What would you ask Buffett if you met him? - The 5 Minute WrapUp by Equitymaster
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What would you ask Buffett if you met him? 

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In this issue:
» Telecom spectrum sales make government rich
» China's May 2010 inflation rises 3%
» More investors for gold than end users
» Taleb says debt burden is spreading like cancer
» ...and more!!


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00:00
 
A lunch costing US$ 2.6 m, is without doubt the most expensive meal one can ever have! In fact for most of us it stretches beyond our imagination. But not if your companion is the legendry value investor Warren Buffett. In his 11th annual charity lunch auction, Buffett has raised US$ 2.6 m this year. The chance to have lunch with the celebrated billionaire investor drew 9 bidders and 77 bids, according to EBay Inc. And the bid this year is nearly 24% higher than that of last year's. Clearly the opportunity to get the insights of someone Buffett during times of such volatility is priceless.

We wonder what would an average Indian retail investor love to ask Buffett, given an opportunity to do so. Would it be about the financial crisis in Europe that is destabilizing global economy? Would it be on his views on the US dollar? Would it be about his interest in stocks from emerging markets, particularly India? Or would be on his defensive stand on Moody's and Goldman Sachs?

Agreed, Buffett has been immensely generous in sharing his wisdom. Particularly, through this annual letters to the shareholders of Berkshire Hathaway. But such an opportunity to quiz Buffett on some contemporary issues can be an unparalleled experience.

Let us know what would you like to ask Buffett if you were to get such an opportunity.

01:17  Chart of the day
 
The global financial crisis may have dented the US' appetite for oil in 2009 as compared to that in 1999. But as today's chart of the day shows, the US still remained the largest primary energy consumer in the world. Interestingly, as the 2009 numbers show, China is set to challenge US' position at the top. The dragon nation's oil consumption in the last decade has grown by leaps and bounds. India's energy consumption has also increased during the decade. But it lags way behind the US and China.

Data Source: The Economist

01:48
 
Debt and more of it has emerged as the gravest concern in recent times for the global economy. But problems of excess debt abound not only in the developed world but in the developing economies as well. India is a case in point. The country's fiscal deficit had ballooned to 6.6% of GDP in FY10. The government has realised the importance of having lower debt. And so in its Budget Speech it laid a roadmap for bringing this deficit down.

The recently concluded telecom spectrum auctions seems to have made the government's coffers richer. The inflow of more than Rs 1 trillion in revenues from the spectrum auction for 3G services and Broadband Wireless Access (BWA) has been better than expected. This is expected to reduce the government's fiscal deficit to 4.47% of GDP during FY11. This is lower than the estimated figure of 5.5%. This indeed spells good news for the Indian government.

But the critical matter now is how the government chooses to utilize these funds. Will it take the necessary steps to bring this deficit comes down and curtail borrowings? Or will it splurge this money on more wasteful expenditure? Indeed, this is where the Indian government's mettle will be really tested.

02:24
 
The World Bank has predicted an annual average GDP growth of 6% for developing economies. This is nearly double of that projected for the developed ones. Infact for China the figure is just short of a double digit growth rate. However, this macro picture overshadows a grave reality. One that can potentially set back the economic empowerment of the developing economies. The World Bank predicts the number of people below poverty line to increase by 26 m by the year 2020. This is due to insufficient aid from developed economies. The funding gap is expected to be US$ 210 bn in 2010. Private capital inflows are projected to improve very modestly from 2.7% of developing world's GDP in 2009 to 3.2% by 2012. However, the same is hardly enough to help address the growing poverty in these regions. One can only imagine what a sub normal economic growth in the developed world can do to the fortunes of the developing economies.

02:51
 
The Chinese have been known for manipulating statistics and reporting low inflation numbers. However, this time around the government seems concerned. CPI in China for May 2010 was 3.1%, higher than the 2.8% level last month. It is also in excess of the 3% target set for 2010. One major cause for this spike is increased wage levels for factory workers.

China has prided itself on being a low cost, labour intensive nation. With labour unrest, worker suicides and growing media glare on the issue, companies like Honda and Foxconn have now been forced to increase wage levels. Higher wages will cause margins to shrink and inflation to rise in the coming period. Authorities in the red-dragon nation may have to rethink their protectionist policies soon.

03:47
 
Governments in developed countries, and especially the US, have been taking on more and more debt to fight what they consider the biggest problem today - the recessionary environment and unemployment. But noted economist Nassim Taleb doesn't seem too happy about that. According to him, the biggest problem today isn't recession but the mushrooming debt burden. Infact, Taleb has gone as far as to say that this debt problem is spreading like cancer. And that governments need to slash debt like the way the Greeks are trying to do. It doesn't look like such a thing is about to happen anytime soon though. The US government debt hit a record of US$ 13 trillion in June and it's on pace to surpass GDP by 2012, according to IMF forecasts. Seems like now it's just a matter of time before the credit crisis of 2008 makes way for the sovereign debt crisis.

04:18
 
2009 was a unique year in many senses. One of them is surely this - it was a year when the demand from the actual users of one particular commodity fell, even as demand from mere investors in it doubled. Yes. This is no ordinary commodity. No rewards for guessing that we're talking about none other than the 'precious' metal gold. Investors' fixation for gold seems to be getting stronger by the day. To the extent that the big vaults used to store the metal are full to the brim and are falling short of space. Not only that. They are even falling short of the security staff required to guard these vaults.

And not to mention the insufficient armoured trucks used to transport the yellow metal around, which are also fast becoming a cause for bottlenecks. Major gold hubs where the metal is stored including New York, Zurich, Geneva, Toronto, Johannesburg, Hong Kong and Singapore are all beginning to face such problems. Reminds us of a famous quote by Warren Buffett that goes something like this - "Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."

04:45
 
The past week was a mixed one for Asian markets, with Japan (down 2%) and Singapore (down 0.4%) ending on a weak note. This was mainly on concerns over the US job report missing the target as well as concerns looming over the Euro crisis. However, Japanese stocks were the top losers despite reports showing that Japan's GDP rose at an annualised rate of 5% in the three months ended March 31. Brazil, France and the US were the top performing markets this week as they ended higher by about 3% each. China and Hong Kong managed to end the week on a positive note.

Indian markets ended the week on a slightly negative note with the BSE-Sensex ending lower by 0.3%. While the Indian markets tumbled during the first half of the week, they managed to pare their losses as buying activity intensified during the latter half. The market sentiments improved due to positive IIP numbers along with some positive developments in corporate India.

Data Source: Yahoo Finance, Kitco


04:56  Weekend investing mantra
"People calculate too much and think too little." - Charlie Munger
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41 Responses to "What would you ask Buffett if you met him?"

sunil

Jun 22, 2010

i am yet to see any other person on this planet who has made HUGE MONEY and still continues to live in the home as he has been for the past 40-45 years . What makes you do this ?? WHICH NO ONE ELSE HAS DONE IN THE WORLD ?? atleast not heard of !! Congrats --- but yes this intrigues me and so the Q ????

Like 

Narendra

Jun 22, 2010

If Buffet loose all his wealth and he has to start over again from scratch.... which stocks and how much he will invest, and from where he will get the money...??

Like 

Inani BP

Jun 17, 2010

Paying such a hefty price for gaining wisdom of Warren Buffett when it is available by attending his several discourses in Berkshire Hathways' AGMs or in various books published on such wisdom sharing - doesnot this step prove that I have opened with a bad start in Investing and managing money....

Like 

NITIN KHURANA

Jun 15, 2010

Dear Mr Buffet,
We have a huge population in India, if Poverty is uplifted then consumption will increase thereby increasing the economy of our country.
Since you have reached at such a stage that you can think and answer it precisely i.e. What should INDIA do to uplift Indian poverty? (don't count on Govt. efforts, as it is not reaching the poor).

Second question: Sir, You had started investing at young, that time the prices were at low premium. But now, share prices are at mountain premium, so how could a young common person start investing? Is any-time be the right time?

Like 

Sumer Chand Jain

Jun 14, 2010

Dear Mr. Buffett,

Is it a fortune or wisdom which leads to success? Strong belief is that A good fortune always steers to a winning wisdom and results in success & vice versa. Comment Please.

Like 

Raphael

Jun 14, 2010

Tell me 10 Indian companies that will multiply my investments 10 times in the next 10 years.

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schinnappa

Jun 14, 2010

Your recent reported defense of credit rating / financial services companies in which your firm has a large shareholding is in variance with the principles of ethical investing associated with your name and hence the image of a perfect role model in the menagerie of stock markets has somewhat diminished. How do you explain this dichotomy ?

Like 

KRISHNAKANT BATAVIA

Jun 14, 2010

EUROPE, USA, PREFERRED INDIAN STOCKS.

Like 

Br Bhanwar Singh Rana

Jun 14, 2010

The question:
Could he show the generosity of the human spirit to over come all adversity of poor people?
Best regards
B. S. Rana

Like 

RAMBABU KOPPARTHY

Jun 13, 2010

STOCK PICKING IS ART? SCIENCE? OR MERE GAMBLING?

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