Warren Buffett's Crystal Ball -- & Rearview Mirror

Memorable Quotes from
Berkshire's '09 Annual Letter

In 75% of [the last 44 years], the S&P stocks recorded a gain. I would guess that a roughly similar percentage of years will be positive in the next 44. But neither Charlie Munger, my partner in running Berkshire, nor I can predict the winning and losing years in advance. (In our usual opinionated view, we don’t think anyone else can either.) We’re certain, for example, that the economy will be in shambles throughout 2009 – and, for that matter, probably well beyond – but that conclusion does not tell us whether the stock market will rise or fall.

--Warren Buffett, 2008 Berkshire Hathaway Annual Report

Substitute "housing market" for "stock market," and you've got a pretty good long-term outlook . . .

If you've never read one of Buffett's letters, I highly recommend it; they're probably the closest thing capitalism has to Mao's "Little Red Book."

At least in my view, here are the most memorable quotes from this year's letter (last year's top line was an instant -- and much quoted -- classic: 'you don't know who's swimming naked until the tide goes out'):

"Putting people into homes, though a desirable goal, shouldn’t be our country’s primary objective. Keeping them in their homes should be the ambition."

"At the moment, it is much better to be a financial cripple with a government guarantee than a Gibraltar without one."

"Beware the investment activity that produces applause; the great moves are usually greeted by yawns."

"When the financial history of this decade is written, it will surely speak of the Internet bubble of the late 1990s and the housing bubble of the early 2000's. But the U.S. Treasury bond bubble of late 2008 may be regarded as almost equally extraordinary."

"Participants [in derivatives contracts] seeking to dodge troubles face the same problem as someone seeking to avoid venereal disease: It’s not just whom you sleep with, but also whom they are sleeping with."

*Through its subsidiary, MidAmerican Energy, Berkshire Hathaway is the ultimate parent company of Edina Realty.

George W. Bush: The L-O-N-G Wait for Redemption

Is Bush's Leadership Like Wagner's Music?

"Wagner's music is better than it sounds."
--Anonymous

Is George W. Bush's Presidency more successful than most Americans (80%) think right now? Will history vindicate Bush, like it did Harry Truman?

I doubt it.

Harry Truman didn't leave office with a PR blitz of interviews arguing that history would redeem his shredded reputation. When you have the courage of your convictions -- and a clue how anxious and angry everyday Americans are right now -- you know when to shut up. If we, contemporary Americans, aren't qualified to judge Bush, why is he spending so much energy trying to persuade us?

Asking people to suspend their (very) critical judgment is more than a bit self-serving, not to mention arrogant and insulting.

Imagine calling the restaurant where you just contracted food poisoning and being told that "it's premature to judge the meal a failure" -- only your great-great grandchildren are qualified to do that.

Sometimes -- no, 99% of the time -- what seems to be a failure, is.

It's certainly possible that history will be kinder to George Bush II than contemporary America. However, it's equally conceivable that history's judgment will be even harsher. Time did nothing to burnish the reputations of Buchanan, Pierce, Fillmore, Harding, Hoover and a host of other Presidential mediocrities. Even luminaries aren't immune from retroactive revisionism: anyone still think Alan Greenspan belongs on an economists' Mount Rushmore?

When Mao Tse Tung was asked, in 1950, what he thought of the French Revolution, he reportedly replied, "it's too soon to tell."

History is not going to wait nearly that long to render its verdict on George W. Bush (no matter how much he hopes otherwise).