1. Health CareBuffett has described the health care reform under President Barack Obama as insufficient to deal with the costs of health care in the US, though he supports its aim of expanding health insurance coverage. Buffett thinks health care costs should head towards 13 to 14% of GDP. Buffett faults the incentives in the US medical industry, that payers reimburse doctors for procedures leading to unnecessary, instead of paying for results.
2. TaxesBuffett stated that he only paid 19% of his income for 2006 ($48.1 million) in total federal taxes (due to their being from dividends & capital gains), while his employees paid 33% of theirs, despite making much less money.“How can this be fair?” Buffett asked, regarding how little he pays in taxes compared to his employees. In 2007, Buffett testified before the Senate and urged them to preserve the estate tax so as to avoid a plutocracy. 3. Trade deficit
Buffett views the United States’ expanding trade deficit as a trend that will devalue the US dollar and US assets. He believes that the US dollar will lose value in the long run, as a result of putting a larger portion of ownership of US assets in the hands of foreigners. In his letter to shareholders in March 2005, Warren Buffett predicted that in another ten years’ time the net ownership of the U.S. by outsiders would amount to $11 trillion. 4. Dollar and gold
The trade deficit induced Buffett to enter the foreign currency market for the first time in 2002. However, he substantially reduced his stake in 2005 as changing interest rates increased the costs of holding currency contracts. Buffett continues to be bearish on the dollar, and says he is looking to acquire companies which derive a substantial portion of their revenues from outside the United States. Buffett emphasized the non-productive aspect of a gold standard for the USD in 1998 at Harvard. 5. Investing in China
Buffett invested in PetroChina Company Limited and in a rare move, posted a commentary on Berkshire Hathaway’s website stating why he would not divest from the company despite calls from some activists to do so, due to its connection with the Sudanese civil war that caused Harvard to divest from the company in 2005. He did, however, sell this stake soon afterwards, sparing him the billions of dollars he would have lost had he held on to the company in the midst of the steep drop in oil prices beginning in the summer of 2008. 6. Tobacco
During the RJR Nabisco, Inc. hostile takeover fight in 1987, Buffett was quoted as telling John Gutfreund I’ll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It’s addictive. And there’s fantastic brand loyalty. —Buffett, quoted in Barbarians at the Gate: The Fall of RJR Nabisco 7. Coal
In 2007, Buffett’s PacifiCorp, a subsidiary of his MidAmerican Energy Company, canceled six proposed coal-fired power plants. These included Utah’s Intermountain Power Project Unit 3, Jim Bridger Unit 5, and four proposed plants previously included in PacifiCorp’s Integrated Resource Plan. 8. Renewable energy
In December 2011, Buffett’s MidAmerican Energy Holdings agreed to buy a $2 billion solar energy project under development in California and a 49 percent stake in a $1.8 billion plant in Arizona. 9. Expensing of stock options
He has been a strong proponent of stock option expensing on the Income Statement. At the 2004 annual meeting, he lambasted a bill before the United States Congress that would consider only some company-issued stock options compensation as an expense, likening the bill to one that was almost passed by the Indiana House of Representatives to change the value of Pi from 3.14159 to 3.2 through legislative fiat 10. Klamath river
American Indian tribes and salmon fishermen sought to win support from Warren Buffett for a proposal to remove four hydroelectric dams from the Klamath River. 11. Google and Facebook In May 2012, Buffett said he avoids buying stock in new social media companies like Facebook and Google because it is hard to estimate future value. He also stated that initial public offering (IPO) of stock are almost always bad investments.
REFRENCES1. McCarthy, Ryan (March 3, 2010). “Warren Buffett On CNBC: Health Care Is Like An ‘Economic Tape Worm’ (WATCH)”. Huffington Post (AP and CNBC). Retrieved November 5, 2011. 6 minutes in.
2. McCarthy, Ryan (March 3, 2010). “Warren Buffett On CNBC: Health Care Is Like An ‘Economic Tape Worm’ (WATCH)”. Huffington Post (AP and CNBC). Retrieved November 5, 2011. 7 minutes in. 3. Ben Stein, “In Class Warfare, Guess Which Class Is Winning”, New York Times, Nov. 26, 2006 4. Dave Zweifel, “Plain Talk: There’s Class War, and Rich Are Winning”, The Cap Times, Oct. 6, 2010 5. “A Sharecropper’s Society?”. The Washington Post. August 7, 2005. Retrieved February 23, 2009.
6. Buffett, Warren (1977–05). “How Inflation Swindles the Equity Investor”. Fortune 7. “Shareholder Proposal Regarding Berkshire’s Investment In PetroChina” (PDF). Berkshire Hathaway. Retrieved May 20, 2008. 8. Burrough, Bryan; Helyar, John (1990). Barbarians at the Gate: The Fall of RJR Nabisco. New York: Harper & Row. ISBN 0-06-016172-8 9. http://www.psc.utah.gov/utilities/electric/07docs/07203501/8-30-07petition.pdf 10. Marc Roca and Ehren Goossens (Dec 20, 2011). “BP Deems Solar Unprofitable, Exiting Business After 40 Years”.
Bloomberg. 11. “Warren Buffett, Fuzzy Math And Stock Options “. The Washington Post: p. A19. July 6, 2004. Retrieved May 23, 2010. 12. Josh Funk (5/3/2008). “Buffett again rebuffs advocates who want Klamath dams out”. USA Today. 13. Bacher, Dan (May 1, 2009). “Klamath Dam Removal Advocates Call on Buffett’s Company To Close the Deal”. Indybay.org. Retrieved May 23, 2010. 14. “Buffett on Facebook and Google: hard to estimate future valu”. Chicago Sun-Times. Associated Press. May 7, 2012. Retrieved May 7, 2012.
RAKESH JHUNJHUNWALAINVESTMENT PHILOSOPHYRakesh Jhunjhunwala’s stock picking strategy is influenced by George Soros’ trading strategies and Marc Faber’s analysis of economic history. He endorses the rule, “the trend is your friend.” His investment philosophy says “Buy right and hold tight”.
He admits to having been a bear in the Harshad Mehta days and believes that investors should be like chameleons. He has said that the markets are temples of capitalism and believes that they are the ultimate arbiters. He claims to base his trades, in part, on the business model of a company, its growth potential, and its potential for longevity. He factors in heavily the competitive ability, scalability and management quality of the enterprise. The entrepreneur, according to Jhunjhunwala, makes an invaluable difference to his expected investment returns.
According to Jhunjhunwala, believing in the vision and the beliefs of the entrepreneur and evaluating risks that may not be perceived by the entrepreneur are key success factors for a trader. Rakesh Jhunjhunwala, has a number of stocks in his portfolio. At first glance, a naive investor would be totally perplexed. There seems to be no order in the portfolio. It comprises of large cap and mid cap stocks, with some being held in abnormally large quantities and others in piffling quantities. Also, while some stocks are well-known household names, others are names you may have never heard of. STRATEGY
1. If you are convinced about a stock, buy large quantities with conviction: Even Ramesh Damani, the Nawab of Dalal Street and one of the most astute investors ever, openly rued at a Motilal Oswal Value Investing Forum that his biggest regret in life is that though he was thoroughly convinced about a stock, he always, by habit, only bought piffling quantities. The result is that though these stocks became super-duper multibaggers, the overall impact on Ramesh Damani’s portfolio was minimal. Ramesh Damani said that the “biggest failing of his career” was the “inability to dream big“. 2. If you are not fully convinced about a stock, buy a small quantity to track it:
Rakesh Jhunjhunwala uses his instincts to a great extent when he buys a stock. If a stock which appears to have potential crosses his path, Rakesh Jhunjhunwala buys a token quantity of it and puts it under “probation” so as to track its performance. Rakesh Jhunjhunwala waits for a quarter or two or several to see how the stock is performing. If the stock’s performance meets with his expectations, he rewards it by increasing his investment. Otherwise, he gently lets the stock go its way.
3. Always choose sector leaders with scaleable opportunity: This is a fantastic message from the master. When Rakesh Jhunjhunwala bought Titan Industries, it was a leader in its’ sector – watches. CRISIL was a leader in its sector – credit rating, Rallis was a leader in its sector – agrochemicals and so on. 4. Diversify between sectors:
Another unsaid but obvious message from Rakesh Jhunjhunwala is that you must never put all of your eggs in one basket, now matter how strong is your conviction. And so it is that each of the five dominant stocks in Rakesh Jhunjhunwala’s portfolio are in a separate sector, insulated from each others’ problems.
REFRENCES1. “World’s Famous Investors”. Retrieved 9 November 2012. 2. rakesh-jhunjhunwala-portfolio-2013-secrets-to-finding-multibagger-stocks 3. Rakesh Jhunjhunwala topic page. Forbes.com. Retrieved October 2012 4. Rakesh Jhunjhunwala raises stake in A2Z. Business Standard. Retrieved 5 June 2012