Alice Schroeder: Buffett Message Is ‘Do as I Say, Not as I Do’

[Guest kumar]

 

Is this the same Schroeder who wrote "The Snowball"?

 

http://www.bloomberg.com/news/2012-03-19/buffett-message-is-do-as-i-say-not-as-i-do-alice-schroeder.html

 

[compoundinglife]

 

Is this the same Schroeder who wrote "The Snowball"?

 

http://www.bloomberg.com/news/2012-03-19/buffett-message-is-do-as-i-say-not-as-i-do-alice-schroeder.html

 

According to the footer of that article it is:

 

(Alice Schroeder, the author of “The Snowball: Warren Buffett and the Business of Life” and formerly a top-ranked insurance analyst on Wall Street, is a Bloomberg View columnist. The opinions expressed are her own.)

[leftcoast]

Did I read this right? Is she seriously suggesting that Berkshire's board should remove Buffett early and that shareholders might welcome this move?

[Liberty]

:o

[compoundinglife]

Is this the same Schroeder who wrote "The Snowball"?

 

According to the footer of that article it is:

 

(Alice Schroeder, the author of “The Snowball: Warren Buffett and the Business of Life” and formerly a top-ranked insurance analyst on Wall Street, is a Bloomberg View columnist. The opinions expressed are her own.)

 

Tongue-in-cheek

 

I thought about that after I posted it, text does a poor job sometimes conveying sarcasm :) I was tempted to post all of my counter points to this article but I think I'll save my breathe. One question though for folks, I follow WEB fairly closely and I do not remember him ever "table pounding" telling investors to buy BRK. Anyone know of anything that backs up this statement? I assume she just using her artistic license WRT to the buybacks. If anything I think I have heard him say at the AGM that he would not buy BRK if he was a smaller investor because there are plenty of cheaper great companies out there.

 

EDIT: The more I think about it she is probably talking about this years letter, but I guess that did not come across as a Cramer style "BUY BUY BUY" to me.

[twacowfca]

Is this the same Schroeder who wrote "The Snowball"?

 

According to the footer of that article it is:

 

(Alice Schroeder, the author of “The Snowball: Warren Buffett and the Business of Life” and formerly a top-ranked insurance analyst on Wall Street, is a Bloomberg View columnist. The opinions expressed are her own.)

 

Tongue-in-cheek

 

I thought about that after I posted it, text does a poor job sometimes conveying sarcasm :) I was tempted to post all of my counter points to this article but I think I'll save my breathe. One question though for folks, I follow WEB fairly closely and I do not remember him ever "table pounding" telling investors to buy BRK. Anyone know of anything that backs up this statement? I assume she just using her artistic license WRT to the buybacks. If anything I think I have heard him say at the AGM that he would not buy BRK if he was a smaller investor because there are plenty of cheaper great companies out there.

 

EDIT: The more I think about it she is probably talking about this years letter, but I guess that did not come across as a Cramer style "BUY BUY BUY" to me.

 

Warren didn't exactly say, "Buy BRK."  But, as our poster, Charlie pointed out, he did say in his letter  in three different ways that BRK is very undervalued. 

 

Schroeder's critical tone is best explained by the saying, "Hell hath no fury like a woman scorned."

[Ballinvarosig Investors]

Schroeder's critical tone is best explained by the saying, "Hell hath no fury like a woman scorned."

Yes, let's just dismiss her arguments as those of a hysterical old bat ::)

[cayale]

"But investors who jumped into the market on his advice would have waited another nine months just to break even. "

 

Seriously, Alice?

 

What kind of monster makes people wait three and a half years to produce a double digit annual return?

[McMatt63]

Couple notes of response to Ms. Schroeder's article:

 

1.  I for one am not "disconcerted" by Mr. Buffett's comments in the shareholders' letter that he is "not going anywhere soon".  Stay as long as you like Mr. Buffett!!  I think your judgment of when it is your time to go is far better than most of the rest of ours could ever be.

 

2. I believe that she has misrepresented Mr. Buffett's comments in the annual letter about those who have lost their homes through foreclosure.  He was not indicating that the banks were victimized by those that only "earlier refinanced at cheaper rates".  He, I believe,  stated that those former home owners actually may not have the ones who had lost out because they had refinanced and pulled all or much of the equity -that was in fact only a temporary allusion of equity- out of their homes to only let those go to foreclosure when the market shifted winds and created underwater situations.  Some homeowners may have actually not lost but gained and the banks are the ones that have lost in those circumstances.

[Tim Eriksen]

Couple notes of response to Ms. Schroeder's article:

 

1.  I for one am not "disconcerted" by Mr. Buffett's comments in the shareholders' letter that he is "not going anywhere soon".  Stay as long as you like Mr. Buffett!!  I think your judgment of when it is your time to go is far better than most of the rest of ours could ever be.

 

2. I believe that she has misrepresented Mr. Buffett's comments in the annual letter about those who have lost their homes through foreclosure.  He was not indicating that the banks were victimized by those that only "earlier refinanced at cheaper rates".  He, I believe,  stated that those former home owners actually may not have the ones who had lost out because they had refinanced and pulled all or much of the equity -that was in fact only a temporary allusion of equity- out of their homes to only let those go to foreclosure when the market shifted winds and created underwater situations.  Some homeowners may have actually not lost but gained and the banks are the ones that have lost in those circumstances.

 

You are exactly right on point #2.  Buffett was pointing out that some who lost their homes took out more in a refinancing than the amount of equity they had from their original down payment and monthly payments.  His point was not to rip on the homeowners but to point out that they technically didn't lose money and that banks were left holding the bag.  Granted most frittered away the money they took out on equity loans. 

 

As for Buffett's recent track record - it is unimpressive when viewing the opportunity that the 2008/early 2009 meltdown provided.  If not for the favorable deals he got due to his reputation, it would be even less impressive.  A younger Buffett would not have got into the utility or railroad business at the price Buffett paid.  The returns are just not that great.    The businesses are too capital intensive.   

[Liberty]

Schroeder seems to forget how large the sums of money that Buffett is working with now. Considering how much he needs to invest to move the needle, his investment universe is quite limited. He's doing pretty much as well as can be expected for a company of that size, and a lot of his recent investments won't show how good they are until a few years have passed anyway.

[link01]

The returns are just not that great.    The businesses are too capital intensive.   

 

lets give credit where credit is due. buffett knows this all too well. he's talked about it often. but given berkshire's mammoth size these days he realizes he needs some large utility type businesses to absorb the ever increasing amounts of cash thrown off each yr by the high return biz's. mid american & burlington fit the bill nicely. and they still earn a more than respectable return on capital employed. certainly beats the short term cash & equivalents WEB would otherwise be forced to park excess cash while waiting for those increasingly elusive world class businesses & compelling large cap stock opportunities to presnt themselves. this is a dilemna the younger buffett never felt the need to contemplate in the earlier days. i think he's playing his late game hand like the maestro that compounded at the 25-30+ returns built the berkshire of today. iuts not the sprinter it used to be but its still winning the marathon.

[CanadianMunger]

Buffett's 55 year investing track record speaks for itself.  Nuff said.

[Guest Hester]

Hasn't she considered that BRK hasn't risen as much as the market since the 2009 lows because it didn't fall as much from 2007 to 2009?

[Parsad]

Buffett has made at least one truly significant, irreversible decision that has haunted him for some time.  He humbly and graciously tapped on the shoulder of some completely obscure, no-name analyst at Morgan Stanley, trusted her intimately, and then made her a millionaire several times over after she wrote a book on him and gained the type of notoriety she could only dream of. 

 

I'm sure she'll be sobbing madly the day Buffett dies, and then as certain as I am that the sun will rise tomorrow, she will write another book on Buffett that will sell millions, followed by tons of interviews, articles and paid speaking engagements...all on Buffett!  I've really tuned her out now...along with Mary Buffett...Doug Kass...Jim Cramer...and Snookie!  Cheers! 

[Kraven]

Buffett has made at least one truly significant, irreversible decision that has haunted him for some time.  He humbly and graciously tapped on the shoulder of some completely obscure, no-name analyst at Morgan Stanley, trusted her intimately, and then made her a millionaire several times over after she wrote a book on him and gained the type of notoriety she could only dream of. 

 

I'm sure she'll be sobbing madly the day Buffett dies, and then as certain as I am that the sun will rise tomorrow, she will write another book on Buffett that will sell millions, followed by tons of interviews, articles and paid speaking engagements...all on Buffett!  I've really tuned her out now...along with Mary Buffett...Doug Kass...Jim Cramer...and Snookie!  Cheers!

 

Sanjeev, I don't get you.  I can see tuning out Alice Schroeder, Mary Buffett, Doug Kass, etc.  But Snookie too?  You've gone too far, my friend.

[link01]

Sanjeev, I don't get you.  I can see tuning out Alice Schroeder, Mary Buffett, Doug Kass, etc.  But Snookie too?  You've gone too far, my friend.

 

yea, but i bet you're as tickled as i am to see those names daisy chained together with that inimitable cultural icon, snookie

[Kraven]

Sanjeev, I don't get you.  I can see tuning out Alice Schroeder, Mary Buffett, Doug Kass, etc.  But Snookie too?  You've gone too far, my friend.

 

yea, but i bet you're as tickled as i am to see those names daisy chained together with that inimitable cultural icon, snookie

 

I was.  She's no JWoww, that's for sure, but yeah.

[redskin]

'Meanwhile, many of Buffett’s major stock picks for the past five years, like Johnson & Johnson, Kraft Foods Inc., ConocoPhillips, and Wal-Mart Stores Inc. have been lackluster. '

 

Total Returns from 2/28/07-2/29/12

 

SP500 +8.15%

Conoco Phillips +38.7

Kraft +43.69

Walmart +36.02

J&J +21

 

[hardincap]

Buffett has made at least one truly significant, irreversible decision that has haunted him for some time.  He humbly and graciously tapped on the shoulder of some completely obscure, no-name analyst at Morgan Stanley, trusted her intimately, and then made her a millionaire several times over after she wrote a book on him and gained the type of notoriety she could only dream of. 

 

I'm sure she'll be sobbing madly the day Buffett dies, and then as certain as I am that the sun will rise tomorrow, she will write another book on Buffett that will sell millions, followed by tons of interviews, articles and paid speaking engagements...all on Buffett!  I've really tuned her out now...along with Mary Buffett...Doug Kass...Jim Cramer...and Snookie!  Cheers!

 

 

she was already a millionaire many times over, and contrary to your point, she took a pay CUT to write the book. 

 

i was confused at first by the antagonisms she attracts, but i've learned to explain it as the reflexive tendency to hate or belittle people who criticize a person you admire

 

buffett has had his feelings hurt by schroeder, but i think he and munger still regard her highly character wise and for her intelligence

[link01]

i was confused at first by the antagonisms she attracts, but i've learned to explain it as the reflexive tendency to hate or belittle people who criticize a person you admire

 

buffett has had his feelings hurt by schroeder, but i think he and munger still regard her highly character wise and for her intelligence

 

no, criticism is one thing, lack of insight is another. her psychology is monumentally ill-suited for someone like buffett & munger. might as well have asked cramer or some other fast money trader to have done his biography. therein lies whatever disappointment WEB or his admirers might have for Alice.

[hardincap]

i was confused at first by the antagonisms she attracts, but i've learned to explain it as the reflexive tendency to hate or belittle people who criticize a person you admire

 

buffett has had his feelings hurt by schroeder, but i think he and munger still regard her highly character wise and for her intelligence

 

no, criticism is one thing, lack of insight is another. her psychology is monumentally ill-suited for someone like buffett & munger. might as well have asked cramer or some other fast money trader to have done his biography. therein lies whatever disappointment WEB or his admirers might have for Alice.

 

Ive spoken with her on numerous occasions in person, have heard munger & his crew opine on her and her book, and i completely disagree with everything you said. id say shes similar to munger in many ways.

[Parsad]

i was confused at first by the antagonisms she attracts, but i've learned to explain it as the reflexive tendency to hate or belittle people who criticize a person you admire

 

buffett has had his feelings hurt by schroeder, but i think he and munger still regard her highly character wise and for her intelligence

 

no, criticism is one thing, lack of insight is another. her psychology is monumentally ill-suited for someone like buffett & munger. might as well have asked cramer or some other fast money trader to have done his biography. therein lies whatever disappointment WEB or his admirers might have for Alice.

 

Ive spoken with her on numerous occasions in person, have heard munger & his crew opine on her and her book, and i completely disagree with everything you said. id say shes similar to munger in many ways.

 

I've heard her in person as well, and I can't agree with you at all.  She is in no way similiar to Munger.  I couldn't believe the stuff she was talking about in her presentation on Buffett.  It started off well and then fell apart ending in answers regarding his emotional state, vices and hypocrisies.  Have you ever heard Munger say anything about Buffett or his insecurities?  Munger is blunt and has plenty of criticisms regarding behavior and ethics, but he doesn't stoop to innuendo or unqualified psychobabble about a person's mental state.  Cheers!

[hardincap]

I heard her talk, and loved it. Buffett is an investing prodigy but he is also a human being, and understanding his human side allows one to see Buffett as a man rather than an investment machine. Munger & his family enjoyed the book, Buffett's own son Peter enjoyed the book and her talk, it looks like it's just the fanatic worshipers who take offense by what Alice has to say.

 

Also re:criticism, munger freely criticizes ppl but makes exceptions for his close friends. He criticized graham for his strictly numerical approach, calling it asinine. Alice has said publicly that it was very difficult for her personally to speak about things unflattering to Buffett because she liked him and valued their friendship, but felt it was her duty as a biographer to talk about them honestly.

 

No offense, but you've said a few things about Alice that are patently false in your last post. I'm curious how you explain those totally false characterizations you paint Alice with?

[Tim Eriksen]

Couple notes of response to Ms. Schroeder's article:

 

1.  I for one am not "disconcerted" by Mr. Buffett's comments in the shareholders' letter that he is "not going anywhere soon".  Stay as long as you like Mr. Buffett!!  I think your judgment of when it is your time to go is far better than most of the rest of ours could ever be.

 

2. I believe that she has misrepresented Mr. Buffett's comments in the annual letter about those who have lost their homes through foreclosure.  He was not indicating that the banks were victimized by those that only "earlier refinanced at cheaper rates".  He, I believe,  stated that those former home owners actually may not have the ones who had lost out because they had refinanced and pulled all or much of the equity -that was in fact only a temporary allusion of equity- out of their homes to only let those go to foreclosure when the market shifted winds and created underwater situations.  Some homeowners may have actually not lost but gained and the banks are the ones that have lost in those circumstances.

 

You are exactly right on point #2.  Buffett was pointing out that some who lost their homes took out more in a refinancing than the amount of equity they had from their original down payment and monthly payments.  His point was not to rip on the homeowners but to point out that they technically didn't lose money and that banks were left holding the bag.  Granted most frittered away the money they took out on equity loans. 

 

As for Buffett's recent track record - it is unimpressive when viewing the opportunity that the 2008/early 2009 meltdown provided.  If not for the favorable deals he got due to his reputation, it would be even less impressive.  A younger Buffett would not have got into the utility or railroad business at the price Buffett paid.  The returns are just not that great.    The businesses are too capital intensive. 

 

considering Buffett prefers a capital intensive business than one with no opportunities for reinvestment, I would say he bagged the Elephant he wanted.

 

Interesting.  I see (or used to see) the opposite.  He used to speak of royalties as being the best business.  If he prefers a railroad or a utility over a See's Candies type of investment then he has changed tremendously and that might explain his decisions and performance over the last decade.  Purchases of NetJets, Burlington Northern, etc. are lower risk, low return, and poor FCF investments.