Warren Buffett

The Debt Ceiling Isn't What Worries Warren Buffett

Investment guru Warren Buffett isn't sweating the debt ceiling as much as he is some of the country's other issues.

Buffett this weekend said the $16.4 trillion in debt the country has collected is not the number on which everyone should be focused.

"It is not a good thing to have it going up in relation to GDP, that should be stabilized, but the debt itself is not a problem," the CEO of Berkshire Hathaway (NYSE: BRK.A) told CBS' "Sunday Morning" this weekend.

Buffett said the country's debt is a "lower percentage of GDP than it was when we came out of World War II. You've got to think about in relation to GDP."

Here's why debt-to-GDP is what Buffett watches.

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Play the Bakken Oil Boom Like Buffett

Energy oil pumping small

Many investors have heard of the Bakken oil field in North Dakota and Montana, but most are unaware of how important this formation is becoming to the U.S. economy.

More germane to investors is the fact that there is still a lot of money to be made from Bakken oil in the months and years ahead.

Just ask Warren Buffett.

He spotted the potential of Bakken oil well ahead of most and bought a non-energy company that would benefit greatly from the boom. Three years ago he bought Burlington Northern Santa Fe (BNSF) Railway Co. for $26 billion.

That railroad is now one of the main beneficiaries of the Bakken oil boom. (And people thought he just had always wanted to own a train set!)

"We're the 1,000-pound gorilla in the oil markets," BNSF CEO Matt Rose told Bloomberg News. "Crude by rail is going to be really strong for us. It's been a real benefit to us to replace some of that lost coal business."

The Bakken oil formation isn't just an investing opportunity; it's transforming the U.S. energy landscape.

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Why Warren Buffett is Wrong About U.S. Banks

Warren Buffett has made billions since the financial crisis by investing in U.S. banks, including Bank of America (NYSE: BAC),

Wells Fargo & Co. (NYSE: WFC) and Goldman Sachs Group Inc. (NYSE: GS).

The Oracle of Omaha has even guaranteed the safety of U.S. banks.

"The banks will not get this country in trouble, I guarantee it," Buffett told Bloomberg News. "Our banking system is in the best shape in recent memory."

Buffett, CEO of Berkshire Hathaway (NYSE: BRK.A, BRK.B), says U.S. banks are safe because they have increased capital ratios, sold risky assets, cut unnecessary jobs and bolstered their balance sheets.

But while the U.S. banking system might be in better shape than it was five years ago, it is nowhere near fixed. And banks could cause another crash.

Here's why.

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Why Warren Buffett Doesn't Fear the Fiscal Cliff, and How He'd Fix it

Warren Buffett, CEO of Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B), is doubtful that Congress can get its act together and compromise on the fiscal cliff before the Dec. 31 deadline.

However, Buffett expects a deal to be reached shortly after that deadline, and he is not concerned with going over the infamous fiscal cliff.

"The fiscal cliff does not enter into my long-term investment decisions... and it wouldn't surprise me if we go past January 1," Buffett said on CNBC's Squawk box Wednesday morning. "[If that happens] I don't think the world will come to an end."

Buffett is in the minority with that sentiment, as investors have been fretting over the fiscal cliff since the election and will continue to do so until Washington finalizes a deal.



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Warren Buffett's Minimum Tax Rate Proposal

In his op-ed in today's The New York Times, billionaire investor Warren Buffett reiterated his case for higher taxes on the wealthiest Americans, calling for a minimum tax rate of 30% on people making more than $1 million a year and 35% for those making more than $10 million a year.

After pointing out that no one, with the possible exception of Grover Norquist, ever turned down a good investment opportunity because the tax rate on the capital gain would be too high, Buffett argued, "So let's forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if - gasp - capital gains rates and ordinary income rates are increased. The ultrarich, including me, will forever pursue investment opportunities."

Imposing a minimum tax rate on high incomes, "...will block the efforts of lobbyists, lawyers and contribution-hungry legislators to keep the ultrarich paying rates well below those incurred by people with income just a tiny fraction of ours," Buffett said. "Only a minimum tax on very high incomes will prevent the stated tax rate from being eviscerated by these warriors for the wealthy."

While Buffett was unsparing in his criticism of those earning the highest incomes, he also suggested modifications to President Obama's plan to raise taxes on incomes over $250,000. "I support President Obama's proposal to eliminate the Bush tax cuts for high-income taxpayers," Buffett wrote. "However, I prefer a cutoff point somewhat above $250,000 - maybe $500,000 or so," recognizing that, in some parts of the country (not Omaha), $250,000 barely covers a middle-class lifestyle.



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Warren Buffett on Stocks, QE3 and the Deciding Factor in Election 2012

Legendary investor Warren Buffett appeared on CNBC's Squawk Box Wednesday morning to answer the biggest questions regarding the global economy, stocks, Election 2012, and more.

The CEO of Berkshire Hathaway (NYSE: BRK.A, BRK.B) remains confident that the U.S. is in better shape than other regions and he still believes the stock market is the best place for your money.

But with so much global uncertainty still swirling around, Buffett isn't ready to go on a buying spree.

Asked what investors should do, here's what Buffett had to say.



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Build Your Wealth the Warren Buffett Way With These "Wide-Moat" Companies

It's never a bad idea to bullet-proof your stock portfolio with companies that have a clear-cut competitive advantage.

And now may be the right time to bolster your defenses with exchange-traded funds (ETFs) that buy stocks of companies with so-called "wide moats."

Of course, famed investor Warren G. Buffett originally coined the term to describe companies with distinct competitive advantages over other firms in its industry.

The Oracle of Omaha says he is always looking for "economic castles protected by unbreachable moats."

Indeed, Buffett's Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) is chock full of wide-moat companies that consistently rake in high returns on invested capital, propelling their shares higher year after year.

The idea is to buy -- when they are cheap -- shares of companies that have dominant positions in their industries and are likely to maintain their superiority for decades, not months or years.

For example, Berkshire has held positions in The Coca Cola Co. (NYSE: KO) and Exxon Mobile Corp. (NYSE: XOM) for decades, patiently reaping the rewards from their wide moats.

"A company that has a greater duration of competitive advantage is simply worth more," Paul Larson, chief equity strategist at investment research firm Morningstar Inc. (Nasdaq: MORN) told MarketWatch.

So what gives one company a wide moat while others try to scrape by on the leftovers?

Here's what gives them the upper hand...

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Warren Buffett's Berkshire Hathaway Holdings Show Major Selling

For those who want to model their investments after the famed Berkshire Hathaway holdings, this is your week.

Berkshire CEO Warren Buffett along with other iconic investors such as George Soros this week revealed their second-quarter stock moves - and you may be a little more than surprised to see what they've been up to.

The two billionaire investors disclosed their most recent investments in 13F filings, which are released by the U.S. Securities and Exchange Commission 45 days after the close of a quarter.

While Buffett has stepped back a bit from the business as he anticipates retirement, the Berkshire Hathaway holdings show he's still the driving force behind the firm's investing success.

"Buffett continues to hold sway over a meaningful amount of the equity portfolio--something we don't anticipate changing too significantly in the near to medium term," wrote Morningstar analyst Greggory Warren.



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Warren Buffett, Bill Clinton Sound off on "Recession 2013"

As concerns mount that the United States is headed for a recession, two famous minds offered opposing takes on what's in store for the U.S. economy.

In one corner was the Oracle of Omaha, Warren Buffett; in the other, the 42nd President of the United States, Bill Clinton.

Speaking at the 25th anniversary dinner of the Economic Club of Washington, Buffett said that it is unlikely the U.S. economy will fall into another recession. He said the chances of that happening are "very low."

Buffett, who blames both political sides for the budget deficit, once again called for raising taxes and cutting spending.

"The problem is the Democrats don't want to talk about what expenditures they would cut and the Republicans don't want to talk about raising revenues," he said.

Buffett said "the big question" remains what's ahead for the euro.

"We've got this system where they're half in and half out," said Buffett, who is currently auctioning off a lunch with himself this week on eBay for charity. "They have to reconcile these things."

Reflecting on the Eurozone he said there is the possibility the U.S. will feel a "spill over" effect from Europe - which some would argue has already happened.

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Berkshire’s Annual Meeting: Warren Buffett Talks Stocks and Successors

Billionaire investor Warren Buffett held court this weekend at Berkshire's annual meeting, fielding dozens of pressing questions about the company, investing strategies, and a new CEO.

Some 40,000 gathered to hear what the leader of the storied Berkshire Hathaway (NYSE: BRK A, BRK B) had to say about the state of the company and its fate following Buffett's recent diagnosis with prostate cancer. The Oracle of Omaha triggers such an enthusiastic investing response the event ends up more like a festival than a shareholders' meeting.

Buffett dismissed the health news as a mere non-event, barely touching on the subject.

The investing legend instead focused on the money.

Buffett on Berkshire

Berkshire posted first-quarter earnings Friday after the close that doubled compared to the same period a year ago, fueled by gains in its insurance, manufacturing, service and retail businesses.

The company reported earnings of $3.25 billion for first quarter 2012, translating to $1,966 per Class A share, versus $1.51 billon in the first quarter of 2011.

Operating income came in light at $1,615 a share. Analysts surveyed by Thomas Reuters had forecast $1,780.

The company also posted gains from its derivates holdings - investments that Buffett once referred to as "financial weapons of mass destruction."

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Warren Buffett Stocks: How to Invest Like the Oracle of Omaha

For months, the Obama administration has been using Berkshire Hathaway Inc. (BRK.A, BRK.B) Chairman and CEO Warren Buffett's considerable name recognition to try to change how America's top earners are taxed.

The fate of the so-called "Buffett Rule," which would apply a minimum tax of 30% to individuals making more than $1 million a year, still has yet to be determined. Chalk it up to politics as usual.

There is, however, a list of other Buffett Rules that are far more useful to investors.

They're the tricks of the trade that have made Warren Buffett the most successful living investor, and one of the richest men in the world.

After all, the Oracle of Omaha hasn't earned his nickname by mistake. To many, it seems the billionaire has a sixth sense when it comes to investing, a supernatural ability to divine the good investments from bad.

But while his ability may be uncanny, there's really no magic at work. What Buffett has above all else is discipline. His philosophy is based on patience.

As a value investor, Buffett's goal is to identify companies the market has undervalued or companies that are trading cheaply compared to their intrinsic value.

Once he finds them, he buys them and holds on to them for the long term while their value steadily increases over decades.

Warren Buffett's Rules for Successful Investments

Beyond those simple tenets, there are a few rules - those other Buffett Rules - that guide Buffett's conscience as he makes investment decisions.

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Congress Wastes Time on Buffett Rule, Keystone Pipeline to Beef Up Attack Ads

They are at it again...

With a cynical eye cast toward the November election, members of Congress forced votes on the "Buffett Rule" and the Keystone pipeline knowing both would ultimately fail.

The real purpose for voting on the Buffett Rule and the Keystone pipeline was to embarrass the opposition and produce material for campaign attack ads.

What Would Warren Buffett Do? The Hottest Trend for Savvy Investors

If Warren Buffett was going to invest in anything right now, where would he put his money?

At first, that question may be difficult to answer. But if you think about Buffett's classic investment approach - focusing on real assets with a reliable return and prizing valuation - it gets a little easier.

Stumped?

Try the housing market - single-family rental homes to be precise.

"If I had a way of buying a couple of hundred thousand single family homes and I had a way of managing them... I would load up on them and take mortgages out at very very low rates," Buffett said in an interview with CNBC. "It's a very attractive asset class right now."

It's a classic buy low, sell high opportunity - and one that more and more investors are taking advantage of.

In fact, sales of investment and vacation homes surged 65.4% last year to 1.2 million units, the highest level since 2005, according to the National Association of Realtors (NAR).

Naturally, low home prices were a major catalyst for that surge.

Last year, U.S. home prices were down 33.8% from their 2006 peak. But another factor was increased interest from investors - many of which boast six-figure salaries and desire a more consistent return than the stock market offers right now.

"I have doctors, lawyers, an engineer from Apple who told some of his buddies," Brian Hardie, who manages rental properties, told Forbes about his clients.

And with foreclosures on the rise this year, there will be an even greater opportunity for entrepreneurial investors, which means Hardie's client list at Regency Property Management will likely continue to grow.

Indeed, foreclosures that had previously been held up by litigation relating to robo-signing and other malfeasance on the part of banks are once again moving back through the system following a $26 billion settlement five major banks reached in January.

A February report from RealtyTrac showed new default notices - the first step in the foreclosure process - were up 1% from January. Furthermore, default notices increased dramatically in some states, such as Pennsylvania (35%), Florida (33%) and Indiana (37%).

As the NAR recently pointed out, 20% of February home sales were foreclosures. And if RealtyTrac's forecast for a 25% increase in foreclosures this year comes to fruition, the number of distressed sales will rise even further.

Meanwhile, the heightened rental property interest, dually helped by inflation, has given landlords more power - which means rents across the country are increasing.

This has created an optimal situation for investors that have the wherewithal to make it work for them.

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Investors Turn to TIPS as Warren Buffett Warns on Inflation

Warren Buffett last week did more than warn investors on the dangers of low interest rates and inflation.

The Oracle of Omaha also had harsh words for traditional bonds.

In a Fortunearticle Buffett went so far as to say, "Right now bonds should come with a warning label."

"They are among the most dangerous of assets," Buffett wrote, "Over the past century these instruments have destroyed the purchasing power of investors in many countries."

To prove his point Buffett labeled inflation as the primary threat to bond investors, noting it takes no less than $7 today to buy what $1 did in 1965.

Instead of bonds, Buffett recommends "productive assets," including farmland and real estate.

But he saved his highest praise for stocks, especially the stocks of companies like The Coca-Cola Co. (NYSE: KO) and International Business Machines Corp. (NYSE: IBM), that consistently deliver inflation-beating returns.

But what if you're not comfortable betting most or all of your chips on stocks? And if traditional bonds are out, where else can investors turn for inflation beating returns?

TIPS Insure Wealth Against Inflation

Enter Treasury Inflation Protected Securities, or TIPS.

Unlike regular bonds, TIPS are designed to protect your principal against the ravages of inflation.

In fact, TIPS zig when other securities zag, providing diversification and safety to your portfolio.

TIPS are considered to be an extremely low-risk investment since they are backed by the U.S. government, and their par value rises with inflation while their interest rate remains fixed.

Here's how they work.



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Why Warren Buffett Is Buying – And You Should Be Too

Legendary investor Warren Buffett recently made news with his purchase of International Business Machines Corp. (NYSE: IBM), though I can't say I'm surprised.

Despite criticism that he's buying into a top-heavy market, that IBM is at a premium, and that he's losing his touch, chances are Buffett knows exactly what he's doing.

And guess what, it's exactly what I've been counseling investors to do since this crisis began - bolster defenses by putting money to work in companies that are backed by trillions of dollars in tailwinds, and have solid defensible businesses (Buffett calls these "moats").

According to a Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) filing made Monday but dated Sept. 30, 2011, Buffett also waded into General Dynamics Corp. (NYSE: GD), DirecTV (Nasdaq: DTV), CVS Caremark Corp. (NYSE: CVS), Intel Corp. (Nasdaq: INTC) and Visa Inc. (NYSE: V).

In the third quarter, Buffett funneled $10 billion into Berkshire's IBM stake, which now stands at 5.5%. Of course, Berkshire maintains a $13.5 billion stake in The Coca-Cola Co. (NYSE: KO) that remains the firm's largest.

Buffett Pulls the Trigger

As a long time Buffett watcher, I am somewhat surprised that he picked up Intel and IBM, if only because the Oracle of Omaha has a well-documented aversion to tech.

Still, I can see the logic. Both companies are global giants poised to profit from the whirlwind of growth set to take place thousands of miles from our shores in the decades ahead.

There are technical similarities, too.

For instance, IBM's price has risen more than 29% this year. As a result, at least five analysts have removed their buy recommendations because they believe the stock may have run its course, according to Bloomberg News and YahooFinance . At the moment, less than 50% of the analysts who cover IBM recommend buying the stock.

Back in 1988, it was much the same situation. Coke had more than doubled in size and analysts had much the same reaction when it came to doubts about further growth. Many openly bashed the stock's prospects and completely ignored the global growth potential that today is Coke's mainstay.

Coke is up tenfold since then. Enough said.

Here's what I think Buffett sees:



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