The Oracle of Omaha has spoken: "I haven't seen anything in Goldman's behavior that makes it any more subject to criticism than Wall Street generally." Perhaps Berkshire Hathaway shareholders thought their leader might have harsher words for bankers, but then again, why would Buffett talk trash about one of his prized holdings?
In fact, according to Buffett and his vice chairman Charlie Munger, it's not Goldman, rather "a very defective system" that's to blame for the problems on Wall Street. Munger used the predator defense saying "When the tiger gets out and starts creating damage, it's insane to blame the tiger, it's the idiot tiger keeper!" That tiger keeper in our analogy is the regulators.
If not Wall Street banks, what about those conflict-ridden ratings agencies that slapped AAA on just about anything that its clients cobbled together? Buffett said the ratings outfits have "incredibly wonderful businesses," and that their "pricing power is significant," which may explain why Berkshire holds nearly 20% of ratings giant Moody's.
What's less easy to understand is how Buffett can defend an industry that downgraded to junk 91% of AAA-rated sub-prime mortgage-backed securities issued in 2007 (not to mention 93% of those issued in 2006). I don't expect Buffett and Munger to dis the companies or industries that they own, but maybe saying a little less would have been preferable.
Still, I went back to find some of my favorite Buffett-isms from over the years. Despite being a tad disappointed at the 2010 Berkshire meeting, you still gotta' love a guy who says stuff like this:
- "Rule No.1: Never lose money. Rule No.2: Never forget rule No.1?
- "Be fearful when others are greedy. Be greedy when others are fearful."
- "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
- "You only find out who is swimming naked when the tide goes out."
- "Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down."
- "Price is what you pay. Value is what you get."
- "I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over."
- "Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well."
- "Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results."
- "In the business world, the rear-view mirror is always clearer than the windshield."
- "The investor of today does not profit from yesterday's growth."
- "It takes 20 years to build a reputation and five minutes to lose it."
The last one may be worthy of a second reading by both Goldman and Moody's...