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Warren Buffet

Berkshire Hathaway 2012 Shareholder Meeting

May 7, 2012 by Eric Rosenberg


“If you buy a business for less than it’s worth, you’re going to make money.” –Warren Buffet

This year, I made my third trip to Omaha for the annual Berkshire Hathaway shareholder’s meeting. Warren Buffet are Charlie Munger took center stage and shared their wisdom on investing, business management, and the economy to a packed house that included billionaire Bill Gates and rock superstar Bono.

While I will drip some of the wisdom into many posts for months to come, here are some top gems that made me think, laugh, or learn from the Oracle from Omaha.

[Read more…] about Berkshire Hathaway 2012 Shareholder Meeting

Filed Under: Economy, Education, Investing Tagged With: Berkshire Hathaway, Charlie Munger, Economy, Warren Buffet

Buffet and the Great Tax Debate

August 16, 2011 by Eric Rosenberg


It is no secret to Narrow Bridge readers that I am a fan of Warren Buffet. His investing strategies have helped him grow investments from family and friends in Omaha into the company with the seventh largest revenue in the United States. As the debate moves forward on dealing with United States debt, the second richest American has voiced strong opinions on how to fix the problem.

I have long been an advocate of social programs such as social security and universal healthcare. I enjoy driving on freshly paved highways and hate the two lane highway that should be at least double the size that I take to work every day. I enjoy the fresh air and clean water protected by the EPA. I like going to public firework shows on the fourth of July. I am glad impoverished Americans can access Medicaid and can visit a doctor when they are sick. I am thrilled that every young American can access a free education, though I wish many were better and that the education lasted through college.

Of course, many could be managed better. The wasteful spending at some organizations, like the military and IRS, could be fixed. If run more effectively, the military could have the same power and effectiveness at a lower cost. The IRS could require electronic filing and save millions, if not billions, in costs. The US Federal Reserve could stop printing paper dollar bills and replace them with coins, also saving billions.

Overall, I am happy with government programs. I enjoy taking advantage of them. I don’t mind paying for them.

Buffet wrote an op-ed in the New York Times this week accusing our legislators of coddling the super-rich. They are. He uses his own company as an example:

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

Does that not disgust you? The second wealthiest man in American followed the law to the letter. He paid his taxes, just as I paid mine. However, my effective tax rate was closer to Buffet’s staff than the man himself. Why do the 98% of Americans no revolt at the plutocracy in this country? The government has engineered a structure that protects and helps the wealthiest Americans keep money and power while encouraging the rest of us to finance our Middle Class lifestyles with debt.

Buffet does not get it either. He clearly attacks the ludicrous claims of the far right. I once had a personal discussion on this topic with a blindly conservative friend. He said that if taxes go up for the wealthy that they will not work as hard because they will take home less for earning more. First off, learn math beyond what Rush Limbaugh teaches you. (Hint, it does not add up) Second, that is the most ridiculous thing I have ever heard. Yes, if your income is $2,000,000 a year and the tax rate goes up on rich people, you will take home less if you earn the same $2,000,000 a year. However, my heart does not bleed for you.

The amazing thing about our graduated tax system is that they pay the exact same tax rate on the first $40,000 they make the same as I do. However, as you make incrementally more, you pay incrementally more on that additional income. If you are confused, here is a good explanation at Bargaineering. As you can see, people that make more money still make more money. Buffet goes on to explain how the tax rate does not scare rich people away from trying to make more money:

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.

I will not argue that the current tax system is perfect. I also believe that $200,000 per year is not the right place to start a super-rich tax bracket. Again, I agree with Buffet. Increase taxes at $1 million. Have another bracket at $10 million. I promise you people making over $10 million a year will not starve. If you think that they will donate money to the government out of the goodness of their heart, you are mistaken. But if you think they will give up on making money and being rich because they pay a little more in taxes, you are an idiot.

Image by Ethan Bloch.

Filed Under: Economy, Taxes Tagged With: conservatives, Economy, rush limbaugh, taxes, tea party, United States, United States Congress, Warren Buffet

BRK2011: Berkshire Hathaway 2011 Annual Meeting Recap

June 1, 2011 by Eric Rosenberg

The weekend of April 30, 2011 was an exciting one! I spent the weekend in Omaha, Nebraska at the Berkshire Hathaway Annual Shareholder meeting with Warren Buffett himself! Here are some of my favorite and biggest takeaways from the event.

[Read more…] about BRK2011: Berkshire Hathaway 2011 Annual Meeting Recap

Filed Under: Investing Tagged With: Benjamin Graham, Berkshire, Berkshire Hathaway, Bill Gates, BNSF Railway, Cessna Citation, Chairman, Charlie Munger, David L. Sokol, Energy, Greenhouse gas, Lubrizol, NetJets, Omaha Nebraska, United States, Warren Buffet, Warren Buffett

BRK2011: Berkshire and a Green Future: Shareholder Proposal

May 5, 2011 by Eric Rosenberg

So far, we have discussed Berkshire’s dividend policy and future leadership. Today, we are going to focus on a particular shareholder proposal that led to the most contentious moments of the day.

The proposal that started the debate:

Emily S. Coward, 2020 Pershing Street, Durham, NC 27705, owns 62 shares of Class A Common Stock and has given notice that a representative of hers intends to present for action at the meeting the following proposal.

Resolved that Berkshire – in response to strict new EPA regulations – establish quantitative goals for the reduction of greenhouse gas and other air emissions at its energy-generating holdings; and that Berkshire publish a report to shareholders by September 30, 2011 (at reasonable cost and omitting proprietary information) on how it will achieve these goals – including plans to retrofit or retire existing coal-burning plants at Berkshire-held companies.

This is an incredibly complex proposal for a company like Berkshire Hathaway and requires a lot of background knowledge, scientific understanding, and business acumen to fully understand. I will try to give you the executive summary version here.

Image by mikebaird / flickr

Greenhouse Gasses and the Environment

The scientific evidence that greenhouse gas emissions, such as those from burning fossil fuels like oil, natural gas, and coal, are having a massive impact on our atmosphere, ecosystem, and planet. If you think this is fabricated or not proven, you are either stupid, ignorant, or trust Rush Limbaugh over science. The evidence is clear.

We can debate all day about how much of an impact we are having and whether we need to take actions to avoid our impact. That is subjective. But we are having an impact.

My personal opinion is very strong and clear. We need to, as a global society, do all we can to eliminate greenhouse gas emissions from fossil fuels. However, even if the United States never put out another ounce of carbon into the atmosphere, the impact from China’s coal power plants alone has the potential to impact our planet’s temperature and ecosystems.

The Polar ice caps are shrinking. Ships have used the northern passage for cargo transportation. That would have been impossible just a few decades ago. I have seen the dead coral reefs in the Caribbean with my own eyes.

I have lots of ideas on how to fix this issue, but none are immediate and all are expensive.

Berkshire Hathaway Impact

Berkshire Hathaway owns several energy focused companies. The largest and best known is MidAmerican Energy. As of a recent initiative in Iowa, MidAmerican is the number one wind electricity generator in the United States. In addition, Buffet is a nuclear energy advocate.

These are two major steps in securing our energy independence in a way that does not destroy the planet. Despite what you may have heard, nuclear is the safest and cleanest energy to meet base load needs. Wind, in combination with solar and hydro, can meet our peak demand needs.

Based on their current track record, I trust that Berkshire Hathaway managers are on the right track for a move to profitable, clean energy forms.

My Take on the Vote

There were passionate speakers both for and against the shareholder resolution. While more people spoke for it, it seemed that the crowd was against it. From my position, it appears that most Berkshire investors either don’t care about the environment or don’t understand it. I am always shocked to hear people say that global warming is not real. It certainly is, and it is not “hot air” as one commenter stated.

However, as an investor and a finance minded person, I am in the camp with Milton Friedman. The purpose of a business is to make money. Warren Buffet and the Berkshire board agree.

I do support moving toward cleaner energy. I am a huge nuclear advocate. However, a shareholder meeting is not the forum to change the world. It is a forum to increase profits.

The Result

The resolution failed, as I expected it would. However, I hope Berkshire and other energy companies continue on the path toward more renewable, sustainable energy that will not destroy our planet.

Do you think this was the right thing to do? Is it the responsibility of big business to protect the environment pro-actively?

Filed Under: Investing Tagged With: Berkshire, Berkshire Hathaway, Charlie Munger, Energy, Greenhouse gas, United States, Warren Buffet, Warren Buffett

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I started a little side hustle blog in 2008, and left my full-time day job as a Senior Financial Analyst to turn my side hustle into a full-time gig. Learn how I did it so you can build your side hustle. It all starts with the first dollar.

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