Buffett sees economic shambles, still optimistic

[Dantheman62]

Buffett optimistic despite big drop in Berkshire profit, prospects for more economic turmoil


OMAHA, Neb. (AP) -- Warren Buffett says the economic turmoil that contributed to a 62 percent profit drop last year at the holding company he controls is certain to continue in 2009, but the revered investor remains optimistic.

Buffett released his annual letter to Berkshire Hathaway Inc. shareholders Saturday morning, and detailed the worst of his 44 years leading the Omaha-based company.

Buffett wrote he's certain "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."

In between the news of Berkshire's sharply lower profit and its nearly $7.5 billion investment and derivative losses, Buffett offered a hopeful view of the nation's future.

He said America has faced bigger economic challenges in the past, including two World Wars and the Great Depression.

"Though the path has not been smooth, our economic system has worked extraordinarily well over time," Buffett wrote. "It has unleashed human potential as no other system has, and it will continue to do so. America's best days lie ahead."

Within Berkshire, Buffett said the company's retail businesses, including furniture and jewelry stores, and those tied to residential construction, such as Shaw carpet and Acme Brick, were hit hard last year, and they will likely continue to perform below their potential in 2009.

But he said Berkshire's utility and insurance businesses, which includes Geico, both delivered outstanding results in 2008 that helped balance out the other businesses.

Buffett said he made at least one major investing mistake last year by buying a large amount of ConocoPhillips stock when oil and gas prices were near their peak.

Berkshire increased its stake in ConocoPhillips from 17.5 million shares in 2007 to 84.9 million shares at the end of 2008.

Buffett said he did not anticipate last year's dramatic fall in energy prices, so his decision cost Berkshire shareholders several billion dollars.

Buffett says he also spent $244 million on stock in two Irish banks that appeared cheap. But since then, he's had to write down the value of those purchases to $27 million.

Berkshire owns a diverse mix of more than 60 companies, including insurance, furniture, carpet, jewelry, restaurants and utility businesses. And it has major investments in such companies as Wells Fargo & Co. and Coca-Cola Co.

http://biz.yahoo.com/ap/090228/buffett_letter.html

[peaceandlove]

Older article:

The light dims at General Electric

Once the world's largest company, GE's disastrous exposure to the banking crisis is now a major threat to its future. Stephen Foley reports

Thursday, 26 February 2009

Thomas Edison will be turning in his grave. On his invention of the electric lightbulb and other innovations sits one of the world's biggest, most historic and best respected companies. For the humble lightbulb, through cookers and fridges, to jet engines, medical scanners and nuclear reactors, it is famous throughout the globe for the tradition of inventiveness infused by its legendary founder.

Article Continues: http://www.independent.co.uk/news/bu...c-1632420.html

Interesting Commentary by Mike at Fever I Am youtube channel regarding Buffett, GE, Goldman Sachs and Berkshire:

Video (3:49): http://www.youtube.com/watch?v=7qU6n...e=channel_page