Saturday, June 07, 2008

Buffett eyes Europe

A most interesting article by Matthew Lynn in this week's Spectator. It's certainly worth reading in full, but here's a few points and questions arising:

  • Buffett's got $35 billion in cash to go a-shopping, and thinks Europe is more promising than the emerging markets - partly because Europe is already in recession.
  • Have European companies endured because many have remained family-owned? Is the Anglo-Saxon model of capitalism too erratic and destructive?
  • How important are hunches in investing? Lynn says, "Buffett doesn’t believe in extended due diligence or complex financial models. He chooses his investments based on what he feels about the people in charge, and whether he likes their products." And recently, George Soros said that for all his research, he pays attention to his own psychosomatic backaches.
  • How much vital business information is conveyed - or betrayed - by tone of voice and body language? Mark McCormack said that he liked to go to meetings on his own, so that he wouldn't have to worry about unconscious non-verbal signals given away by an underling's reactions. For the same reason, he loved the opposition to come with company. Is the most important bit of investment reserach the site visit?

5 comments:

Ordovicius said...

Cheers for that, a very interesting article

Nick Drew said...

yes, a good article

I was a bit taken aback when Buffett had to take a big write-down recently on derivatives losses, which tells us that he isn't quite to be taken at face value ...

did you see this other Spectator piece ? - I like the account of 'Malthus + Milton' inflation

a propos of which, Sackers, would you agree the great in- / de- question is now resolved ?

SACKERSON said...

Hi Nick. Yes, I've read my Speccie, usually one of the joys of my week.

In vs De: not at all decided, partly because there are different factors, and partly because it depends what you're buying. Big ticket items getting cheap now to clear stock - look at the foreign holidays, cruises, kitchen refurb, cars and computer sections of the daily paper. Food going up for various reasons and the pound racing the dollar downwards.

I think the poor are now in an inflationary environment, the rich in a deflationary one.

SACKERSON said...

... and when oversupplies have been cleared, and Western governments become desperate to restart their economies, inflation all round, I guess. And if that doesn't work, stagflation.

Ryan said...

Given that we have a much higher GDP than most of the rest of Europe, I don't think we need to take any lessons on business from the others. Lessons on setting up a constitution to limit the governments powers on spending beyond its means would be most welcome however....