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Posts Tagged ‘inconsistencies’

President Barack Obama and Warren Buffett in t...

I didn’t have as much patience as some did, and tuned out near the beginning when he talked about spending money to hire teachers and police officers, and instructed the States that they need to make high school mandatory until age 18.

Here in Canada, our Prime Minister wouldn’t dare get involved in the provincial issue of education to the degree Obama did.

He indirectly brought up Warren Buffett, who pays a lower effective tax rate that his secretary. I wrote an article in 2010 about Buffett’s three major inconsistencies. He said derivatives are weapons of financial mass destruction, yet subjected his shareholders to billions in losses from them, he said you shouldn’t buy banks, since they can cook their books 10 ways from Sunday, yet he bought a big share in Goldman Sachs and then Bank of America, and he said not to invest in capital-intensive businesses, only to make his largest-ever investment in a highly capital-intensive railroad.

Since then, Buffett has claimed that making Tim Geithner the Treasury Secretary was an excellent decision, and that Bernanke did a great job since the 2008 financial collapse, and deserved his reappointment.

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I saw this article by David Olive of the Toronto Star today that highlights Warren Buffett’s inconsistencies between his investment approach ¬†in principle, and in practice.

Some highlights are:

  • He said not to buy banks, because of their ability to ¬†doctor their numbers so much, as we saw with the financial meltdown of 2007-2009 and beyond, yet is a major investor in several banks.
  • He said not to make acquisitions with undervalued company stock, yet did exactly that with his company’s largest ever acquisition of Burlington Northern Santa Fe, for $26.4 billion.
  • He called financial derivatives “weapons of financial mass destruction,” yet invested in them heavily and subjected shareholders to $4.6 billion in associated losses in 2008.

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