Berkshire Hathaway Annual report 2008 / a must read

http://www.berkshirehathaway.com/2008ar/2008ar.pdf

You can’t be mistaken when you are reading from the greatest punters in the Financial space – Warren Buffett. The Chairman’s letter to shareholders did not dissappoint me. It was filled with the usual interesting titbits on his insurance ops and business, the concept of insurance ‘float’, his profit margins, the stake he took in Goldman Sachs, GE etc. during the troubling cashflow starved times of late 2008, the usual caveats on on the derivatives business and the future of Berkshire! Oh btw – there was no mention of “fruit of the loom” as marketwatch said there would be!

As I have said many times before, I am a self proclaimed protege of Warren Buffett and anything he does interests me. His annual reports are always looked forward to by much ado and this time was especially different to get the views of the man who I consider is king in stock market investing alongwith with his mentor Ben Graham and associate, Charlie Munger.

The Satyam fiasco – Ramalinga Raju’s misadventures

Sorry for not blogging about this earlier. I did not have access to broadband Internet at my home for the last 3 days and was working off my Blackberry for office related tasks.

While the economic and financial implications have been written about far and wide and everyone is busy reading the tea leaves, what are the lessons one take’s away from this? Before I begin my analysis, I would like to remind my readers that I had blogged on Corporate governance and sound accounting practices as early as 1.5 years ago on this very blog: http://ecofin.wordpress.com/2007/07/06/importance-of-accounting-for-the-business-world/ and on http://www.accounting101.wordpress.com AND on Corporate Ethics here: http://ecofin.wordpress.com/2006/11/16/corporate-ethics/ more than TWO years ago!

Wall Street – the movie / 1987

http://en.wikipedia.org/wiki/Wall_Street_(film)

I saw this captivating movie on TV today and it really sums up what has been happening. A great movie about a young broker who decides to go the fast track unethical way of conveying insider information but thankfully stops short but does get nailed towards the end.

Michael Douglas (Gordon Gekko in the movie) and Charlie Sheen (Bud Fox in the movie) have acted well! Can’t believe that 21 years ago, they still had good old PC’s and big satellite phones to communicate which is pretty much what we have today but more compact and sophisticated machines – as one would expect. But, the point is, it could well have been 2008 and not 1987!

Can large banks fail / CITIBANK on the brink

I saw the developments of the last week where CITI (NYSE: C) shares really fell to $3 a share and was in danger of going bust as public confidence was eroding sharply. CITI faces a real threat of a collapse.

There were two options open to the board: 1. Fire the CEO, Vikram Pandit as a sacrificial lamb, 2. split the company and sell the parts or whole of the company.

Inverse correlation – Sachin’s highest test score and the BSE Sensex

These two seem to be negatively correlated. As one goes up (read: Sachin’s highest test score – 12K-odd runs), the other goes down (8K-odd as on Black Friday – 24th Oct 2008).

What are the other alarming statistics of the Sensex?

Why am I crazy about Wall Street/US monetary policies?

Simply because, it has a huge impact - no matter where you are in this world!

What happens out there impacts every single country in this world. It impacts you you and you. It impacts the decision making we make on our jobs etc. It impacts our local domestic economy. No matter how much we claim of ourselves being insulated from Wall Street, the truth is its just an eyewash. We will all get affected by the mayhem on Wall Street and the effects take at least 6 months to trickle into economies such as India and China. This is what happened in 2001 and I was a very close observer of what happened then and used to take very conservative decisions that paid off on multiple fronts and hence it is imperative I do the same again.

The age of turbulence – Alan Greenspan’s memoir

http://www.amazon.com/Age-Turbulence-Adventures-New-World/dp/1594201315

I am going to start reading up this book starting next week once I am done with ‘The Snowball – Warren Buffett and the business of life’.

While critics are holding Greenspan responsible for advocating ARM’s way back in his testimony to Congress in 2004 and his keeping of interest rates low from the days of the dot com bubble burst, I still admire Greenspan for what he did for the US economy. Its easy to criticize the Federal reserve Chairman but what were the Wall Street companies and their hugely overpaid CEO’s doing? Who will track Dick Fuld (CEO of the now disgraced/bankrupt Lehman Brothers that sold itself to Barclays some weeks back) or who will track the activities of Merrill Lynch’s ex-CEO who was fired or who will track the activities of AIG’s ex-CEO who insured a whole load of CDS that nearly sunk AIG.

Will post my review once done but it will take some time to read up both books!

The Snowball – Warren Buffett and the business of life

http://www.amazon.com/Snowball-Warren-Buffett-Business-Life/dp/0553805096

I bought this book from Strand book stall at Manipal chambers, Bangalore today. This book was just released 2 days ago on the 28th September 2008 and lo and behold it’s already in circulation in India – that is cool.

I am a self proclaimed Warren Buffett protege and fan since I first read his books by Mary Buffett (Buffettology) and the Warren Buffett Way (2nd ed.) since 2003.

Anything about his investment habits interests me. This book written by Alice Schroeder – a Managing Director at Morgan Stanley is going to be my food for thought in the coming days! Will post my detailed review once I am done reading through this massive book that I will be forced to read at home due to its huge size – its almost 960 pages! The book I bought is Printed in Great Britain and is not the US print.

Buffett swoops down with $5 billion capital infusion into Goldman Sachs

http://www2.goldmansachs.com/our-firm/investors/financials/current/annual-reports/entire-2007-annual-report.pdf

This was expected. Goldman Sachs (NYSE: GS), an exceptionally run institution could not beat the heat of Wall Street and lately its stock was also hammered down by investors. They converted themselves to a bank a couple of days ago and this immediately meant the ’smartest man in any room’ – the legendary Warren Buffett and my guru  swoop down and make a minimum $ 5 billion dollars in preferential stock and an option to purchase another $ 5 billion at a later date.

AIG struggling to stay afloat – no pun intended!

http://ecofin.wordpress.com/2007/08/12/the-us-subprime-crisis-increasing-chance-of-a-us-recessionburst-of-the-us-housing-bubble/

If you have read Warren Buffet’s letters to shareholders and his book – The Warren Buffet way (2nd ed.), then you know what a float is. I am not trying to strike a relation or anything to this problem but am just stating that insurance business is supposed to insure others and AIG (American International group) had that obligation to keep but something clearly went astray.