-Caveat Lector- Buffet agrees with me: Stocks overpriced and it is a good bet to bet against the dollar. Unfortunately he deals in billions, me in thousands. flw
FINANCIAL TIMES Buffett sceptical on investment values By Dan Roberts in New York Published: March 5 2004 16:28 | Last Updated: March 5 2004 16:28 Berkshire Hathaway, the insurance and holding company run by legendary investor Warren Buffett, almost doubled profits last year but revealed it was holding onto a record $31bn of its assets in cash or cash equivalents. The "gusher of cash" kept on the sidelines, up from $10bn in 2002, is the clearest signal yet of Mr Buffett's continued scepticism about the valuations of companies open to investment. This comes despite the benefits of a recovering economy and better management of Berkshire's own insurance businesses, which combined to increase pre-tax profits by 88 per cent to $12bn. "It [2003] was a terrific year for our insurance business, but the big boost that gave to earnings was largely offset by the pathetically low interest rates we earned on our large holdings of cash equivalents," said Mr Buffet in his annual letter shareholders. Berkshire's investment strategy also highlights the difficulty of finding meaningful returns at a company that has grown so large. Berkshire shares underperformed against the S&P 500 index of big US companies by 7.7 per cent in 2003, but have outperformed by an average of 11.8 per cent over the last 38 years. "Our capital is under-utilised now.. It's a painful condition to be in - but not as painful as doing something stupid," added Mr Buffett. "We have purchased a number of businesses in recent years, though not enough to fully employ the gusher of cash that has come our way." The chairman's caution has been largely justified in the past, particularly during the technology bubble in 1999, which was the last time that Berkshire shares underperformed against the S&P 500. Mr Buffett also highlighted a number of risks to the US economy that add to last year's warnings on derivatives and corporate governance. In particular, he singled out the weak dollar as a cause for concern and revealed that Berkshire Hathaway had $12bn invested in foreign currencies to balance its exposure to the greenback. "Prevailing exchange rates will not lead to a material letup in our trade deficit. So whether foreign investors like it or not they will continue to be flooded with dollars," said Mr Buffett. "The consequences of this are anybody's guess. They could, however, be troublesome - and reach, in fact, well beyond currency markets." The so-called "Sage of Omaha", whose annual letter to shareholders is keenly anticipated as a commentary on corporate America, was also dismissive of attempts to reform corporate governance - singling out Jeff Immelt of General Electric as a rare exception. "In judging whether corporate America is serious about reforming itself, CEO pay remains the acid test," he said. "To date, the results aren't encouraging." Yet Mr Buffett also conceded Berkshire's own corporate governance challenges were a significant issue for shareholders as they increasingly worry about who will succeed the 73-year-old chairman. "The primary job of our directors is to select my successor, either upon my death or disability, or when I begin to lose my marbles... the real discussion centres on the strengths and weaknesses of the four internal candidates to replace me." Find this article at: http://news.ft.com/s01/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c =StoryFT&cid=1078381560768&p=1012571727088 www.ctrl.org DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance—not soap-boxing—please! These are sordid matters and 'conspiracy theory'—with its many half-truths, mis- directions and outright frauds—is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRLgives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credence to Holocaust denial and nazi's need not apply. Let us please be civil and as always, Caveat Lector. ======================================================================== Archives Available at: http://www.mail-archive.com/[EMAIL PROTECTED]/ <A HREF="http://www.mail-archive.com/[EMAIL PROTECTED]/">ctrl</A> ======================================================================== To subscribe to Conspiracy Theory Research List[CTRL] send email: SUBSCRIBE CTRL [to:] [EMAIL PROTECTED] To UNsubscribe to Conspiracy Theory Research List[CTRL] send email: SIGNOFF CTRL [to:] [EMAIL PROTECTED] Om
