The WSJ reports possibly imaginary rumors that Warren Buffett is buying or reinsuring bond insurers. I have no idea if it's true or not -- if there were a prediction market, I'd be selling this at 10%, buying at 1%, and watching with interest in between.
But what's annoying about this is that the article's argument is, roughly, 1) Warren Buffett buys things nobody else is willing to buy, and 2) nobody else is willing to buy bond insurers. I can think of a few situations over the last few years when nobody -- including Buffett -- was buying. Airlines, Internet Incubators, Enron, Worldcom, Tyco, steel, homebuilders, subprime lenders, etc. And in none of those situations did Buffett end up buying so much as a single share.
This kind of article is a cheap shot -- or a free call. Nobody is going to remember someone for being the 99th person to say "Buffett is buying!" and be wrong, but almost any financial journalist would love to be the one in a hundred who says that and happens to be right.
Comments (4)
I thought Buffett was supposed to be the owner of Bear Stearns?
Posted by Colin | November 13, 2007 7:27 AM
Posted on November 13, 2007 07:27
I forgot about that one!
Posted by Byrne | November 13, 2007 8:42 AM
Posted on November 13, 2007 08:42
Byrne,
Buffett was buying Tyco back in 2005. Not sure when he sold out.
A quick search yielded this article.
Also, while Buffett didn't buy Enron's stock, he did purchase their pipeline business (for a great price of course!).
Posted by Michael | November 15, 2007 2:15 PM
Posted on November 15, 2007 14:15
Was it Buffett, or Lou Simpson? As of the last few years, I think Berkshire's reports consolidate their portfolios (I'm pretty sure JNJ was Simpson, not Buffett, for example). The 13F is for Berkshire's entire portfolio, including General Re and GEICO, so it's not going to reflect just Buffett's choices.
And he did buy Enron assets (and Enron bonds, I think). But I was referring to an earlier rumor, after the ENE/DYN deal fell through.
Posted by Byrne | November 15, 2007 2:20 PM
Posted on November 15, 2007 14:20