Buffetts deutliche Worte

[Jovel]

Hallo Leute,
Buffett mahnt zur Mäßigung und greift Unternehmen, die ihre Pensions Fonds (Rückstellungen für Betriebsrenten) übertrieben bilanzieren und die Gewinne damit aufblähen, an.
[hr]

FOOL ON THE HILL
Buffett on the Stock Market

Two years after publishing a prescient article warning investors about the
perils of tech stocks and urging them to reduce their expectations from
investing in the stock market, Warren Buffett is back with further
insights into the market's valuation today, an estimate of what returns
the market might deliver to investors over the next decade or two, and
strong words for how companies are handing pension fund accounting.

ByWhitney Tilson
November 27, 2001

Almost exactly two years ago, Warren Buffett published in Fortune magazine
a brilliant, prescient article, warning investors to lower their
expectations regarding stock market returns and, in particular, to be wary
of a tech stock bubble. He traced the history of other "glamorous
businesses that dramatically changed our lives but concurrently failed to
deliver rewards to U.S. investors," and concluded with some of the most
important words ever written on investing:

"The key to investing is not assessing how much an industry is going to
affect society, or how much it will grow, but rather determining the
competitive advantage of any given company and, above all, the durability
of that advantage. The products or services that have wide, sustainable
moats around them are the ones that deliver rewards to investors."

With the Internet and tech stock mania gripping the country, Buffett was
dismissed as an out-of-touch old fogey. My, how times have changed! Though
the tech stock bubble continued to inflate for another four months after
Buffett published his article, his predictions have come true. Investors
who failed to listen have paid the price: The Nasdaq is since down 43%,
and the S&P 500 15%, while the stock of Berkshire Hathaway (NYSE: BRK.A),
Buffett's holding company, is up 17%.

Perhaps investors today will pay more attention to Buffett's latest
thinking, Warren Buffett on the Stock Market, which appears in this week's
Fortune. I urge you to read it before you continue with this column, as
Buffett's thinking and writing are a lot better than mine, and my comments
will make more sense.

Market forecast
In the first part of the article, Buffett repeats and then expands upon
his thinking two years ago, when he concluded that for stocks to continue
to rise at the double-digit rate investors then expected, either corporate
profitability would have to become a larger and larger fraction of Gross
Domestic Product or interest rates would have to continue to fall.
Neither, he felt, was very likely.

He expected, therefore, "equity returns over the next decade or two (with
dividends included and 2% inflation assumed) of perhaps 7%." (Or 6% net
after frictional costs such as commissions and fees.) Today, he's bumped
that forecast up by one percentage point to 7% net, given that "the
country's economy has grown and stocks are lower, which means that
investors are getting more for their money."

The profitability/interest rate trade-off
I think Buffett's forecast is virtually certain to be correct, plus or
minus a few percentage points, because I agree that it's highly unlikely
that corporate profitability will boom once again and interest rates will
stay low. Consider the past two years: Corporate profits have fallen
markedly while long-term interest rates have remained roughly flat.

A skeptic might argue that Buffett's forecast was only half right, but
that would mean ignoring a critical insight: Alan Greenspan has kept
interest rates low because the economy is weakening and corporate
profitability is falling. When the economy picks up again, Greenspan (or
his successor) will become less concerned about a recession and focus
instead on combating inflation -- and, therefore, boost rates, which will
act as a brake on the stock market.

I'm not ruling out the possibility that low rates and a booming economy
could happen again -- I'm certainly not an expert in this area -- but I'd
argue that it's equally likely that high rates and a recession could
occur.

Looking in the rear-view mirror
Despite the power of Buffett's arguments, few investors appear to see the
logic of his long-term market forecast. Most investors -- including
corporations and pension funds, as discussed below -- still believe the
market will deliver double-digit returns, studies show. Buffett attributes
this unwarranted optimism to "the mistake that investors repeatedly make:
People are habitually guided by the rear-view mirror and, for the most
part, by the vistas immediately behind them."

It's quite reasonable to apply patterns to most things in life. If your
car breaks down repeatedly, for example, it probably will again. If
someone lies to you, would you trust them again? But when it comes to
investing, don't think this way! Yes, some patterns continue -- often for
a long time -- but there is a powerful force at work called "regression to
the mean."

Applied to individual businesses, this means high-return-on-capital
companies are likely to become less-high-return-on-capital companies over
time. The fierce competitiveness of our capitalist system is generally
wonderful for consumers and the country as a whole, but bad news for
companies that seek to make extraordinary profits over long periods of
time. Applied to macroeconomic factors, it means, for example, that as
interest rates fall further and further below their historical levels, the
odds become greater and greater that higher interest rates will follow.
The same is true of oil prices, inflation, GDP growth, and so forth.

Yet investors as a group do not appear to understand regression to the
mean. For instantly, I recently observed a class of very bright MBA
students who presented evaluations of numerous companies. In nearly every
case, the companies' results were poor over the past year, so guess what
the students did? They projected the companies' most recent weak cash
flows far into the future, discounted them back to the present -- using
elaborate spreadsheets, of course -- and concluded that the stocks were
overvalued.

I don't recall much independent thinking about whether the companies' cash
flows might be temporarily depressed or what catalysts might boost
results, but this is exactly what is required for successful investing.
(The professor, interestingly, noted that two years ago, a similar group
of students evaluated a similar group of companies and made the same
mistake -- in the opposite direction: They projected then-booming cash
flows forever into the future, concluding that the stocks were cheap
despite much higher prices than today.)

Valuing the market
Given that the market is prone to bouts of euphoria and depression, how
can an investor determine which condition is present at any given time?
There are, of course, countless metrics -- P/E ratio, dividend yield,
etc. -- but Buffett presented only one: The market value of all publicly
traded securities as a percentage of U.S. Gross National Product. He
admits that it has "certain limitations," but argues that "it is probably
the best single measure of where valuations stand at any given moment."

So where are we today? Buffett refers to a chart showing this ratio over
the past 80 years (there's no link in the online article, so I guess
you'll have to buy the magazine to see it) and concludes that if it "falls
to the 70% or 80% area, buying stocks is likely to work very well for you.
If the ratio approaches 200% -- as it did in 1999 and part of 2000 -- you
are playing with fire. As you can see, the ratio was recently 133%."

In other words, the market is still richly valued by Buffett's measure. In
fact, it's at nearly twice the level at which he would be excited about
buying stocks in general.


The scandal of pension fund accounting
Buffett saves his strongest language for the topic of pension fund
accounting. (You can read my rant on this topic in last week's column. The
long-running bull market, in short, inflated the value of the funds many
companies had set aside to pay future pension obligations, such that the
plans became overfunded. This, in turn, allowed companies to apply such
gains toward reducing product or operating costs, thereby inflating
earnings.)

Buffett uses similar statistics to those I presented, but adds a powerful
twist: He compares the expected pension fund returns certain
representative companies are using today with the expected returns the
same companies used in 1975 and 1982.

Despite far lower interest rates today (a significant fraction of pension
funds are invested in bonds), these companies are projecting far higher
returns, which Buffett thinks are ludicrous: "I'm a sporting type, and I
would love to make a large bet with the chief financial officer of any one
of [ExxonMobil (NYSE: XOM), GE (NYSE: GE), General Motors (NYSE: GM), and
IBM (NYSE: IBM)], or with their actuaries or auditors, that over the next
15 years they will not average the rates they've postulated."

So why are the assumptions so high? To some extent, Buffett notes, it's
"that rear-view mirror again," but he also notes that "heroic assumptions
do wonders... for the bottom line. By embracing those expectation rates...
these companies report much higher earnings -- much higher -- than if they
were using lower rates."

Buffett then proceeds to blast the actuaries: "The actuaries who have
roles in this game know nothing special about future investment returns.
What they do know, however, is that their clients desire rates that are
high. And a happy client is a continuing client."

After effectively calling actuaries corrupt, Buffett then targets
companies and their boards of directors:

"Unfortunately, the subject of pension assumptions, critically important
though it is, almost never comes up in corporate board meetings. (I myself
have been on 19 boards, and I've never heard a serious discussion of this
subject.) And now, of course, the need for discussion is paramount because
these assumptions that are being made, with all eyes looking backward at
the glories of the 1990s, are so extreme."

"Considering how poor returns have been recently and the reprises that
probably lie ahead," he continues, "I think that anyone choosing not to
lower assumptions -- CEOs, auditors, and actuaries all -- is risking
litigation for misleading investors. And directors who don't question the
optimism thus displayed simply won't be doing their job."

Wow! Buffett does not lightly use words and phrases like "critically
important," "extreme," "litigation for misleading investors," and "won't
be doing their job." In fact, having read a great deal of what Warren
Buffett has written for public consumption over his career, I can safely
say that I can't recall any instance of him using such strong language,
even for other corporate evils about which he feels strongly.

-- Whitney Tilson

Guest columnist Whitney Tilson is Managing Partner of Tilson Capital
Partners, LLC, a New York City-based money management firm. He owned
shares of Berkshire Hathaway at press time. Mr. Tilson appreciates your
feedback at Tilson@Tilsonfunds.com. To read his previous columns for The
Motley Fool and other writings, visit http://www.tilsonfunds.com/

[Fabule]

Hallo, zusammen!

Ich habe gestern von andreasl33 einen Link erhalten, den ich gerne an euch weiter geben möchte:

http://www.fortune.com/indexw.jhtml?...&doc_id=205324

Es ist der Artikel "Warren Buffett on the stock market", von dem im Ausgangsbeitrag die Rede ist. Ihr findet dort weiterhin den Artikel von 1999 und noch einige andere Beiträge über/von Warren Buffett.

Viel Spaß beim Lesen wünscht

Fabule