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How Buffett tripped over the dollar
MSN Money ^ | 6/15/2005 | Jon D. Markman

Posted on 06/15/2005 4:27:22 PM PDT by Smogger

Six months ago, the value of the U.S. dollar was on the firing line as it plunged to a record low vs. the euro. Amid fears that a united Europe would surmount the spendthrift United States as a safe haven for financial assets in a tumultuous world, investors worldwide -- led by noted Nebraska sourpuss Warren Buffett -- heaped scorn on our currency and scolded U.S. lawmakers to get the federal deficit under control.

But a funny thing happened to all those dollar bears. Their contempt for U.S. economic freedoms hasn’t amounted to a hill of bill of beans, and their positions have been smoked. The dollar has rallied massively since the start of the year against all other currencies, reflecting a swift, stunning paradigm shift in the way that global political risks are priced.

Buffet, who reportedly lifted his bet against the buck to a position of $22 billion and counting in the first quarter this year, isn’t sounding quite so smug anymore. Normally an equity investor with liberal social views who rarely made forays into the foreign exchange markets, he has had his head handed to him by more experienced currency players. Although his anti-dollar attack worked from 2002 through 2004, since then he has been forced to pay for attempting to mix politics and money.

(Excerpt) Read more at moneycentral.msn.com ...


TOPICS: Business/Economy; Front Page News; News/Current Events
KEYWORDS: berkshirehathaway; billionaires; buffett; dollar; sorelosers; warrenbuffett
hehehe.. Couldn't have happened to a better guy. Great read.
1 posted on 06/15/2005 4:27:24 PM PDT by Smogger
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To: Smogger

bump


2 posted on 06/15/2005 4:30:01 PM PDT by ventana ("The essential things in history begin always with the small, more convinced communities." Ben. XVI)
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To: Smogger

"HA-HA!"--Nelson


3 posted on 06/15/2005 4:30:14 PM PDT by Darkwolf377 (Suffer fools gladly? I don't suffer them at all.)
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To: Smogger
Buffett and Soros:


4 posted on 06/15/2005 4:32:18 PM PDT by ambrose (.)
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To: ambrose

so true


5 posted on 06/15/2005 4:34:04 PM PDT by packrat35 (reality is for people who can't face science fiction)
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To: ambrose

"Buffett and Soros"

Yes, B.S.


6 posted on 06/15/2005 4:34:46 PM PDT by Socratic (Honor the Liberator - He toils for you.)
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To: Smogger

So how much did Buffett lose?


7 posted on 06/15/2005 4:39:59 PM PDT by Neanderthal
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To: Smogger
"What Buffett and his cohorts failed to understand as they thumbed their nose at the dollar was that it’s impossible for Europeans to sustain a single currency without a commitment to a single European political and economic policy."

This makes sense. It would be like the various states in the U.S. trying to make deals with foreign nations, but each state having a difference in objectives.

"And the liberal immigration laws demanded by such integration have proven to be social anathema, as northern Europeans have freaked out over the prospect of a flood of cheap Eastern European and Turkish labor stealing their good blue-collar jobs."

They have solid grounds to fear the loss of those jobs.

8 posted on 06/15/2005 4:40:40 PM PDT by Enterprise (Coming soon from Newsweek: "Fallujah - we had to destroy it in order to save it.")
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To: ambrose

ROFLMAO!

"Turn those machines back on! Turn those machines back on!"


9 posted on 06/15/2005 4:49:21 PM PDT by LibertarianInExile (<-- sick of faux-conservatives who want federal government intervention for 'conservative things.')
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To: Smogger

These were the exact type of comments about WB when he wouldn't bet on the dot.com bubble stocks. A few years later I still hear about WB and he has done very well for himself, but haven't heard too much from all the people who lost large and small fortunes in 2000. If you are investing for the next 5 minutes or 5 months you may be right. If you are investing for the long haul what's happening lately is just a small blip on the dollars way down.


10 posted on 06/15/2005 5:07:01 PM PDT by rreahsito
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To: rreahsito

Looks like his bet on silver at $8/oz isn't doing too well. Buffett hasn't had a stellar record the past 10 years or so.


11 posted on 06/15/2005 5:11:33 PM PDT by oblomov
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To: Smogger
"... Buffet, who reportedly lifted his bet against the buck to a position of $22 billion and counting in the first quarter this year, isn’t sounding quite so smug anymore. Normally an equity investor with liberal social views who rarely made forays into the foreign exchange markets, he has had his head handed to him by more experienced currency players."

Seriously now, how long will it be before those who lost a mint on betting the Euro against the US Dollar will blame and international Jewish conspiracy for their reversal of fortune?

Now taking bets.

12 posted on 06/15/2005 5:15:35 PM PDT by The KG9 Kid (Semper Fi!)
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To: rreahsito
If you are investing for the long haul what's happening lately is just a small blip on the dollars way down.
 
That statement might have held a little water 6 months ago, but now it is absolute hogwash! The only way this was possible was if the Euro held it's artificially inflated value. Now that the Euro constitution is headed for the dump the dollar will still be the best investment in currency for the foreseeable future.
 
Currency is based on the a country's economy. Europe is headed for the toilet, and in the long term it is downright ignorant to bet against the US dollar. There is a helluva a lot of speculators that are going to lose their butts because they chose to doubt the economy of the strongest country in history and it's economic base. They not only doubted it, they were trying their damndest to make it happen. Unfortunately these traitors were betting the Euro was going to be the currency of the future. This would only work if the European Union could agree on the Euro constitution. We all know now the odds of that are slim to none. The Euro is headed to the toilet, and with it all of these speculators that were wishing for the demise of the US economy. The Euro has been artificialy inflated since day one, as it has always depended on a unified trade and labor agreement between the nations involved. We now know they are no where near agreeing on anything, it was wishful thinking by the socialist elites. Problem is the spoiled have no intention of giving up any of their fringe benefits in order to make it work. Ask the French and the folks from Holland if there is ever going to be a European Constitution.
 
 The Euro is whistling like a WWII, 2 ton bomb headed for Hitler's Bunker. Good riddance! Soros and his cohorts are going to lose their shirts on this one!

13 posted on 06/15/2005 5:35:15 PM PDT by Allosaurs_r_us (for a fee........I'm happy to be........Your BACKDOOR MAN!....Dirty Deeds Done Dirt Cheap!)
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To: Smogger
Over the short term, the currency markets can be compared to roller derby or professional wrestling. All of the participants and almost all of the spectators know or at least should know that the game is rigged. Central banks "intervene" directly buying and selling currencies ... and by boinking around with interest rates to induce others to make what would otherwise be unwise currency transactions.

Buffett should have followed his own advice and only invested in things that he understands. I doubt that Buffett is an expert in abnormal psychology. To play around with the likes of Greenie, your had better have

Note: The same principle got him in trouble in the weird world of reinsurance.

14 posted on 06/15/2005 5:44:19 PM PDT by R W Reactionairy
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To: Allosaurs_r_us

the strength of the EURO is backed by French courage and German love of democracy and capitalism...


15 posted on 06/15/2005 5:51:54 PM PDT by chilepepper (The map is not the territory -- Alfred Korzybski)
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To: R W Reactionairy

I always wondered why he went into that. Kicks? Morbid curiosity? It's like a poker player suddenly says, "What's that game with the dice about? That looks like fun!"


16 posted on 06/15/2005 5:54:07 PM PDT by durasell (Friends are so alarming, My lover's never charming...)
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To: Smogger

If he's been buying Euros since 2002, I would think he's still in pretty good shape.


17 posted on 06/15/2005 6:02:12 PM PDT by Guillermo (42% of suicide bombers in Iraq are Saudi and Bush continues to lick their boots)
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To: oblomov
Looks like his bet on silver at $8/oz isn't doing too well. Buffett hasn't had a stellar record the past 10 years or so.

Well, Since silver had not been over $7/oz in more than 10 years, I dont know why you think he paid $8. I seem to remember that he bought in th $4.50-5.50 range and it spiked to near $7 after his position was made known around 97-98.

As to his track record over the past 10 years. Berkshire Hathaway's stock was around $22,500 a decade ago and is now trading for $83,610. Maybe not "stellar", but certainly not too shabby either.

Buffett doesn't take short term positions. He was short the dollar long before it's recent bottom. This 6 month rally has certainly taken back a good chunk of his profits on the trade, but IMO this is nothing more than a counter trend rally that does not signify the end to the dollar's troubles. Fiscal and trade deficits do matter and show no sign of abating, yet. If not for China and Japan spending billions to keep their own currencies week, the buck would in all likelyhood be much lower already.

18 posted on 06/15/2005 6:02:51 PM PDT by getsoutalive
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To: Smogger

Bad link...any help? I would love to read the rest of the article.


19 posted on 06/15/2005 6:03:20 PM PDT by Guillermo (42% of suicide bombers in Iraq are Saudi and Bush continues to lick their boots)
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To: Smogger

Couldn't have happened to a more deserving skunk than Buffett


20 posted on 06/15/2005 6:04:48 PM PDT by Tennessean4Bush (An optimist believes we live in the best of all possible worlds, a pessimist fears this is true.)
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To: getsoutalive

Buffett's entire strategy has always been waiting for the chickens to come home to roost, for better or for worse. In the case of commodity and currency markets, the chickens often take the long way home, stopping off for a few beers along the way. Soros made a fortune on this fact. Buffett seems ill-equipped to deal with tardy chickens.


21 posted on 06/15/2005 6:07:58 PM PDT by durasell (Friends are so alarming, My lover's never charming...)
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To: ambrose
Damn! A co-worker of mine bet me $1 a few months ago that Warren Buffet was going to be eating crow for his anti-dollar agenda. Well, time to pay up. Tomorrow morning, I'm going to give my co-worker his dollar.

Check out the face of Sacagawea. Even she thinks Warren Buffet is a horse's ass!

22 posted on 06/15/2005 6:08:23 PM PDT by SamAdams76 (Do Cats and Dogs know that they are going to die someday?)
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To: Smogger

Thanks for the good laugh...


23 posted on 06/15/2005 6:09:46 PM PDT by BurbankKarl
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To: BurbankKarl

"That saw the Aussie up to its highs and euro up to $US1.2150 and then the euro basically ran into a wall of selling."

Ms Masters said the market had speculated the selling was a result of a euro/yen bond redemption or some major euro selling by US investor Warren Buffet.

6/14/05


24 posted on 06/15/2005 6:11:32 PM PDT by BurbankKarl
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To: Smogger

"Tripped"? I wish he'd choke on the dollar.


25 posted on 06/15/2005 6:38:38 PM PDT by freeangel ( (free speech is only good until someone else doesn't like what you say))
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To: ambrose

BWAAAAAAHAHAHAHAHAHAHAHA!!!!! No kidding. I'm glad Buffet got handed his head by the real market pros. Soros should have just known better.


26 posted on 06/15/2005 7:00:08 PM PDT by Free Vulcan
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To: Smogger
Buffet, who reportedly lifted his bet against the buck to a position of $22 billion and counting in the first quarter this year, isn’t sounding quite so smug anymore.

22 Billion??

27 posted on 06/15/2005 7:18:58 PM PDT by Mo1
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To: chilepepper

...and Italian sang-froid.


28 posted on 06/15/2005 7:35:00 PM PDT by expatpat
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To: ambrose

I love those guys. too bad they lost a buck in the end. down to their last dollar really ment something in that story. Thanks for your post.


29 posted on 06/15/2005 7:56:31 PM PDT by q_an_a
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To: getsoutalive

The question is, what will the USD fall in relation to? Gold or orther precious metals? perhaps. The PRC yuan? It's possible. But the Euro? No.


30 posted on 06/15/2005 8:13:27 PM PDT by oblomov
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To: Smogger
Interesting. I'm wondering if I should go long on the dollar or short on Berkshire 8o) *.

*Caution, Attencion, Achtung! This is not investment advice, so don't go out and buy issues that you haven't thoroughly researched yourself. Okay?

31 posted on 06/15/2005 10:24:13 PM PDT by Seaplaner (Never give in. Never give in. Never...except to convictions of honour and good sense. W. Churchill)
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To: oblomov

What a difference a year makes, Huh?


To: rreahsito

Looks like his bet on silver at $8/oz isn't doing too well. Buffett hasn't had a stellar record the past 10 years or so.
11 posted on 06/15/2005 5:11:33 PM PDT by oblomov


32 posted on 03/03/2006 10:15:15 AM PST by rreahsito
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To: Smogger

The rally the US Dollar is enjoying right now is a BEAR MARKET RALLY.

At some point this year the majors will resume their BULL MARKET and reverse the correction.

USD will once again come under pressure...

USD is set to reverse this most recent near term correction...and resume its mid term Bull Run...

Thats just my opinon...and my money is where my mouth is...

I am back long(as of this morning) USDCHF/USDJPY and short EURUSD/GBPUSD...


33 posted on 03/03/2006 10:24:04 AM PST by antaresequity (PUSH 1 FOR ENGLISH, PUSH 2 TO BE DEPORTED)
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To: Allosaurs_r_us
The Euro is whistling like a WWII, 2 ton bomb headed for Hitler's Bunker. Good riddance! Soros and his cohorts are going to lose their shirts on this one!

Sure it is...how much would you like to bet the dollar resumes its decline and it's Bear Market rally evaporates?


34 posted on 03/03/2006 10:33:57 AM PST by antaresequity (PUSH 1 FOR ENGLISH, PUSH 2 TO BE DEPORTED)
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To: rreahsito

Yes, well at least I have had some $$$ in Ag as well.


35 posted on 03/03/2006 10:51:43 AM PST by oblomov (Join the FR Folding@Home Team (#36120) keyword: folding@home)
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