Warren Buffet, the ‘Oracle of Omaha,’ recently faced weary shareholders of Berkshire Hathaway this past weekend for an update on the outlook of the conglomerate. Questions from shareholders indicated the anxiety was a largely a result of the recent Standard & Poor’s Index put the U.S. government’s credit rating on a “negative credit watch,” according to Reuters. Mr. Buffet responded by saying that the Standard & Poor’s decision was hasty, as the US government can print more money to pay down the debt if absolutely necessary. As a result, he went on to say that it was an economic certainty that the dollar would fall; however, it is variable as to how fast and soon this will occur.
It grows increasingly likely that the US dollar will become devalued in the short term. Mr. Buffet says he is accounting for this trend by adjusting investments to focus on fixed-income buys. Another source of anxiety for Berkshire Hathaway shareholders came up in reference to the recent debate in the US Congress over the national debt ceiling. The issue of contention is the fact that the US is nearing its limit in debt issuance. When a shareholder posed the question to Buffet about what he would anticipate to happen as a result of this debate, he replied that it would be one of the legislature’s “most asinine acts” in its history to not raise the ceiling.
Another notable event took place with respect to the recent purchase of $10 million in Lubrizol stock. Warren Buffet told the shareholders that his top aid, David Sokol, overstepped his mandate when he purchased this stock and additionally violated Berkshire Hathaway policy by purchasing the stock prematurely and then pressuring the company to buy in. Personally, Sokol made roughly $3 million as a result of the timing that he allegedly orchestrated according to the Wall Street Journal. Sokal’s attorney responded by denying any wrongdoing on his client’s part.
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