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Yahoo
a day ago
- Business
- Yahoo
3 Warren Buffett Money Moves That Were Highly Criticized
Warren Buffett is widely considered to be the most successful value investor in history. His knack for identifying stocks selling for less than they're worth has enabled him to grow his Berkshire Hathaway firm into a $1.1 trillion global conglomerate and amass a personal fortune of about $153 billion. This currently makes him the fifth richest person in the world, slightly behind the likes of Elon Musk, Mark Zuckerberg, Jeff Bezos and Larry Ellison. Be Aware: For You: As Buffett is set to retire at the end of 2025, it might help to learn from both his victories and his missteps during his illustrious career. Buried among all his celebrated successes are money miscalculations that prove even 'The Oracle of Omaha' isn't immune to earning criticism through business failures, leadership scandals and unwise investments. In 2008, at the height of the Great Recession, the New York Times reflected on a similar Wall Street catastrophe 20 years earlier — and Buffett was at the center of it all. In 1987, Buffett invested $700 million in a bond-trading powerhouse called Salomon Brothers. A few short weeks later, the firm revealed a shocking $70 million write-down from ill-advised junk-bond trading. Comparing it to the Lehman Brothers collapse in 2008, the Times wrote that the Salomon implosion triggered a domino effect that culminated in the market crash of 1987, which erased one-third of Buffett's investment. Discover Next: While the Lehman Brothers downfall was the before-and-after moment that defined the economic unraveling of 2008, no firm is more synonymous with the Great Recession than Goldman Sachs. When it became the corporate face of the crisis, the Wall Street investment bank faced intense criticism from the public and the press for irresponsibly investing in subprime mortgage-backed securities, misleading investors and profiting from the crisis it helped create. Even so, Buffett backed the bank with his reputation and his wealth, investing $5 billion in Goldman Sachs at the peak of the crisis while largely excusing it for its role in the chaos, according to Goldman Sachs' website. Unlike the Salomon Brothers affair, the gamble paid off — at least financially. While CNN reported that Berkshire Hathaway earned $3.7 billion upon redeeming its Goldman shares, outlets like NPR heavily criticized Buffett for defending Goldman and campaigning against rules that would have curtailed its risky derivatives trading. Sometimes, it's not what you do that garners the most ferocious criticism, but what you don't do. Buffett has long advised against investing in things you don't understand, which has kept him away from many promising tech companies with unfamiliar business models. However, in 2017, CNBC reported that Buffett finally conceded that he had missed a golden opportunity to invest in two defining giants of the 21st-century economy — and this time, a legitimate fear of the unknown couldn't justify his failure to buy Amazon and Google early and cheap. He conceded that he should have understood Google's business model because his subsidiary companies were directly contributing to its advertising revenue. As for Amazon, he simply underestimated Jeff Bezos's brilliance and ability to execute. 'That's cost people a lot of money at Berkshire,' he told CNBC. Caitlyn Moorhead contributed to the reporting for this article. More From GOBankingRates Mark Cuban Warns of 'Red Rural Recession' -- 4 States That Could Get Hit Hard Mark Cuban Says Trump's Executive Order To Lower Medication Costs Has a 'Real Shot' -- Here's Why How Much Money Is Needed To Be Considered Middle Class in Every State? This article originally appeared on 3 Warren Buffett Money Moves That Were Highly Criticized Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Daily Mail
05-05-2025
- Business
- Daily Mail
Reeves falls for the crypto poison and exposes us all to becoming victims of a global scam, warns ALEX BRUMMER
When it comes to sound investment judgment, there is no more reliable voice than Warren Buffett. At the age of 94, after 60 years at the helm of Berkshire Hathaway, it should come as no surprise that he is stepping back from the fray. His lair in Omaha, Nebraska, is far away from New York's bright lights. But down the decades, he has been a lender of last resort at times of disruption. When the investment bank Salomon Brothers ran into difficulties in 1990, amid a trading scandal, Buffett stepped in as chairman and cleaned up. In 2008, when Goldman Sachs came within a whisker of collapse, Buffett proffered $5billion of temporary capital to propel it back to safe land. As Joe Biden was beating a hasty retreat from fossil fuels, Buffett showed his hand by snapping up Occidental Petroleum. The Oracle of Omaha has an unalloyed view of cryptocurrency. Buffett describes it as 'probably rat poison squared' and asserted shareholders could be assured that Berkshire would not invest in crypto. It would be wonderful if Chancellor Rachel Reeves had been listening. In an example of financial lunacy, she has vowed to back the builders of the fintech and crypto space, while ensuring strong financial protection. Backing UK fintech is a great prize as it builds on British creative leadership in the space. The list of UK fintech successes is impressive and growing. Worldpay blazed a path which others, such as payments outfit Wise and internet banks Monzo, Revolut and Atom have followed. Crypto is entirely different. The perpetrators of current ransomware attacks on Marks & Spencer and the Co-op, causing deep anxiety for employees and customers alike, inevitably demand payment in crypto. It is the favoured medium of exchange for financial hooligans, crooks and terrorist groups such as Hamas. Anonymity allows it to be moved surreptitiously from crypto accounts, known as wallets, to repositories in exotic locations. The bezzle was exposed by the Sam Bankman-Fried and FTX saga in 2023. Just how murky the crypto world has become is illustrated by a weekend headline. It recounted that French police are investigating the kidnappings of people linked to cryptocurrency after a 60-year-old man had his fingers chopped off by attackers demanding a ransom. This is the new, fast-growing area of investment, which Reeves looks keen to embrace. She has been inspired by a desire to stay in lockstep with the zealots dominating US financial regulation and a Trump dynasty building crypto billions. The UK's approach is to bring crypto assets, including stablecoins (ostensibly backed by real money), within the regulatory framework. Until now, the approach of the Financial Conduct Authority has been to warn consumer and investors away from snake oil sales people offering crypto investment. The paradox is that by creating a framework, it will confer legitimacy to an asset class with no transparency. Central banks, including the Bank of England, mostly want no truck with crypto. It has no more relationship to real currency, as a store of value, than the paper money on a Monopoly board. Regulation is meant to protect the consumer. Crypto governance exposes us all to becoming victims of a global scam.
