The man, the legend, the interview: Warren Buffett
Magically, a transcription of a PBS Nightly Business Report interview with Warren Buffett ended up in my inbox and I thought it would be a great place to pull a catchy quote for a Money Talks post (which is basically my cop out when I have nothing else to write about). But halfway through the interview I realized it was way to good to pick and choose. Buffett - CEO of Berkshire Hathaway, worth about $60 billion (pre-economic collapse), and widely considered to be one of the smartest investors in the world - is truly an amazing guy.
For someone who’s life you would think revolves largely around money, he is, afterall, an investor by title, he seems so unphased by the economic climate right now.
A PBS reporter interviewed Buffett as a part of the Nightly Business Report’s 30-year anniversary special about his talks with President Obama, his optimism for the economy in the long run, and how he hasn’t altered his investing strategies since 1949, or maybe ‘50 (no, he will NOT give you investing recommendations, even if the reporter begs, which she does)
Here’s a quote to satisfy those of you who don’t like to read, the majority of the interview after the jump for those of you in the middle, and for anyone who wants the whole beast - post a comment and I’ll e-mail you the full interview.
Well the most important thing to fix right now is the economy. We have a business slowdown particularly after October 1st it was sort of on a glide path downward up til roughly October 1st and then it went into a real nosedive. In fact in September I said we were in an economic Pearl Harbor and I’ve never used that phrase before.
- Warren Buffett,
CEO, Berkshire Hathaway,
inventing new phrases.
Get some answers, Girlfren’ (or Boyfren’)
One of the greatest things about being home for breaks is definitely late night TV …. or just having time to watch TV, for that matter. So it was with great pleasure that I finally discovered the Suze Orman show - I’ll admit, I’ve been intrigued ever since they started spoofing her on SNL.
I’ve become quickly obsessed …. I spent most of today YouTubing clips from her show (and re-watching the SNL skits) - it’s sort of amazing how someone can be so obnoxious and yet so intriguing at the same time. I mean, she’s clearly smart, but there aren’t that many respectable TV personalities that can get away with referring to a caller as “Girlfren,” and there aren’t that many respectable people period who can emphasize so many syllables with equal importance. She’s sort of amazing.
So halfway through my Suze Orman marathon, my father discovered how incredibly lazy and unproductive I was being me and suggested I ask Suze for advice on how to invest my money - afterall, she’s bound to love me … I have no debt, about $7,000 in savings and some considerable cushion in the fact that I don’t pay many expenses (no rent, utilities, not too many bills, etc) and own a car. So, for probably the first time ever, I’m going to take my dad’s advice (he gave me $5 to get my car washed today and instead, I bought Starbucks … being home is so great).
I’ll keep you updated on what she says …. though I suspect it ends with: People first, money second, things third. Thanks, Suze.
The Suze Orman Show airs Saturdays at 9 p.m. and midnight on CNBC. Check her out.
Finally, something you can’t blame on our generation
It’s not exactly news that the economy is a little sub par right now or how it’s affecting consumers (that’s the name the financially stable policy makers use for the lowly public) - but The New York Times published an article on Saturday about debtors that are even deeper in debt during this recession than previous recessions … there are a whole lot more of them. The downturn economy is affecting people even harder this time around than usual - maybe because it’s hitting on all fronts (housing prices are down, incomes are down, jobs are down, lending is almost nonexistent) but I think it’s also because people in 2008 just live differently than people did during some of the last deep recessions (like in the early 1980s when Congress reacted to failing banks by deregulating them and loosening lending restrictions … good idea, guys).
I know, I know, I’ve said this a million times but people just don’t save as much anymore - even the idea of saving has transformed into the idea of investing. I’m not saying I know much about the stock market yet, I don’t have any investments, but I do know that the people who have made out best coming out of the financial crisis are people who have CASH. According to Bankrate.com, in 1985 Americans saved 11.1% of their income, in 2005 that rate slipped to -.5%, the first time since the Great Depression that it dropped below zero, and it’s pretty much stayed down there ever since.
The worst day in Wall Street …. again.
After four hours of negotiation in the House today, representatives shot down the proposed $700 billion bailout plan that President Bush and Federal Reserve Chairman Ben Bernanke have been saying would rescue our ridiculous mess of an economy. Gotta love the quick fix. The response: oh you know, the Dow Jones drops another 778 points - the highest daily point drop in history.
Need a quick breakdown? (mostly via CNN/Money) After last week’s disaster on Wall Street (remember when I said that was the worst day on Wall Street, just kidding), banks and other financial institutions have basically stopped lending to each other all together. It might sound like a good idea to let things sit for a while (I mean, when you figure out you’re over spending - you just stop for a week or so, right?) but unlike the everyday consumer, these institutions determine the amount of capital available to the business world. So in recent weeks, there has been virtually no money made available for mortgage loans, business loans and consumer borrowing.
So the economy is at a standstill, right? Not exactly, when the House rejected the bailout plan today - investors who were counting on the plan to rescue the money they had in these companies panicked and withdrew funds, chaos ensued and the market plummeted.
Need some background? This all started when banking institutions were giving out loans to people who couldn’t really afford them, when pricing in the housing market went up unexpectedly, the foreclosure rate skyrocketed, leaving the institutions with all these outstanding loans.The bailout plan would basically have bought out all mortgage backed securities, taking that burden off the financial institutions and allowing them to go on with business as usual. The bailout plan would also have put the government’s hand into the administration procedures of these institutions, a part of the plan many were skeptical about.
Need to lighten things up? Read more
How to protect yourself from the economy
So I was a little ambitious in thinking I could get you some answers to your crazy economy questions the next day. But basically, everyone can chill out (I mean, if you were ever upset, which chances are you weren’t, unless your parents work(ed) for Lehman). Since Lehman and Merrill have bajillions of dollars in insurance, chances are your money (and your parents’) is fine. I mean, the economy is still in some kind of rut, but for the time being no panic is necessary.
Need more? Here’s our friend Ramit in his vlog debut, explaining the state of your funds and how to protect yourself against future loss - regardless of how it hits.
Also, I just made up the phrase money crush, as in, I have a big money crush on Ramit because the more he talks about money the cuter he gets.
My favorite lines: “Stop asking stupid questions!” (Finally, someone who gets what I’m saying) and his sound advice to just “save more than anybody else,” and “just do a great job at work.”
OMFG Wall Street
Today’s headlines:
Wall Street’s turmoils sends stocks reeling - The New York Times
Wall Street fears pummel stocks - The Wall Street Journal
Wall Street Wreckage - CNNMoney.com
Dow Jones index plummets more than 500 points - The L.A. Times
Fed holds AIG crisis talks - The Financial Times
So, in summary, today was the worst day on Wall Street since 2002. Two of the biggest investment banks in the country are seriously screwing with the market, Lehman Brothers filed for bankruptcy and Merrill Lynch was sold to Bank of America. The stock on one of the biggest insurance agencies in the country, AIG, is down more than 70 percent. The Dow Jones is down more than 500 points, or 4.4 percent. People are freaking out.
Unfortunately, I didn’t get to talk to anyone today about what this all really means to us.
Fortunately, MSNBC did. Read this for now, I’ll try to tailor this to students tomorrow. But if you don’t understand any of this right now and are wondering what sort of response you should have when people mention it to you, the title of this post would be appropriate.
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