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The right way to Keep Out of Debt: Warren Buffett – Monetary Way forward for American Youth (1999) – jj
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The right way to Keep Out of Debt: Warren Buffett – Monetary Way forward for American Youth (1999)



Buffett became a billionaire on paper when Berkshire Hathaway began selling class A shares on May 29, 1990, when the market closed at $7,175 a share. More on Warren Buffett:

In 1998, in an unusual move, he acquired General Re (Gen Re) for stock. In 2002, Buffett became involved with Maurice R. Greenberg at AIG, with General Re providing reinsurance. On March 15, 2005, AIG’s board forced Greenberg to resign from his post as Chairman and CEO under the shadow of criticism from Eliot Spitzer, former attorney general of the state of New York. On February 9, 2006, AIG and the New York State Attorney General’s office agreed to a settlement in which AIG would pay a fine of $1.6 billion. In 2010, the federal government settled with Berkshire Hathaway for $92 million in return for the firm avoiding prosecution in an AIG fraud scheme, and undergoing ‘corporate governance concessions’.

In 2002, Buffett entered in $11 billion worth of forward contracts to deliver U.S. dollars against other currencies. By April 2006, his total gain on these contracts was over $2 billion. In 2006, Buffett announced in June that he gradually would give away 85% of his Berkshire holdings to five foundations in annual gifts of stock, starting in July 2006. The largest contribution would go to the Bill and Melinda Gates Foundation. In 2007, in a letter to shareholders, Buffett announced that he was looking for a younger successor, or perhaps successors, to run his investment business. Buffett had previously selected Lou Simpson, who runs investments at Geico, to fill that role. However, Simpson is only six years younger than Buffett.

Buffett ran into criticism during the subprime crisis of 2007–2008, part of the late 2000s recession, that he had allocated capital too early resulting in suboptimal deals. “Buy American. I am.” he wrote for an opinion piece published in the New York Times in 2008. Buffett has called the 2007–present downturn in the financial sector “poetic justice”. Buffett’s Berkshire Hathaway suffered a 77% drop in earnings during Q3 2008 and several of his recent deals appear to be running into large mark-to-market losses.

Berkshire Hathaway acquired 10% perpetual preferred stock of Goldman Sachs. Some of Buffett’s Index put options (European exercise at expiry only) that he wrote (sold) are currently running around $6.73 billion mark-to-market losses. The scale of the potential loss prompted the SEC to demand that Berkshire produce, “a more robust disclosure” of factors used to value the contracts. Buffett also helped Dow Chemical pay for its $18.8 billion takeover of Rohm & Haas. He thus became the single largest shareholder in the enlarged group with his Berkshire Hathaway, which provided $3 billion, underlining his instrumental role during the current crisis in debt and equity markets.

In 2008, Buffett became the richest man in the world, with a total net worth estimated at $62 billion by Forbes and at $58 billion by Yahoo, dethroning Bill Gates, who had been number one on the Forbes list for 13 consecutive years. In 2009, Gates regained the position of number one on the Forbes list, with Buffett second. Their values have dropped to $40 billion and $37 billion, respectively, Buffett having lost $25 billion in 12 months during 2008/2009, according to Forbes.

In October 2008, the media reported that Warren Buffett had agreed to buy General Electric (GE) preferred stock. The operation included extra special incentives: he received an option to buy 3 billion GE at $22.25 in the next five years, and also received a 10% dividend (callable within three years). In February 2009, Buffett sold some of the Procter & Gamble Co, and Johnson & Johnson shares from his portfolio.

In addition to suggestions of mistiming, questions have been raised as to the wisdom in keeping some of Berkshire’s major holdings, including The Coca-Cola Company (NYSE:KO) which in 1998 peaked at $86. Buffett discussed the difficulties of knowing when to sell in the company’s 2004 annual report:

That may seem easy to do when one looks through an always-clean, rear-view mirror. Unfortunately, however, it’s the windshield through which investors must peer, and that glass is invariably fogged.

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36 Comments

  1. If you don't mind being a LEECH ON SOCIETY and can stomach the idea of meeting GOD and explaining how you DID NOT HELP your brother but MADE IT HARDER on him, go ahead and follow this man. Cain asked, "AM I MY BROTHER'S KEEPER?" GOD's answer was clear. How can you ignore the very first lesson in the Bible ?

  2. Wow he is really far off in one aspect, Warren Buffett and Bill Gates would be superior at any time in history. They would be natural leaders, they might not run fast but he'd figure out how to recruit and get to work for him a 1000 men who could run fast etc. Good businessmen have ALWAYS done well. Kind of a funny ignorant comment by him lol

  3. I don’t mean to be a pariah but people rich enough seem to be so relaxed on how they tell the world it’s easy . Yes stay away from credit cards unless you have a bonifed business 2. Never borrow with conditions of borrowing and never lend lend without them 3.live the poor life and stay ahead of the game and never quit the end game

  4. @28:49 he hits the nail with a tiny hammer and states "Pretty much everything is self taught". Education in the US isn't about educating you, it's an indoctrination about getting you in debt. I clear 6 figures doing what I love and didn't spend one day in college and barely made it out of High school, but I knew what I wanted to do and I educated myself and went after it. I saw college as a waste of time because it was clear to me it was a social atmosphere and not a learning environment, Charlotte Iserbyt states America is Being deliberately dumbed down.

  5. I was in high school during this time and have made a lot of mistakes. 20 years later im in a position i never dreamed and pursuing my plan to be debt free even with a high student loan. I wish i saw this back then, but better late than never.

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  7. Mr Warren is correct, if u start out ahead, you are sure to win right. That's how this nation was founded. He is saying sooo much based on his experience. For those like him, they have the opportunity to be given a headstart in this great country.

  8. The odds were in his favor. Like he said he was lucky to be born into a certain society. There was a lot of discrimination as he stated, but in more ways than what he had to go through. Although, he seems to be a humble and blessed person. Idk.

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  10. Wow! We need to get a movement started. Why not pay teachers well and people in performing arts? Why not? Shame on that answer. Very very sad. Educators should be making as much salary as politicians, legislators, attorneys, doctors, etc.

  11. It is obvious his focus is people who are already well off.
    It's all well and good to talk this way when you have the money to play with.
    The bottom line here is: most of us will never see this level of finance. We will never have the 'seed' money to invest. And even if we did, the market is rigged such that those who don't have the 'staying power'; that is, those who have no choice but to cash out and take their losses. Meanwhile, those who manipulate the market (suddenly sell off all of a stock; wait for the weak to drop out; then buy back all your previous stock, cheap, thus driving the stock's value up again. This way, you've just fleeced a whole lot of people. Kinda like a form of legal theft.
    BTW: note that, in America, if you have a contract (and who can do anything significant without a contract?), then you can circumvent rules and regulations; just make sure you share your ill gotten gains with the other thieves in the industry.

  12. This system is going down! You can't continue to rip people off and expect to remain that way forever! I can see clearly now is what I'll say. Stay tuned. Especially illegally justifying that! In no offense to those who work hard for their earnings.

  13. #Hooray! Mr.(*Warren) #BUFFET! #GODSPEED What a #MAGNIFICENT Discussion this was/is. I really enjoyed this! It helped me to affirm my own self..in the sense that I have these principles instilled within me Already. To have been gifted the opportunity via #SOCIAL #MEDIA (*#YOUTUBE in this instance)..to be tutored under the person that I #MOST #ADMIRE, in terms of being (*in My Personal estimation, as well as a General consensus that YOU* (#MR. #BUFFET)..are the #MASTER in your #FIELD and #WORLD concerning, #FINACE #BUSINESS #WEALTH #ACCUMULATION and some of the #BEST #MOST #IMPORTANT ways/means to #NOT ONLY #ARRIVE there (*a #PLACE/#POSITION/#STANDARD) of #THE #HIGHEST STANDARD of #WEALTH (*AVAILABLE and, #ALSO..) #AFFORDED *ONE..but..To #CONTINUE to #BUILD UPON this and MOST #IMPORTANTLY (*FOR #ME)..#MAINTAING and #PROTECTING this #PROSPEROUS #AFFLUENT #and #UNCOMMON #WAY OF #LIVING and #LIFESTYLE. I would love to #GO #OUT ON A #LIMB..and make it Known that I would like to have the good #FORTUNE and #OFFER/#OPPURTUNITY of #YOUR #INVESTING in #ME/#MY #POTENTIAL as an #UP AND #COMING #ENTREPENUER and #future #COMPANY #CORPORATION #EXECUTIVE (*#CEO)..along with MY MOM BETTE DAVIS *MY DAUGHTERS HOPE ELIZABETH AND DESTINY KAYLANI..I am such a #NEWBIE in this field that I do not know what to ask nor an amount that is #SIGNIFICANT to my #CAUSE (*in terms of having/giving Me #PLENTY/#ENOUGH/#AMPLE monetary/financial #LEVERAGE(S)..that It leaves me with/#GIVES #ME a little #BREATHING #ROOM, and #WIGGLE #ROOM..as to #NOT, feel the need and #PRESSURE to, have to wring my #HANDS in #TENSION and #INADVERTENTLY #BECOME #HASTY..and make #HOORIBLE #DECISIONS/#CHOICE(S)
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