Tags: buffett | relative | returns

Buffett: Happy Just Beating the Averages

By    |   Wednesday, 06 May 2009 09:32 AM

Billionaire investor Warren Buffett, who slayed the markets for years on end, now seems to be happy with relative returns.

He admitted to shareholders this week that he may well have "lost his touch," as some critics have suggested. His holding company stock’s saw a 30 percent decline during the past 12 months.

But, he notes, Berkshire Hathaway still beat the stock market, as measured by the S&P 500 index, making it not such a bad year after all.

Berkshire's book value is Buffett's favorite measure, and it fell 9.6 percent last year. The S&P's decline was much more dramatic, down 37 percent.

The company will report a decline of almost 11 percent in first quarter earnings, mostly because of losses on credit default swaps.

Saying the condition of some of Berkshire's swaps has worsened during the past few months, Buffett also predicted they may wind up losing money over the long term.

"We have run into far more bankruptcies in the last year than is normal," Buffett told CNBC.

Buffett there is a bright side. Berkshire's much larger derivative contracts that provide buyers insurance against long-term losses for major stock indexes around the world.

"The odds are extremely good that on the equity put options, we will make money," said Buffett.

Some experts say the market is doing really well now, contrary to Buffett's claims about the macro factors that impacted his firm.

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Billionaire investor Warren Buffett, who slayed the markets for years on end, now seems to be happy with relative returns.He admitted to shareholders this week that he may well have "lost his touch," as some critics have suggested. His holding company stock’s saw a 30...
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2009-32-06
Wednesday, 06 May 2009 09:32 AM
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