Important! Starting Monday, June 13, 2011, the Paul Drockton Radio Program will Start at 2 PM Pacific, 3 Mountain, 4 Central, 5 Eastern and run for two full hours on Renseradio.com (Click on the Windows Media Player to listen)
When Warren Buffett speaks, the mainstream media falls all over themselves to lap up every word, as if it were water from heaven on a dry and dusty world.
Warren Buffett founded a holding company known as Berkshire Hathaway. One of the first closed-end mutual funds, Berkshire has a limited number of shares outstanding, and trades like every other company on the New York Stock Exchange. Because it is a closed end mutual fund, or holding company, it can actually buy a majority stake in other companies and physically manage them. As the above chart demonstrates, Berkshire has performed below the S&P 500 for the last 12 months.
It seems that even Warren Buffett is playing Rothschild Roulette with his investors money:
"Buffett, 81, drew down Berkshire’s cash as Europe’s debt crisis and Standard & Poor’s downgrade of the U.S. pushed stocks to their worst quarterly performance since 2008. The investments disclosed Nov. 4 include $6.9 billion of equities, $5 billion for preferred shares and warrants in Bank of America Corp." (Source)
For the uninitiated, preferred stock are actually corporate bonds. Warrants are the right to buy Bank of America's stock at a higher price at some future date. Bank of America has over 15 trillion dollars of derivatives exposure and has experienced a recent credit downgrade. As reported, they just transferred that exposure to FDIC insured accounts. A clear sign that they will shortly take the company into bankruptcy. (Source)
Would you consider spending 5 billion dollars on debt that could go to worthless in the very near future? Warren is a Rothschild puppet and will do as he is told. No doubt, Bank of America will loose that 5 billion in the derivatives market as well, probably betting on Greece's recovery or that Elvis is alive and well in Costa Rica.
"Berkshire’s third-quarter net income slid 24 percent to $2.28 billion as the stock market slump pressured the value of Buffett’s equity derivative bets, the firm said in the filing." (Source)
Berkshire Hathaway does not pay a dividend, so investors are are hoping that somehow, in spite of Buffett's Buffoonery, the stock price will defy the laws of gravity. Not a very good bet considering recent performance or Buffet's high tolerance for bad risks. I will talk more about Berkshire in my next article.