By JAMES FREEMAN
Billionaire Berkshire Hathaway CEO Warren Buffett is once again thrilling the political class by volunteering other people to pay higher taxes. Long-time observers recall his opposition to former President George W. Bush's efforts to reduce the tax rate on dividends. Since Berkshire pays no dividends, Mr. Buffett had little at stake but enjoyed the opportunity to pose as if he were a rich guy eager to cough up more dough to Washington.In the current debate, President Obama is pushing the "Buffett Rule" to ensure that high-income earners pay higher tax rates. But even if it's enacted, don't expect the Buffett Rule to have much impact on Mr. Buffett. By an amazing coincidence, the sage of Omaha is already positioned to shield most of his rising wealth from such a tax.
Political journalists who don't read the business press are the most likely to be duped by Mr. Buffett's pose as a public-spirited billionaire happy to pay more to support the government. He frequently suggests that tax hikes will have little impact on investment activity. In a New York Times op-ed last August, Mr. Buffett said, "I have worked with investors for 60 years and I have yet to see anyone -- not even when capital gains rates were 39.9 percent in 1976-77 -- shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off."
But he seems to have concluded that a potential tax bill might have scared off some owners of the Burlington Northern Santa Fe railroad when Berkshire was negotiating to buy it. According to a January 2010 Barron's story, Mr. Buffett "said that, while he's not enthusiastic about issuing more shares, the deal is too large to be all-cash and that he wants to give Burlington shareholders a tax-free option."
In another case, it's not clear if Mr. Buffett was scared but he certainly appears to have been angry when Kraft Foods, partly owned by Berkshire, didn't pay as little in taxes as he wanted them to. In another Barron's story from May of 2010, the magazine reported that Mr. Buffett "groused about a tax bill of roughly $1 billion that Kraft incurred by selling its pizza business to Nestlé, the world's largest food concern, for $3.7 billion, to raise additional funds. 'Dumb' was Buffett's word of choice."
This brings us to the Buffett Rule, which at its heart is a way to raise taxes on dividends and capital gains. Berkshire still doesn't pay a dividend, and as for capital gains taxes, well, Mr. Buffett has already made clear that he'll largely avoid them by transferring his fortune to the Gates Foundation and to charitable trusts controlled by his family. In fact, at the 2010 Berkshire annual shareholders meeting, according to Dow Jones Newswires, Mr. Buffett urged attendees to "follow my tax dodging example" and give away their wealth. Democrats in Washington may enjoy using Mr. Buffett as cover to raise taxes, just as long as they understand that he won't necessarily be paying them.
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Read the full transcript of the March 2 Squawk Box Interview with Warren Buffett
Download the 2010 Berkshire Hathaway Annual Report
Download the 1977 - 2010 Warren Buffett Letter's to Berkshire Hathaway Shareholders
Warren Buffett Books @ Amazon
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4 comments:
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I have a lot of respect for warren buffett. But that being said I believe their are ways of matching or exceeding the performance of warren buffet. I would like to give a simple method of security selection that I really think stands a very good chance of outperforming warren buffett. No I have no ax to grind here. I have no desire to show up warren buffett I still think he most likely is the number one buy and hold investor.
The following may not apply to investors worldwide. Their are now over fifty single country funds available and maybe over 100 narrow sectors like airlines steel solar so why the concern for the nasdaq or the standard and poor five hunderd each one of these countries and sectors is a index of and by itself The solar exchange traded fund {TAN} is now down 90% from its high in 2007. If I were a investor or trader I would simply look for any exchange traded fund or closed end fund that does not use any leverage in their porfolios and start buying in the ratio of 0.50 percent of your cash on hand in my account after their is a 75% decline from its all time high and than buy twice as much in the ratio of 1.00 percent of your cash on hand in my account if that exchange traded fund or closed end fund declines another five percent an 80% decline from its all time high buy twice as much in the ratio of 2.00 percent of your cash on hand in my account at a 85% decline from its all time high buy twice as much in the ratio of 4.00 percent of your cash on hand in my account at a 90% decline from its all time high and finally buy twice as much in the ratio of 8.00 percent of your cash on hand in my account at a 95% decline from its all time high. Now I know that some of these funds will not decline 90% from their all time highs. Another thing that you might be wondering about I would run out of money. If I followed that method right wrong example take one hundred thousand dollars. Example Buy 500 dollars of xyz fund at 25 dollars off 75% from its all time high of 100 dollars buy 1000 dollars of xyz at 20 dollars off 80% from its all time high of 100 dollars. Buy 2000 dollars of xyz at 15 dollars off 85% from its all time high of 100 dollars Buy 4000 dollars of xyz at 10 dollars off 90% from its all time high and finally Buy 8000 dollars of xyz at 5 dollars off 95% from its all time high This way you will have your biggest positions in the funds that have declined the most and the smallest positions in the funds that have declined the least. Also keep in mind that if your cash position in your account is say one hundred thousand dollars to start this will gradually decrease as the equity portion of your portfolio increases. Example If your cash position is fifty thousand dollars of your one hundred thousand dollar portfolio you would invest one half of one percent to start which would be two hundred and fifty dollars. Also keep in mind when you buy an exchange traded fund you are buying a basket of stocks so the fund cannot go to zero unlike a stock. Than when any fund has regained three quarters of its value that would be say fund XYZ which traded at 100 dollars five years ago. It now trades at 75 dollars in the case of XYZ. Now you would use a 10% trailing stop loss to protect your gains. So if XYZ declines to 67.50 from 75.00 you would be stoped out insuring that you retain most of your gains. If XYZ continues to rally without correcting by 10% Who knows you may sell out of the stock within 90% of its all time high. Its all time high could be 150 dollars..
And their you have it a simple but brilliant strategy for exchange traded fund and closed end fund investing.
Good Blog About Warren Buffett
Warren Edward Buffett is an American business magnate, investor, and philanthropist. He is widely regarded as one of the most successful investors in the world. Often introduced as "legendary investor, Warren Buffett", he is the primary shareholder, chairman and CEO of Berkshire Hathaway. He is consistently ranked among the world's wealthiest people. He was ranked as the world's wealthiest person in 2008 and is the third wealthiest person in the world as of 2011. In 2012, American magazine Time named Buffett one of the most influential people in the world.
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Long-time observers recall his opposition to former President George W. Bush's efforts to reduce the tax rate on dividends. Since Berkshire pays no dividends, Mr. Buffett had little at stake but enjoyed the opportunity to pose as if he were a rich guy eager to cough up more dough to Washington. Web Design Garut
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