Investments that might not be profitable at market rates, could be profitable for Buffett. And investments that would be profitable at market rates, could be wildly profitable for Buffett.
Here's Gross:
And here's one of the more interesting anecdotal observations on our current zero-based environment, one to which my investment paragon "“ Warren Buffett "“ would probably immediately admit. His business model "“ and that of Berkshire Hathaway "“ has long benefitted from what he has described as "free float." Those annual policy payments, whether for hurricane, life or automobile insurance, have long given him a competitive funding advantage over other business models that couldn't borrow for "free." Today, however, almost any large business or wealthy individual can borrow or lever up with minimal interest expense. Buffett's "Omaha/West Coast" offense is being duplicated around the world thanks to central bank monetary policies, placing an increasing emphasis on stock and investment selection as opposed to business model liability funding. Buffett will succeed based upon his continued strong offensive play calling, but the rules of the game are changing.
That ending about Buffett succeeding no matter what is very polite and politic on Gross's part. No one like to be seen bashing Warren Buffett.
RELATED LINKSCurrent DateTime: 03:13:22 01 Mar 2012LinksList Documentid: 46539603Buffett: CEOs Don't Need to Put Political Beliefs Into 'Blind Trust'Buffett: Steve Jobs Didn't Take My AdviceBuffett: Berkshire Board 'Enthusiastic' About Mystery CEO SuccessorBerkshire Hathaway's 15 Biggest Stock Holdings
But the truth is that low rates hurt Buffett in more ways than just cutting at the free float. Low policy rates compress interest rates in the private sector, diminishing the value of things like being triple-A rated. So Berkshire is losing a part of that edge as well.
Buffett is still the Oracle of Omaha. But for the first time in many years, he has a little less of an advantage over all those other folks laboring in the agora.
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Kevin Warsh & the US Economy cnbc_commentCountMapObj.cnbc_commentCountMap_put("15840232?video=3000076095&play=1", "38910635_8","cnbcCommentsTxt" ); cnbc_commentCountMapObj.cnbc_commentCountMap_put("15840232?video=3000076095&play=1", "38910635_8","cnbcCommentsTxt" ); BofA Considers Checking Account Fee Revamp: Report cnbc_commentCountMapObj.cnbc_commentCountMap_put("46584643", "38910635_9","cnbcCommentsTxt" ); cnbc_commentCountMapObj.cnbc_commentCountMap_put("46584643", "38910635_9","cnbcCommentsTxt" ); Blackstone Founder Tops Private Equity Pay League cnbc_commentCountMapObj.cnbc_commentCountMap_put("46584416", "38910635_10","cnbcCommentsTxt" ); cnbc_commentCountMapObj.cnbc_commentCountMap_put("46584416", "38910635_10","cnbcCommentsTxt" ); cnbc_commentCountMapObj.cnbc_commentCountMap_put("", "38910635_1","cnbcCommentsTxt" ); » HelpCurrent DateTime: 03:13:22 01 Mar 2012LinksList Documentid: 38851925Subscribe to this RSS feedsetDefault('cnbc_textbody');Is Warren Buffett's Berkshire Hathaway Losing Its Edge?Published: Tuesday, 28 Feb 2012 | 4:14 PM ET Text Size By: John CarneySenior Editor, CNBC.com #divButtons .gig-button-container-facebook-like {margin-right:-2px;} #divButtons .gig-button-container-twitter {margin-right:15px;} #divButtons .gig-button-container-google-plusone {margin-right:-16px;} #divButtons .gig-button-container-linkedin {margin-right:17px;} var params ={ userAction:ua, shareButtons: [{provider:'facebook-like',action:'recommend'},{provider:'twitter'},{provider:'google-plusone'},{provider:'linkedin'},{provider:'share',enableCount:false}], containerID: 'divButtons'} if (navigator.userAgent.indexOf("MSIE 6") cnbc_init_droparrows('menu_arrow_','img',cur_navSect); cnbc_getCommentsCount(cnbc_commentCountStr) ; Current DateTime: 12:07:09 01 Mar 2012LinksList Documentid: 29778429CNBC NEWSU.S. NewsAsia-Pacific NewsEurope NewsEconomyEnergyGreenTechnologyBlogsWiresSlideshowsSpecial ReportsCorrections Current DateTime: 02:44:25 01 Mar 2012LinksList Documentid: 29778428MARKETSPre-MarketsWorld MarketsStocksDow 30CommoditiesCurrenciesBondsFunds Current DateTime: 10:01:29 29 Feb 2012LinksList Documentid: 29779196EARNINGSNewsCalendarSurprisesHighlightsIdeas Current DateTime: 10:02:28 29 Feb 2012LinksList Documentid: 29779197INVESTINGStock BlogPersonal FinancePortfolio (Beta)WatchlistStock ScreenerFund ScreenerEarnings Screener Current DateTime: 10:02:28 29 Feb 2012LinksList Documentid: 29779200VIDEOLatest VideoTop VideoU.S. VideoAsia-Pacific VideoEurope VideoCEO InterviewsAnalyst InterviewsCNBC ProCurrent DateTime: 01:42:17 01 Mar 2012LinksList Documentid: 29779199CNBC TVCNBC U.S.CNBC Asia-PacificCNBC EuropeCNBC WorldCNBC HD+Channel FinderCurrent DateTime: 10:02:28 29 Feb 2012LinksList Documentid: 29779198MORESmall BusinessCNBC 360CNBC Mobile WebsiteRSSReal-Time Quotes and Extended HoursLatest Press ReleasesAbout CNBC | Site Map | Video Reprints | Advertise | Help | ContactPrivacy Policy | div.FOOTMC_BI {padding: 5px 10px 5px 10px; text-align:left; line-height:25px;} a#_bapw-link span {margin: 0 0 0 5px !important;} | Terms of Service | Independent Programming Report Data is a real-time snapshot *Data is delayed at least 15 minutesGlobal Business and Financial News, Stock Quotes, and Market Data and Analysis© 2012 CNBC LLC. All Rights Reserved. var scodePath = cnbc_tickerDataPath + "/js/s_code.js"; s_linkInternalFilters="javascript:,cnbc.com"; var s_account="nbcuglobal, nbcucnbcd, nbcucnbcbu"; var s_prop8 ="cnbc"; var s_prop9 ="cnbc.com"; var s_prop10=cnbc_sectionName; var s_prop31=cnbc_topSection; var s_prop32=cnbc_subSection; var s_prop33=cnbc_subSubSection; var s_prop34=cnbc_microSection; var s_prop35=cnbc_nanoSection; var s_prop36=cnbc_docid; var s_prop37=cnbc_doctype; var s_prop38=cnbc_doclayout; var s_prop39=cnbc_docsource; document.write(''); try { cnbc_init_services(); cnbc_highlightSubText(cnbc_docid,"sub_active"); } catch(e){} cnbcSwitchOnRemember("cnbcStreamQuoteMasterToggleRememberSwitch"); setTimeout("cnbc_comboQuoteMoveRun()",10); if (cnbc_DARTFlag=="new") { cnbc_DARTAdCall(1,1,"CNBNE0"); } else { dapMgr.enableACB("news1x1",false); dapMgr.renderAd("news1x1","&PG=CNBNE0&AP=&PN=CNBC",1,1); }Investments that might not be profitable at market rates, could be profitable for Buffett. And investments that would be profitable at market rates, could be wildly profitable for Buffett.
Here's Gross:
And here's one of the more interesting anecdotal observations on our current zero-based environment, one to which my investment paragon "“ Warren Buffett "“ would probably immediately admit. His business model "“ and that of Berkshire Hathaway "“ has long benefitted from what he has described as "free float." Those annual policy payments, whether for hurricane, life or automobile insurance, have long given him a competitive funding advantage over other business models that couldn't borrow for "free." Today, however, almost any large business or wealthy individual can borrow or lever up with minimal interest expense. Buffett's "Omaha/West Coast" offense is being duplicated around the world thanks to central bank monetary policies, placing an increasing emphasis on stock and investment selection as opposed to business model liability funding. Buffett will succeed based upon his continued strong offensive play calling, but the rules of the game are changing.
That ending about Buffett succeeding no matter what is very polite and politic on Gross's part. No one like to be seen bashing Warren Buffett.
RELATED LINKSCurrent DateTime: 03:13:22 01 Mar 2012LinksList Documentid: 46539603Buffett: CEOs Don't Need to Put Political Beliefs Into 'Blind Trust'Buffett: Steve Jobs Didn't Take My AdviceBuffett: Berkshire Board 'Enthusiastic' About Mystery CEO SuccessorBerkshire Hathaway's 15 Biggest Stock Holdings
But the truth is that low rates hurt Buffett in more ways than just cutting at the free float. Low policy rates compress interest rates in the private sector, diminishing the value of things like being triple-A rated. So Berkshire is losing a part of that edge as well.
Buffett is still the Oracle of Omaha. But for the first time in many years, he has a little less of an advantage over all those other folks laboring in the agora.
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