This blog post originally appeared on RealMoney Silver on Jan. 23 at 8:14 a.m. EST.
"It's never paid to bet against America.... We come through things, but it's not always a smooth ride....This is an economic Pearl Harbor." -- Warren Buffett, "Dateline" interview on NBC (Jan. 18, 2009)
On Sunday evening, Warren Buffett sat down with
Tom Brokaw for a marvelous and straightforward
is the complete transcript.)
Early in 2008, I took a
and negative view on
stock. During the late summer, I profitably covered a
I put on Berkshire at approximately $140,000 per share.
Based on the recent deterioration of Berkshire's investments, I might have been premature. (Berkshire's common now trades for under $89,000 a share.)
In the last 60 days, Berkshire's
has plummeted in value. Buffett has lost over $4.5 billion alone on his 300-million-share investment in
since Dec. 1, 2008, and another $1 billion loss on
shares; both stocks have been halved in less than two months. His most recent investments in
Burlington Northern Santa Fe
have deteriorated markedly in value from his cost basis.
Equally important, I have repeatedly uttered the notion that Berkshire's large derivative position -- namely, short puts on the
-- was evidence of investment
. Regardless of that view, Berkshire has now likely recorded a nonrealized loss in excess of a $10 billion on the index short put position. A loss on that scale, whether realized or unrealized, is large even for Warren Buffett.
In 2008 and (so far) 2009, The Oracle of Omaha has been wrong; it
paid to bet against America.
Moreover, the U.S. "economic Pearl Harbor" has humanized and brought down to earth many of the
in the world (e.g., Warren Buffett), as well as the entire private equity universe, many well-regarded hedge funds and investors (e.g., Marty Whitman and Bill Miller), and some masters of the universe in residential and nonresidential real estate, among others. Many industrialists, including
, have been thrown under Mr. Market's bus, as have financiers
Bank of America's
While the downfalls of a widening list of investment, financial and industrial icons have historically been associated with a market and economic bottom, the lesson remains the same: The average individual investor should continue to err on the side of conservatism in a market that provides a wonderful setting for trading but a not-so-exquisite setting for investing.
Doug Kass writes daily for
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At the time of publication, Kass and/or his funds were long Wells Fargo and General Electric, although holdings can change at any time.
Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Long/Short LP.