Calling Warren Buffett Crazy.

[401kobsessive]

When your net worth is equal to that of Warren's, Look me up. Then I will take you seriously. Until then the best thing to do is to mimic everything Warren does until he is dead.

[zev]

When I read what Buffet said the other day, I also was a bit startled about his recommendations. But, I don't believe that "He's simply turned into a whack job". His recommendation is obviously not what you (JX) have suggested, but that doesn't mean it's bonkers! You ask "How in the world could Buffett possibly conclude that the market is a big buying opportunity today?" Well, he lays out a reasonable scenario:
He believes (and he probably has much better access to information than any of us!) that "the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts". Thus, the P/E ratio could very quickly go very low, if the earnings side shoots up due to inflation. As well, he is looking at the long-term. Finally, nothing he says contradicts what he said a few years ago. At that time, he did not see significant inflation coming up (When the facts change, I change my mind. What do you do, sir? - J. Keynes). "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors." This too is consistent between what he did a few years ago and now.
About those derivative losses, by all accounts I have read, his losses on derivatives have been remarkably small. When half of his conglomerate consists of insurers and re-insurers, how likely is it that he doesn't have some derivative exposure? So just because he has to deal with them, doesn't mean he can't mistrust them or fear the consequences of widespread speculation in them.
He saw the depression. He has seen a lot more than you or I from his vantage point, and from having to put a lot of money where his mouth is. He may lose his shirt, I know (and he knows), but your predictions may also turn out wrong. So just because you think that we are facing deflation doesn't mean Buffet's a whack job or losing his marbles because he thinks inflation is coming. And ad hominem attacks don't help your case.
"He doesn't have the vaguest idea how the stock market will perform over the next decade." Neither do you, or I.

"Obama who will be the new "Hoover."" I disagree:
1) Hoover was a republican - who followed two previous republican presidents, and was himself a secretary of commerce during the 20's - so he would have been closely associated by people with the regime that (like today's republicans) promoted small government, lax regulation, etc. (hey, maybe that's another long-term generational pattern!) In contrast, Obama is from the opposite party to the one popularly associated with today's mess. Today's republicans have made the point over and over again that they are the party of neo-conservatives and neo-classical economics (deregulation, small government, low taxes on the rich). And Obama's not a republican.
2) from the wiki on Hoover (http://en.wikipedia.org/wiki/Herbert_Hoover) : "In the presidential election of 1928 Hoover easily won the Republican nomination. The nation was prosperous and optimistic, leading to a landslide for Hoover over the Democrat Al Smith." The Bushies, try as they might, have not been able to delay the strike of midnight to after the presidential election. The US appears to be far from optimistic - this election and its results will not be some replay of the 30's.
3) again from that wiki: "Hoover's lack of charisma in relating to voters". Again the contrast is stark - Obama's got charisma, in spades. Anything he does will look like he's doing his best for his nation, even if it doesn't pan out. Not fair, but that's just the way is, just like the unfair blame on Hoover.

[malleni]

There are obviously some with other view than JX on Warren Buffetts move:

http://arabianmoney.net/2008/10/18/warr ... ys-stocks/

Obviously, some annalists do not agreed with John.
Even past (and earned money) approved Warren...
(at least to now...)

[The Grey Badger]

I have always found Miller's Law to be very helpful when I couldn't understand someone's actions. "Assume that what he says is true [no matter how outrageous it seems to you. Pat.] and then try to imagine what it could posibly be true of." Or as an old 1968 political pamphlet put it, "Everyone does what she does for a reason. Instead of simply saying 'She's just doing it because she's a [female dog, sex worker, thief, insert pejorative at random]', first seek the reason." [P.S. This is also an excellent rule for a fiction writer when creating your bad guys.]

So - when Warren Buffett says he's buying, instead of simply saying "He's an idiot", I need to seek the reason. I'm sure it will be found in either the information he has or the theory he is using. Considering his wealth so far, his theory has been good. The question is, was it good only under certain conditions? Or is it like the theory in physics that works only until they hit a singularity? [For if this is 1932 all over again, 'singularity' is as good a term as any.]

Over to you all.