How bullish is Buffett really on America?

[stahleyp]

I wanted to get your guys' thoughts on this. Buffett is in the media frequently talking about how he's bullish on the long term future of America. I wonder how much of this is his private, personal thoughts versus him being more of a media darling these days. I believe this article was on berkshire's website a few years ago, but it looks like it's since been taken down.

 

About 10 years ago, Buffett wrote this piece.

 

http://money.cnn.com/magazines/fortune/fortune_archive/2003/11/10/352872/

 

"So on the trade front, score at least one "wolf" for me. Nevertheless, I am crying wolf again and this time backing it with Berkshire Hathaway's money. Through the spring of 2002, I had lived nearly 72 years without purchasing a foreign currency. Since then Berkshire has made significant investments in--and today holds--several currencies. I won't give you particulars; in fact, it is largely irrelevant which currencies they are. What does matter is the underlying point: To hold other currencies is to believe that the dollar will decline."

 

"But I believe that in the trade deficit we also have a problem that is going to test all of our abilities to find a solution. A gently declining dollar will not provide the answer. True, it would reduce our trade deficit to a degree, but not by enough to halt the outflow of our country's net worth and the resulting growth in our investment-income deficit."

 

Just wanted to get you fine folks' opinions/thoughts.

[no_free_lunch]

Follow the money.

[Guest wellmont]

he believes the standard of living in usa will go up. he believes the American system works. I think he sees inflation in the future, as well as a week dollar. Burlington Northern is an inflation hedge. Now he has sunk $4b in Exxon. Berkshire is a great inflation hedge and good holding if the dollar weakens in the future. Holders of brk will maintain their purchasing power.

[blainehodder]

he believes the standard of living in usa will go up. he believes the American system works. I think he sees inflation in the future, as well as a week dollar. Burlington Northern is an inflation hedge. Now he has sunk $4b in Exxon. Berkshire is a great inflation hedge and good holding if the dollar weakens in the future. Holders of brk will maintain their purchasing power.

 

Interesting take on Burlington.  I'm not sure I agree about it being a hedge due to the capital intensity. What do you see in it that works as an inflation hedge? Pricing power?

 

Traditional Buffett inflation hedges are closer to sees Sees/KO like businesses. What are your thoughts on BNSF?

[stahleyp]

wellmont, I do agree with you here that berkshire will most likely be a relatively good inflation hedge.

 

Buffett used to write less than positive things from time to time. Now, it seems like a good amount of what he says is positive. I think I worded my original post poorly. I don't doubt that he sees the best ahead for America (with all the innovations and things, I can't say that I disagree over the long term), but I do wonder how much his fame has changed his public opinion on various issues.

[Cardboard]

I mentioned something similar in a post a while ago. Back in the days, you could find good information in the annual letter: pensions being underfunded, accounting gimmicks, the need to expense options, this one on the deficit. You felt that the guy was fighting for the good stuff. Not liberal, not conservative, but the right, logical, common sense stuff.

 

Cardboard

[tng]

Believing in the long term future of America doesn't necessarily mean he believes that the current price of American assets (stocks, currency, etc) are attractive. Just as great companies can be overvalued, assets in a great country can be overvalued too.

[jb85]

Him and munger recommended a book a while back called "The Birth of Plenty".  In that book there is a graph showing GDP/capita since 1820.  It is remarkable how steady the growht has been (about 2% per year).  He commonly talks about how the living standard (GDP/capita) has gone up 7 fold since he was born and how all these problems with pensions, etc (while they do need to be solved) are not going to bump us off the 2% growth trend line.  I'd be very surprised if he expected us to fall of the growth trendline

 

http://www.efficientfrontier.com/ef/702/Fig1.gif

[Guest longinvestor]

wellmont, I do agree with you here that berkshire will most likely be a relatively good inflation hedge.

 

Buffett used to write less than positive things from time to time. Now, it seems like a good amount of what he says is positive. I think I worded my original post poorly. I don't doubt that he sees the best ahead for America (with all the innovations and things, I can't say that I disagree over the long term), but I do wonder how much his fame has changed his public opinion on various issues.

 

Buffett could be wrong about some things, Munger said this at this year's meeting. What Buffett says does not become a law of nature. Who knows, senility may also be setting in. But he does put money where his mouth is, what, pushing a hundred billion on America over the past 5 years?

 

[Guest wellmont]

he believes the standard of living in usa will go up. he believes the American system works. I think he sees inflation in the future, as well as a week dollar. Burlington Northern is an inflation hedge. Now he has sunk $4b in Exxon. Berkshire is a great inflation hedge and good holding if the dollar weakens in the future. Holders of brk will maintain their purchasing power.

 

Interesting take on Burlington.  I'm not sure I agree about it being a hedge due to the capital intensity. What do you see in it that works as an inflation hedge? Pricing power?

 

Traditional Buffett inflation hedges are closer to sees Sees/KO like businesses. What are your thoughts on BNSF?

 

I see it as a toll bridge. it profits by moving stuff that will be priced higher down the road. it's a royalty on the sales of others. his favorite kind of business, as discussed in the money masters. I could be very wrong about this, however. he actually prefers high capital intensity businesses, as long as they earn a decent return on invested capital.

[Guest wellmont]

wellmont, I do agree with you here that berkshire will most likely be a relatively good inflation hedge.

 

Buffett used to write less than positive things from time to time. Now, it seems like a good amount of what he says is positive. I think I worded my original post poorly. I don't doubt that he sees the best ahead for America (with all the innovations and things, I can't say that I disagree over the long term), but I do wonder how much his fame has changed his public opinion on various issues.

 

we are not it a period of real excess. when he sees excess, he will inform us. we are "in the middle". the dollar is doing better. the deficit is doing better. economy doing better. he has been talking about wealth disparity and rising health care costs. and we may get something in next AR about health care costs.