Gross and his team have determined, appear to indicate a long and perhaps very difficult path for this country and others like it.”

International Luster

While Obama has lost some of his international luster, he continues to be viewed positively outside the U.S. In interviews, poll respondents cited the turnaround of the U.S. economy under his leadership.

“The world is facing the worst economic period of its recent history,” says Francesco Scotto, 36, head of treasury products for BNP Paribas Fortis in Milan. “Acting on both the real and the financial economy, the U.S. government helped in the best possible way the American economy to exit from the crisis.”

U.S. investors’ highly critical view of the Obama administration is at odds with the views not only of investors elsewhere but also the general public at home. Most polls of Americans have shown only small erosion in Obama’s popularity over the past three months and the president is viewed favorably by comfortable margins of the U.S. public.

The Obama policy agenda has a more direct impact on U.S. investors’ bank balances, says Ann Selzer, president of Selzer & Co., which conducted the poll.

‘Skin in the Game’

“They have a different kind of skin in the game,” Selzer says. “They worry about potential government interference in their ability to make money for themselves and their employers and their clients. They see higher taxes and controls on executive pay on the horizon and it can’t possibly make them happy.”

Bernanke’s leadership of the Fed is held in high esteem across every region, with a favorable view from 69 percent of investors worldwide, down slightly from 74 percent in July.

Geithner is viewed positively by 48 percent against 43 percent with a negative opinion.

The worldwide verdict on Summers is negative, with 42 percent rating him unfavorably versus 34 percent favorably.

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Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive AdvantageWarren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage by Mary Buffett
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Wednesday, October 28, 2009

AMAZON: The Snowball: Warren Buffett and the Business of Life - Updated Paperback

The Snowball: Warren Buffett and the Business of Life

The Snowball: Warren Buffett and the Business of Life
By Alice Schroeder

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Product Description

Here is THE book recounting the life and times of one of the most respected men in the world, Warren Buffett. The legendary Omaha investor has never written a memoir, but now he has allowed one writer, Alice Schroeder, unprecedented access to explore directly with him and with those closest to him his work, opinions, struggles, triumphs, follies, and wisdom. The result is the personally revealing and complete biography of the man known everywhere as “The Oracle of Omaha.”

Although the media track him constantly, Buffett himself has never told his full life story. His reality is private, especially by celebrity standards. Indeed, while the homespun persona that the public sees is true as far as it goes, it goes only so far. Warren Buffett is an array of paradoxes. He set out to prove that nice guys can finish first. Over the years he treated his investors as partners, acted as their steward, and championed honesty as an investor, CEO, board member, essayist, and speaker. At the same time he became the world’s richest man, all from the modest Omaha headquarters of his company Berkshire Hathaway. None of this fits the term “simple.”

When Alice Schroeder met Warren Buffett she was an insurance industry analyst and a gifted writer known for her keen perception and business acumen. Her writings on finance impressed him, and as she came to know him she realized that while much had been written on the subject of his investing style, no one had moved beyond that to explore his larger philosophy, which is bound up in a complex personality and the details of his life. Out of this came his decision to cooperate with her on the book about himself that he would never write.

Never before has Buffett spent countless hours responding to a writer’s questions, talking, giving complete access to his wife, children, friends, and business associates—opening his files, recalling his childhood. It was an act of courage, as The Snowball makes immensely clear. Being human, his own life, like most lives, has been a mix of strengths and frailties. Yet notable though his wealth may be, Buffett’s legacy will not be his ranking on the scorecard of wealth; it will be his principles and ideas that have enriched people’s lives. This book tells you why Warren Buffett is the most fascinating American success story of our time.


From the Hardcover edition.


Product Details

  • Amazon Sales Rank: #911 in Books
  • Published on: 2009-10-27
  • Released on: 2009-10-27
  • Original language: English
  • Number of items: 1
  • Binding: Paperback
  • 832 pages

Editorial Reviews

From Publishers Weekly
In this startlingly frank account of Buffett's life, Schroeder, a former managing director at Morgan Stanley—and hand picked by Buffett to be his biographer—strips away the mystery that has long cloaked the word's richest man to reveal a life and fortune erected around lucid and inspired business vision and unimaginable personal complexity. In a book that is dominated by unstinting descriptions of Buffett's appetites—for profit, women (particularly nurturing maternal types), food (Buffett maintained his and his family's weight by "dangling money")—it is refreshing that Schroeder keeps her tone free of judgment or awe; Buffett's plain-speaking suffuses the book and renders his public and private successes and failures wonderfully human and universal. Schroeder's sections detailing the genesis of Buffett's investment strategy, his early mentoring by Benjamin Graham (who imparted the memorable "cigar butt" scheme: purchasing discarded stocks and taking a final puff). Inspiring managerial advice abounds and competes with gossipy tidbits (the married Buffett's very public relationship with Washington Post editor Katherine Graham) in this rich, surprisingly affecting biography.

From Bookmarks Magazine
Warren Buffett should be applauded for allowing such open access to his life. Alice Schroeder, who interviewed friends and family, pored over Buffett's personal archive, and spent thousands of hours with Buffett, comes away with an unprecedented look at the hidden life of an American icon. At more than 900 pages (100 of which are notes), The Snowball—the title is a metaphor for the relentless growth of Buffett's portfolio—sets the bar high for future efforts. Schroeder's account is comprehensive and her eye for the telling detail keen; while she explains the financial deals, she also explores Buffett's childhood quirks and his unconventional marriage. Enough is enough, though, and John Mark Eberhart of the Kansas City Star speaks for several critics when he points out, "I just could have done with a little less bang for my buck."
Copyright 2008 Bookmarks Publishing LLC

Review
'An epic account of the greatest capital accumulator in history' Dominic Lawson, The Times 'Warren Buffett's opinions are so hotly sought that THE SNOWBALL, a biography with which he has enthusiastically cooperated, would be of interest even if it answered only softball questions. It approaches him seriously, covers vast terrain and tells a fascinating story' New York Times 'Buffett has been ahead of the curve for most of the past 50 years, making him one of the world's richest people. The Snowballprovides some clues about how he's done it' Financial Times 'A monumental work you feel like you've been in the presence of a monumentally flawed but riveting character utterly compelling' Evening Standard


Customer Reviews

To a great extent, his life has been business...and business has been his life5

I recently re-read Roger Lowenstein's biography, Buffett: The Making of an American Capitalist (first published in 1995 and now re-issued with a new Afterword), and then read this more recent one by Alice Schroeder. Both are first-rate. Which to select if reading only one? That depends on how much you wish to know about Buffett's personal life, including his relations with various family members, and how curious you are about his personal hang-ups, peculiarities, eccentricities, fetishes, etc. If you can do without any of that, Roger Lowenstein's biography is the one to read. I also highly recommend the recently published Second Edition of The Essays of Warren Buffet: Lessons for Corporate America, with content selected, arranged, and introduced by Lawrence Cunningham.

The heft of Schroeder's biography may discourage some people from obtaining a copy. To them I presume to suggest that they not be deterred by that factor. Schroeder has a lively, often entertaining writing style that drives the narrative through just about every period and (yes) interlude of Warren Buffett's life and career thus far. There is much more information provided than most readers either need or desire. However, she had unprecedented access not only to Buffett but to just about everyone else with whom he is (or once was) associated as well as to previously inaccessible research resources. It is possible but highly unlikely that anyone else will write a more comprehensive biography than Schroeder has, at least for the next several years, if not decades. Also, her opinion of Buffett seems to me to be balanced and circumspect. No doubt he wishes that certain details about his life and career were not included. However, there has been no indication from him or those authorized to represent him that any of the material in this biography (however unflattering) is either inaccurate or unfair. Both halos and warts are included.

Others have shared their reasons for holding this book in high regard. Here are two of mine. First, although I had already read various Buffett's chairman's letters that first appeared in a series of Berkshire Hathaway's annual reports, I did not understand (nor could I have understood) the context for observations he shared, especially his comments about especially important 12-month periods throughout BRK's history. Schroeder provides the context or frame-of-reference I needed but previously lacked. For example, whereas in previous letters, Buffett merely offered brief updates on how each BRK company was doing, in 1978 he began to share his thoughts about major business topics such as performance measurement for management and why short-term earnings were a poor criterion for investment decisions. With the help of Carol Loomis, especially since 1977, his chairman's letters "had grown more personal and entertaining by the year; they amounted to crash courses in business, written in clear language that ranged from biblical quotations to references to Alice in Wonderland, and princesses kissing toads." As Schroeder explains, these gradual but significant changes of subject and tone reflect changes in Buffett's personal life as he became more reflective about business principles and more appreciative of personal relationships. His children were growing up and departing the "nest" in Omaha. His wife Susie decided to relocate to San Francisco. Meanwhile, his personal net worth continued to increase substantially. His national and then international recognition also increased. The "Oracle of Omaha" had finally become sufficiently confident of himself to reveal to others "a sense of him as a man."

I also appreciate how carefully Schroeder develops several separate but related themes that help her reader to manage the wealth of information she provides. The biography's title suggests one of these themes: the "snowball" effect that compounded interest can have. From childhood when he began to sell packs of gum (but not single sticks) and bottles of soda, and a money changer was his favorite toy, Buffett was fascinated by the way that numbers "exploded as they grew at a constant rate over time was how a small sum could be turned into a fortune. He could picture the numbers compounding as vividly as the way a snowball grew when he rolled it across the lawn. Warren began to think about it a different way. Compounding married the present to the future. If a dollar today was going to be worth ten some years from now, then in his mind the two were the same." Early in life, Buffett avoided making any purchases unless they were almost certain to generate compound interest. This theme is central to understanding Buffett's investment principles and to his own leadership of BRK. It also helps to explain why he could become physically ill when an investment cost others the funds they had entrusted to his care. Other themes include his determination to simplify his life to the extent he could (e.g. eating hamburgers and wearing threadbare sweaters, minimizing participation in family activities) so that he could concentrate almost entirely on business matters; his dependence on a series of women, beginning with his mother and two sisters (especially Doris) that continued with his first wife Susie (and their daughter "Susie Jr.") and then companion Astrid Menks whom he married in 2006; and his passion for helping others to understand the business principles to which he has been committed since childhood.

There is one other theme of special interest and importance to me: over the years, how Buffett has interacted with various associates, notably with Jerome Newman and Benjamin Graham, Sandy Gottesman, Charlie Munger, Bill Ruane, Katherine Graham, and Bill Gates. By all accounts, Buffett is a superb business associate once he agrees to become involved. He cares deeply about each relationship, does whatever may be necessary to protect and defend the best interests of his associates, and is extraordinarily generous with material rewards as well as recognition. Here is an especially revealing excerpt from Cunningham's Introduction to The Essays of Warren Buffett: "The CEOs at Berkshire's operating companies enjoy a unique position in corporate America. They are given a simple set of commands: to run the business as if (1) they are its sole owner, (2) it is the only asset they hold, and (3) they can never sell or merge it for one hundred years." These three "commands" are wholly consistent with what Lawrence explains earlier in the same Introduction: "The central theme uniting Buffett's lucid essays is that the principles of fundamental business analysis, first formulated by his teachers Ben Graham and David Dodd, should guide investment practice. Linked to that theme are management principles that define the proper role of corporate managers as the stewards of investment capital and the proper role of shareholders as the suppliers and owners of capital. Radiating from these main themes are practical and sensible lessons on the entire range of important business issues, from accounting to mergers to valuation." Those who shared Buffett's same core values of honesty and integrity, and who are also committed to the same basic principles, cherish their relationship with him.

To me, Alice Schroeder's rigorous and eloquent analysis of this theme of mutually productive and beneficial collaboration is her single greatest achievement among many in this definitive biography of one of the most important and yet least understood business leaders in recent years. Bravo!

Valuable Insight into an Enigma!5
The title of this book refers to Buffett's likening life to a snowball - "the important thing is to find wet snow and a really long hill." Buffett certainly has had that effect with money.

"The Snowball" begins with a Buffett presentation to an elite 1999 group at Sun Valley, suggesting in a humorous manner that the ".com" frenzy was no more than a bubble. Then, its on to learning why his associate Charles Munger (an inseparable partner since 1959) is both the opposite and highly similar to Buffett.

Warren Buffett, we learn comes from a heritage of very thrifty small business owners. His parents initially struggled through the Great Depression, carried initially by grandfather's letting the food bill run at his grocery store, then by the success of his newly opened stock brokerage that focused on conservative investments. Unfortunately, his mother was somewhat unbalanced, directing frequent tirades at Warren and his sister, creating a lifelong need for the approval of women. Calculating the comparative life spans of religious song writers while in church led Warren towards religious skepticism at an early age.

Armed with his father's nostrums and examples, his early business experiences (selling gum, pop, magazines, refurbished golf balls, delivering papers) and stock investment (sold too early, losing most of his potential profit), learning that he didn't like physical work (helping his father and grandfather), an early meeting with the head of Goldman Sachs (Buffett just pumped $5 billion into the firm), and knowledge from Benjamin Graham at Columbia Business School (Harvard turned him down), he went on to become the richest man in the world (had $5,000 by the time he finished high school - equivalent to $53,000 today) in a series of interesting stories within "The Snowball."

Buffett learned a number of important lessons en route to becoming the richest man in the world. 1)Commitments are so sacred that they should be rare; allies are important; grandstanding rarely gets anything done. 2)Customer loyalty is valuable (bought a gas station across from one with established clientele - never did well). 3)GEICO had a sustainable competitive model - lowest costs, protected by limiting clientele to government workers (more likely to be responsible), ability to invest funds prior to use. 4)Looking at management, ability to maintain sales growth (Charlie Munger) are important in addition to financial data emphasis (Benjamin Graham). (This was an important change because the number of statistical bargains had shrunk to virtually nil and tended to be small companies which did not work when large sums of money were involved.) 5)Public often overreacted - eg. American Express hit by Kennedy Assassination + DeAngelis soybean scandal at same time = good opportunity. 6)Diversification was not a good thing, as long as investment analysis had a high probability of correctness and low probability of drastic change. 7)Corollary of #6 was ruling out investing in complex technology or human problems (eg. strike, layoffs, plant closings).

requires more editing2
This review is to balance off the many positive reviews in Amazon:
(and to apply an expression from Berkshire Hathaway's brilliant Vice Chairman, Charlie Munger:
"Invert, always invert".)

~
point #1 on Alice Schroeder's Buffett biography:
When someone asked "what factor did people feel was the most important in getting to where they`d gotten in life" (sic), both Warren Buffett and Bill Gates answered: "focus" (p. 623)

Unfortunately, focus is missing in Schroeder's wordy, rambling 960 page biography. A quarter to a third of the content could have been pruned. This book could have used a few more months of rewriting, with more disciplined editing. Schroeder's book was at least five years in the making, yet With the world financial maelstrom upon us now, one wonders its September 2008 release is merely opportunistic publishing.

point #2: To use a Buffett expression: Schroeder is beyond her "circle of competence" . Schroeder has a finance background. When reading this book, We see can tell she does not have any past experience on writing an extensive in-depth personal biography.

~
In contrast, I would recommend you also read the Buffett biography written by Roger Lowenstein. Although published in 1995, it has a professional writer`s mark of clarity. Regrettably, Buffett gave Lowenstein a chilly reception after its publication. Lowenstein may have unfortunately become shut out from accessing Buffett for a subsequent revision.

In summary, Schroeder`s biography is worth reading, but you should expect to exert much patience and persistence when plowing through it. You will find nuggets in there, if you mentally block out certain sections and read between the lines.

The Snowball: Warren Buffett and the Business of Life
The Snowball: Warren Buffett and the Business of Life by Alice Schroeder
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CNBC: Warren Buffett and Bill Gates to Hold Master Class in CNBC Special

Published: Tuesday, 27 Oct 2009 | 4:04 PM ET

BUFFETT GATES
Nati Harnik / AP
Bill Gates and Warren Buffett share a laugh while answering questions from students at the University of Nebraska-Lincoln's College of Business Administration, in Lincoln, Neb., in 2005.

Warren Buffett and Bill Gates will be the 'Big Men on Campus' next month when they go to Columbia Business School to answer questions from the "next generation of business leaders" .. and CNBC's cameras will be there.

We've just announced that a one-hour special town hall event, Warren Buffett and Bill Gates: Keeping America Great, will air Thursday, November 12 at 9p and 12a ET. The program will be repeated on Sunday, November 15 at 10p ET.

Squawk Box co-anchor Becky Quick will be the moderator of the event, which will be taped earlier in the day. CNBC.com's Warren Buffett Watch will be inside the hall for real-time coverage as it all happens.

Buffett, of course, enrolled at Columbia Business School because his mentors, Benjamin Graham and David Dodd, taught there. He graduated in 1951.

Gates famously dropped out of Harvard's class of 1977.

It's the first time in years the two friends and online bridge partners will be back on campus for an appearance together, and the last one got rave reviews.

Their 2005 session with students at the University of Nebraska at Lincoln's College of Business Administration was turned into a PBS broadcast special and DVD. (Five stars on Amazon.com)

You can expect Buffett and Gates to be candid, informal, and very funny, with a substantial helping of their thoughts on the responsibilities we all have to make the world a better place.

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Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive AdvantageWarren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage by Mary Buffett
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MANAGEMENT TODAY: Editor's blog: What to make of Warren Buffett?

NB: From the editor of Management Today the piece below is a rather odd rant after seeing the Warren Buffett BBC documentary aired a few days back. I have included all the spelling errors and grammatical slip ups for your entertainment.

Date: 27-Oct-09

He's the world's second richest man. But he's also very odd, and by no means infallible.

It’s hard to know what to make of Warren Buffet. He is deeply weird. And last night’s BBC documentary presented by Evan Davis made the old boy from Omaha appear even odder. For a man who is the second richest in the world, his genuine folksiness is quite bizarre: he lives in the same modest house he bought decades back, he loves burgers, steaks and cherry coke, shunning vegetables. He swears that Dale Carnegie’s gruesome ‘How to win friends…’ changed his life. He answers his own phone but doesn’t have a Bloomberg terminal or even a mobile phone.

The temptation at the moment is to contrast what Buffet does with the activities of all those evil investment bakers. Buffett goes for ‘long term value’ by investing in real companies that produce real goods and services (even if, like Coca Cola, you could argue that they rot kids’ teeth and make people fat). Investment bankers are mere frenetic gamblers fiddling, like Faustus, with dangerous arcane financial devices of no social use whatsoever. He creates, they just churn. He’s the acceptable old style face of capitalism – in for the long term - whereas they are the vampire squids of unacceptability, ready to suck on anything they can get their fangs into for ten minutes. And we love him because he got Goldman Sachs by the short and curlies, when they badly needed $5 billion he had kicking around as loose change.

This is all very well, but the truth is the business and financial world has moved on since Buffett’s visionary days. He’s also apparently not averse to the odd punt on derivatives. And he picks the odd bummer, getting into oil at the top of the market last year and even taking a very unwise punt on a pair of Irish banks. So he may be conservative but he isn’t infallible.

There is another potential criticism of Buffett. He’s famously averse to backing innovation – anything that is a start-up with no proven track record. He prefers mature business that have shown they are viable but where he detects oodles of steady, long term value. You could argue that having the stomach to back creativity and get behind new ideas is vital to capitalism’s survival. It’s also very hard to do because winners are tough to pick.

One thing it’s hard to fault him on is his philanthropy. He refuses steadfastly to indulge his kids, who will get nothing when he passes. (His daughter Susie explained how she asked for an extension to her kitchen so she could fit a table for two in it. He refused. This strikes me as plain unreasonable and mean. At his worst he can come over as a crusty old bore, even if he does utter the odd memorable witticism.)

He’s terrible at spending money and is going to leave the lot to Bill Gates’ charitable foundation. But Buffett dislikes the vanity of having his name on anything. As he himself has said: ‘I don't have a problem with guilt about money. The way I see it is that my money represents an enormous number of claim checks on society. It's like I have these little pieces of paper that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GDP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing. I don't do that though. I don't use very many of those claim checks. There's nothing material I want very much. And I'm going to give virtually all of those claim checks to charity when I die.’

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Recommended Amazon Reading

Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive AdvantageWarren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage by Mary Buffett
Buy new: $16.47 / Used from: $13.52
Usually ships in 24 hours
The Warren Buffett Way, Second EditionThe Warren Buffett Way, Second Edition by Robert G. Hagstrom
Buy new: $9.72 / Used from: $3.47
Usually ships in 24 hours


Kindle 2/Kindle DX: Amazon's New Wireless Reading Devices (Latest Generation)

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