Tuesday, March 31, 2009

Final Day: Submit Questions for the Buffett Top Ten List!


As John Lennon might have written, Warren Buffett was in the news today, oh boy.

Two weeks ago came the first ratings downgrade in Berkshire’s modern era, with Fitch unceremoniously replacing Buffett’s cherished Triple-A with a mere Double-A.

Buffett’s fans immediately came to The Oracle’s defense, naturally, pointing out that it was Fitch doing the downgrading, as opposed to Moody’s and S&P—you know, the geniuses who gave us all those Triple-A CDOs still smoldering beneath the wreckage of our financial house.

Still, the bad news didn’t end with the ratings downgrade.

Ever since the automakers were crucified for flying private jets to Washington to beg for a public bailout, America’s CEOs have been under enormous pressure to make like Regular Joes.

So much so that this morning’s Wall Street Journal carries a rather sad full page ad from NetJets, the Berkshire-owned jet timeshare business that must certainly be one of the worst-performing assets in the Berkshire pantheon—Shaw’s carpets and Acme bricks included—at the moment.

“Recently,” the ad begins, “much has been made of corporations and their private jet fleets,” as if we didn’t know. The copy then argues plaintively that private jets are “an important business tool,” and then pulls out all the stops: Buffett himself not only called NetJets “indispensable,” but he actually “bought the whole company.”

Not only does the ad come at the worst possible time in the relatively brief history of the private jet business, it happens to be in the same section of the Wall Street Journal that carries the story of Rick Wagoner’s unceremonious dumping from his CEO perch at GM—which story notes that Wagoner no longer flies in and out of GM’s own private jet terminal at the Detroit airport: he flies Northwest (first class, but, still, Northwest).

As full page ads go it’s probably the worst money Berkshire—and Buffett—ever spent, from a return-on-investment point of view.

Finally, even Buffett’s 9%-owned Coca-Cola is suffering the slings and arrows of outrageous economies today, with the same Journal reporting “Soda-Pop Sales Fall at Faster Rate” in a brief article in the B-Section, which notes that Coke is trying to arrest the slide with “new advertising and new packaging”—like that’s never been tried before.


Regardless of the bleak current news flow, Berkshire investors around the world are looking forward to the approach of the Berkshire shareholder meeting, the first weekend in May.

Approaching even faster is the April 1st deadline of our “Ten Questions for Warren Buffett” competition, in which we’ve asked readers to submit questions they’d like to see Buffett asked at the meeting.

And if our virtual mail is any indication, Buffett is going get some doozies—provided, of course, the Top Ten Questions that we submit to Andrew Ross Sorkin at the New York Times, who will be one of three reporters asking questions of The Oracle—make that reporter’s own high standards and get asked at the meeting.

The most popular topic by far has, thus far, been Buffett’s eyebrow-singing sale of index puts at market peaks. Other topics include:

1. That dreadful Conoco investment Buffett himself bemoaned in his recent letter;

2. Obama and the new administration’s economic and fiscal policies;

3. Whether owning Wells Fargo or any other large, opaque financial can be considered within one’s “circle of competence.”

Missing almost entirely—a surprise, we think—are questions about General Re’s dealings with AIG, and questions about Berkshire’s non-insurance businesses.

So take another look at the annual report that just hit your mailboxes last week, and submit your questions by tomorrow.



Jeff Matthews
I Am Not Making This Up


© 2009 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews.
Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: such inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.

Tuesday, March 24, 2009

“We Believe We Have Stability”


You wouldn’t expect much out of Williams-Sonoma these days.

What with the evaporation of high-paying Wall Street jobs and the kind of buyer who can afford to spend $635 on a chafing dish—which calls to mind one of the best moments in movie history, from Hot Shots!, no less—not to mention the evaporation of low-paying manufacturing jobs and the disappearance of that so-called “aspirational buyer,” you wouldn’t think there would be much of a market for the kind of foofy, “consumer discretionary” items Williams-Sonoma, and its Pottery Barn affiliate, are famous for.

Yet all good economic cycles must, eventually, end: even the bad ones.


And if this down-cycle is ever going to start to turn back up, it has to first stop going down.

So we were intrigued to hear on the company’s conference call this morning the following from Sharon McCollam, the Williams-Sonoma COO:

What we would say about the current environment is we believe we have stability and we are seeing the October/November trend be our baseline. We see it's volatile. But that's what we're seeing.

Now, whether Williams-Sonoma is an appropriate thermometer to measure the health of the American consumer may be debatable.

But at least the patient’s fever looks like it might—might—have stopped going up.


Jeff Matthews
I Am Not Making This Up


© 2009 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews.
Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: such inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.

Friday, March 20, 2009

Boo-Yah! Will Never be the Same



“What it feels like to us, and I’m speaking purely as a laymen, it feels like we are capitalizing your adventure…”

—Jon Stewart to Jim Cramer, March 12, 2009


Thus Jon Stewart drove a stake in the heart of what many serious investors refer to as “BubbleVision”, when he dismantled “Mad Money” host Jim Cramer—and, by inference, CNBC—piece by piece during last week’s now-famous Daily Show interview.

So famous, in fact, that NBC Chief Jeff Zucker felt compelled this week to dismiss Stewart’s interview as “absurd” and “completely out of line.”

But it is far from absurd and anything but out of line. We think it’s about time somebody called CNBC out for the mindless cheerleader it has become.


Still, if you haven’t seen the interview for yourself, spend the twenty minutes to watch the replay, and see what you think.

We think it’s an eye-opener.

For one thing, Stewart demonstrates that, when he is not making yuks with his peers in the entertainment world who use the show to flog forgettable movies and even worse TV shows, he can be the best interviewer on television, bar none.

In less than half the air time of one “Mad Money”, Stewart picks apart Cramer’s show through the kind of logical, well thought-out, relentlessly piercing, hypocrisy-baring interview that “Sixty Minutes” is famous for but hasn’t conducted since Nixon was in the White House.

For another thing, it is Cramer, and not some lesser CNBC light, getting drilled here. You'd think he'd do better.


After all, Cramer actually ran a hedge fund and made money for his investors before getting into the entertainment side of the financial world. Furthermore, he wrote what we have long considered one of the best financial books ever written—certainly the best look at what it’s like to actually be on the inside of a hedge fund (“Confessions of a Street Addict.”)

If anybody could handle a Jon Stewart, you'd think it would be a Jim Cramer. Yet he barely says a complete sentence, let alone makes a coherent point, during the entire interview.

In fact, far from landing a punch, Cramer says ‘no mas’ in a figurative sense by offering—and we are not making this up—to change his style completely.

Now, to be fair, Stewart seems to have actually prepared for the interview. He knows where he’s going, right from the start.

Not so Cramer, who strides onto the Daily Show set fresh off a Martha Stewart pie-making segment, with his shirt-sleeves rolled up and a smile on his face, and a game-plan that seems no deeper than to a) appear contrite, b) speak softly, and c) smile a lot. None of which come naturally to the man, as long time viewers know.

“Big fan of the show,” Cramer tells Stewart at the start, after taking his seat at the Daily Show desk. “But who doesn’t say that?”

“A lot of people, actually,” Stewart shoots back, under his breath, getting a laugh while simultaneously putting himself firmly in the driver's seat, Alpha-Male-wise.

Stewart then ingeniously sets up his guest by leaning towards Cramer and offering what sounds like an apology: “This was not directed at you per se,” Stewart says, of the relentlessly scathing portrayals of Cramer on his previous shows. “I just wanna let you know that.”

No, and D-Day was not directed at Hitler, per se.

Cramer, however, takes the bait: he smiles, shrugs, and lets his defenses down. This will be his first mistake, his second mistake, and his third, too, for it allows Stewart to then lay out the central premise of what he perceives to be CNBC’s main problem, without any rebuttal from Cramer.

The problem with CNBC, Stewart says, is “The gap between what CNBC advertises itself and what it is.

To make his point he shows an “In Cramer We Trust” promotional clip for Mad Money, with an authoritative, God-like voice intoning:


“When you don’t know what to do, don’t panic. You’ve got Cramer at your back.”

“Look,” Stewart says, letting the farcical nature of that statement sink in to Stewart’s audience and Cramer as well—after all, most of Cramer’s boo-yah types probably lost as much of their 401ks as everyone else in America—“We’re both snake oil salesmen to a certain extent, but we do label the show here as ‘snake oil,’…isn’t there a problem selling snake oil as vitamin tonic?”

“We all should have seen it more,” Cramer says contritely. “I don’t think anyone should be spared in this environment.” He concludes with a shrug. “We’ve made some mistakes…we’ve got 17 hours of live TV to do—


“Maybe you could cut down on that,” Stewart says quietly, stopping Cramer in his tracks and bringing down the house.

The Lightening Round this is not.

With Cramer momentarily speechless, Stewart moves in for the kill, calling up clips of Cramer’s infamous 2006 Street.com interview in which Cramer discusses, in very plain language, how to manipulate markets:

“You know a lot of times when I was short,” Cramer says on the video, “I would create a level of activity beforehand that could drive the futures, it doesn’t take much money….”

“What does that mean?” Stewart asks when the clip ends.

Cramer, shoulders hunched, tight smile on his face, says, “Okay, this is a hyperbolic example…I didn’t do this, I’m trying to explain this—”

Steward interrupts: “It sounded like you did do that.”

“Well I was inarticulate,” Cramer responds, inarticulately. “I barely traded the futures.”

Stewart says nothing to Cramer, but quickly calls for the next video clip from that same interview. It shows Cramer putting on his most egomaniacal face and sniffing to the interviewer,


“I would encourage anyone who’s in the hedge fund business to do it because it is legal, and it is a very quick way to make money, and very satisfying. By the way, no one else in the world would admit this, but I could care.”

Stewart lets the arrogance sink in, then says, “I want the Jim Cramer on CNBC to protect me from that Jim Cramer.”

And he’s still not even halfway through the interview.



What else could Cramer have done, you might ask?

Well, for starters he could have pointed out that the show is called “Mad Money” and not “How to Secure Your Financial Situation for Life.”

He could have pointed out that the show grew out of a radio program in which small investors called in questions; that he began to get a tremendous response from investors who wanted to take more control of their finances; and things took off from there.

He could have pointed out that his show was simply feeding a market that already existed, not forcing something down people's throats.

He could have pointed out that the whole idea of a TV show called “Mad Money” was exactly that: a fun way to help investors make some “Mad Money” in stocks. Not to uncover fraud at Fannie Mae or AIG or Lehman Brothers.

He could have pointed out that, being an ex-hedge fund guy, he was helping educate his viewers as to what actually makes stocks move, what to look for when trying to evaluate companies in different industries, and how to do their own homework on those companies.

Cramer could have said right up front that he never pretended to be Suze Orman or Ralph Nader, for that matter: that he simply tried to make the stock market understandable and maybe even fun, before he and his bull-market pals got blind-sided by the worst stock market since 1937.

But he did not. Cramer never had a plan.

Besides, Stewart’s larger criticism of CNBC is right on target, and hard to rebut:

“You talk about the regulators, why not the financial news networks?” Stewart says, summing up his main beef. “That’s the whole point of this. CNBC could be an incredibly powerful tool of illumination for people that [sic] believe that there are two markets—one that has been sold to us as long term, put your money in 401ks…then there’s this other market, this real market…and it hurts that long term market. … What it feels like to us, and I’m speaking purely as a laymen, it feels like we are capitalizing your adventure… It is a game you know is going on, but that you go on television as a financial network and pretend isn’t happening.”

Stewart is right: CNBC could be a powerful tool of illumination, rather than a testosterone-charged reflection of The Market itself.


And Cramer, who lately seems hell-bent on blaming the financial crisis on a laughably delusional 'conspiracy' among naked short-sellers, which simply does not exist, rather than five solid years of really really really bad lending practices by AIG, Countrywide Credit, Citigroup, Fannie Mae, Freddie Mac, Merrill, Lehman, Wachovia, and, oh, yes, GE, which happens to be the parent company of CNBC, has no response to it.

Instead, he simply gives in.


“How about if I try it?” Cramer blurts out, half way through the interview.

Stewart looks taken aback momentarily, while his guest, a man who normally dismisses his critics by ripping heads off of plastic bears and punching the cry-baby button, offers to throw out the manic-depressive Mad Money Playbook and adopt the Jon Stewart Illumination Model.

I’ll try it. I’ll try it,” Cramer insists.

Boo-yah! will never be the same.



Jeff Matthews
I Am Not Making This Up


© 2009 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews.
Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: such inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.






Monday, March 16, 2009

The New-New Gettysburg Address

(With apologies to our greatest President.)

Old Gettysburg Address:

Four score and seven years ago our fathers brought forth on this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.

Now we are engaged in a great civil war, testing whether that nation, or any nation so conceived and so dedicated, can long endure. We are met on a great battle-field of that war. We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives that that nation might live. It is altogether fitting and proper that we should do this.

But, in a larger sense, we can not dedicate -- we can not consecrate -- we can not hallow -- this ground. The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced.


It is rather for us to be here dedicated to the great task remaining before us -- that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion -- that we here highly resolve that these dead shall not have died in vain -- that this nation, under God, shall have a new birth of freedom -- and that government of the people, by the people, for the people, shall not perish from the earth.


New-New Gettysburg Address

Four or five years ago our Investment Bankers helped bring forth on this continent, and around the world, a new banking system, conceived in Leverage, and dedicated to the proposition that all persons working for Investment Banks can create enormous Wealth for themselves with almost no Risk except to Taxpayers.

Now we the Investment Bankers of Goldman Sachs are engaged in a great Scam, testing whether that Nation of Bankers can get paid without Tipping Off the Taxpayers to that Scam.


We have come to cash our checks.

It is altogether fitting and proper that we should do this, for we have Houses in the Hamptons requiring upkeep.

But, in a check-clearing sense, we can not Cash Our Checks so long as AIG cannot make good on the credit default swaps we purchased to Hedge our Leverage. Thankfully, the brave men of Goldman who struggled to Attain Positions of Power in Treasury and the White House have consecrated it, far above Barney Frank’s poor power to detract from our AIG Contracts.

The Small Investor will little note, nor long remember, how completely screwed He got, but we the Investment Bank of Goldman Sachs can never forget what they did to provide us this cash. We thank them for the $8 billion Their Government is paying to AIG in order to Make Us Whole.

We here highly resolve that The Little Investor shall not have died in vain -- that this nation, under Goldman Sachs, shall have a new birth of Leverage Without Risk -- and that government of Goldman, by Goldman, and for Goldman, shall not perish from the earth.



Jeff Matthews
Well, Yes, I Am Making This One Up


© 2009 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews.
Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: such inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.

Sunday, March 01, 2009

Top Ten Questions We’d Like to Hear Warren Buffett Asked at the Berkshire Annual Meeting


Well, Warren agrees with us!

In our book, “Pilgrimage to Warren Buffett’s Omaha,” we pointed out that Berkshire Hathaway’s annual shareholder meeting is no longer mainly about Berkshire Hathaway.

Instead, the Berkshire meeting is mainly about Warren Buffett—what he eats to stay healthy, what he reads to stay informed, and what he thinks about all manner of topics, from what teenagers should do with their lives to how he’d handle the healthcare crisis.

Far from being a “forum for business discussion,” as Buffett [once] wrote, not a single shareholder has even asked about the business.—Chapter 27, “What Would Warren Do?”

And Buffett, it turns out, agrees.

In his just-releasted 2008 shareholder letter, Buffett discloses an unprecedented change to the question-and-answer session with the following preface:

In recent years, we have received only a handful of questions directly related to Berkshire and its operations. Last year there were practically none. So we need to steer the discussion back to Berkshire’s businesses.

No kidding. Last year’s meeting had the single most off-topic question we’ve ever heard at a shareholder meeting:

“Do you know and believe in Jesus Christ, and do you have a personal relationship with God?”

Buffett did answer that question—as he does nearly every question asked of him, no matter how out-there—and if you care to find out what he said, you can purchase a copy of “Pilgrimage to Warren Buffett's Omaha."

Or, you can compete for a complimentary copy here at JeffMatthewsIsNotMakingThisUp.

That’s right.

In order to try to help Warren Buffett “steer the discussion” at the upcoming shareholder meeting back to Berkshire Hathaway, we’re holding the first annual Pilgrimage to Omaha's Top Ten List of Questions We’d Like to Hear Warren Buffett Asked.

1. Simply email your question—a good one—to


PilgrimageToOmaha@gmail.com.

2. On April 1, 2009 all questions received by that date will be posted, via a link at the top of this blog. You, our readers, will then get to vote on which questions you judge belong in the Top Ten.

3. The top ten vote-getting questions as of the New York Stock Exchange close on April 15, 2009, will be deemed The Top Ten Questions We'd Like to See Warren Buffett Asked.

4. Those ten questions will then be forwarded to one of three reporters anointed by Buffett to collect, choose and read alternating questions at the shareholder meeting (Andrew Ross Sorkin, ace New York Times reporter).

Now, there is no guarantee that any of our Top Ten questions will get selected, let alone asked, at the meeting.

Here’s how Buffett described the process in his letter:

…several financial journalists from organizations representing newspapers, magazines and television will participate in the question-and-answer period, asking Charlie [Munger] and me questions that shareholders have submitted by e-mail….

From the questions submitted [to the reporters], each journalist will choose the dozen or so he or she decides are the most interesting and important. (In your e-mail, let the journalist know if you would like your name mentioned if your question is selected.)

Neither Charlie nor I will get so much as a clue about the questions to be asked. We know the journalists will pick some tough ones and that’s the way we like it.


To be very clear, we have no official (or unofficial, for that matter) relationship to Berkshire Hathaway or to the three journalists who will receive, winnow, and ask the questions. Anybody can email their questions directly to the journalists, as instructed by Buffett. Also, s
hareholders will also be able to ask their own questions at the meeting, based on a lottery system.

But Buffett says he’s looking for “tough ones.” and we can’t think of a better informed crowd that’s up to the challenge than the readers of NotMakingThisUp.

So email your question—one per email, please, and make it a good, well thought-out question—to


PilgrimageToOmaha@gmail.com.

1. Make it 40 words or less, so we have room on the blog, and make it exactly how you want it worded. Otherwise, we'll have to edit. (If you dislike the way we edit your question, follow-up with an email.)

2. No multiple-part questions, and no questions about what Berkshire is buying or selling now. Anything else, as Buffett might say, is fair game.

3. Include your name and mailing address, so you can get credit when we determine the Top Ten. However, your name will not be posted on this site.

4. Indicate if you'd like your name identified or withheld, should your question be asked at the meeting.

To repeat: there are no assurances any of these questions will be asked.


But our readers are no slouches, so who knows? Perhaps your question will make headlines come May 2nd when Buffett is finally asked about something besides how he stays healthy and what he would do if elected President.

And whether he has “a personal relationship with God.”

Readers who submit the Top Ten vote-getters as of the New York Stock Exchange close on April 15, 2009, will receive an autographed copy of "Pilgrimage to Warren Buffett's Omaha."

So, to quote those ancient philosophers, the Black Eyed Peas, let’s get it started.



Jeff Matthews
PilgrimageToOmaha@gmail.com
Pilgrimage to Omaha™

© 2008 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews.
Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: such inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.