On Tue, 14 Mar 2000, Enrique Diaz-Alvarez wrote:
> Maybe rational capitalists are just rationally reallocating rational
> capital in rational search of the rationally biggest rational future
> profits. Or maybe not.
True enough. But then, when the returns to thinking rationally are so poor, doesn't that mean economic rationality is economically irrational? In these our times.
Financial Times 13-Mar-2000
COMPANIES & FINANCE: INTERNATIONAL: Buffett grades himself 'D'
Warren Buffett, whose chairmanship of Berkshire Hathaway has for years earned him the reputation as an investor of rarely matched brilliance, awarded himself a "D" grade for his performance last year.
In an annual letter to shareholders, Mr Buffett said Berkshire's 45 per cent drop in net earnings in 1999 was "the worst absolute performance of my tenure and, compared to the S&P (index), the worst relative performance as well."
He offered little hope of a quick improvement in the insurance and investment group's fortunes, but was unrepentant about the absence of technology stocks in Berkshire Hathaway's portfolio - a departure from the herd for which Mr Buffett has often been criticised.
In a tacit reference to technology stocks, he warned that investor expectations of returns seemed "wildly optimistic".
Should that optimism change, he said: "The market adjustment is apt to be severe, particularly in sectors in which speculation has been concentrated."
He broke with tradition, however, by indicating that he may now consider repurchasing shares, a strategy that has hitherto been taboo at Berkshire Hathaway.
With the A shares trading at Dollars 41,300, their lowest for nearly three years, Mr Buffett said: "Recently, when the A shares fell below Dollars 45,000, we considered making repurchases.
"We decided, however, to delay buying, if indeed we do elect to do any, until shareholders have had the chance to review this report," he added, before giving shareholders who wanted to tender their stock a telephone number to call.
Mr Buffett said Berkshire Hathaway had been hardest hit last year by the performance of its equity portfolio, which includes American Express, Coca-Cola, Freddie Mac and Gillette.
"Even Inspector Clouseau could find last year's guilty party: your chairman," Mr Buffett wrote, in reference to the bumbling detective in the Pink Panther films. He added that it was "no sure thing" that the companies would quickly regain their stride this year.
Berkshire Hathaway had not added to its holdings, he added, because: "right now, the prices of the fine businesses we already own are just not that attractive."
Striking another cautious note, Mr Buffett said the days when Berkshire Hathaway could beat the S&P index by "truly large superiorities" were over.
Moreover, he said he was almost certain that the S&P would do less well in the coming decade than in the years since 1982.
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__________________________________________________________________________ Michael Pollak................New York City..............mpollak at panix.com