Cheap debt behind M&A 'purchasing frenzy' - Warren Buffett

Warren Buffett

Berkshire's insurance business took $3 billion in losses from the damage of Hurricanes Harvey, Irma, and Maria, or $2 billion after taxes, Buffett said in the letter. Now 87, he has been investing since he first bought stock at the age of 11.

"It certainly means corporations will pay quite a bit less in tax than they otherwise would", Buffett said.

Berkshire said that NICO Group's premiums earned were $US4.451 billion, down $US198 million (or 4%) in 2017 compared to 2016 when the figure was $US4.646 billion, while premiums written declined slightly to $US4.371 billion from $US4.433 billion. During the 10 year bet, the hedge fund managers involved nearly certainly made tens of thousands of buy and sell decisions.

"Buffett is piling on more cash".

High-grade bonds, he said, can increase the risk of an investment portfolio as inflation eats away at the return. "I imagine prices will come down for some time".

Known as the "Oracle of Omaha" - after his birthplace in the Midwestern state of Nebraska - he is one of the world's most successful investors and one of its richest men.

Berkshire's many insurance operations also include the GEICO auto insurer and General Re reinsurer.

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For 2017, net earnings attributable to Berkshire shareholders surged to USD44.94 billion from USD24.07 billion in the previous year.

Buffett will "make a move" on the market's downturnThe Dow Jones industrial average, S&P 500 and Nasdaq are all lower for the month, but Buffett probably sees the downturn as a buying opportunity, said Cramer.

That's right. It turns out Warren who, in his annual letter patiently explained how "Charlie and I view the marketable common stocks that Berkshire owns as interests in businesses" hasn't the faintest fucking clue why he owns $350 million worth of shares in a struggling Israeli manufacturer of generic drugs. The prize money for the bet was being held in Treasury bonds, which five years into the wager were trading at a yield/maturity of 0.88%.

The final lesson is that investors should "stick with big, "easy" decisions and eschew activity".

Beside investments, Berkshire owns more than 90 different businesses in a variety of industries, including BNSF railroad, Geico insurance and several electric utilities and manufacturing firms. Most of those managers undoubtedly thought hard about their calls, each of which they believed would prove advantageous. "We do know, however, that the risk increases over time because of growth in both the number and value of structures located in catastrophe-vulnerable areas", he wrote, boasting that "no company comes close to Berkshire" in being financially prepared for a $400 billion mega-cat.

If I am reading this letter correctly, a Gulf investor should be raising cash ready to invest in great companies (perhaps like Berkshire) when their share prices are temporarily cheap in a crash, avoid the high fees of professional investment managers like the plague, and keep it all as simple as possible.

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