Author: Gil

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Monday Morning Montaigne: Of taking a break

No Monday Morning Montaigne this week, dear readers. While I did start reading Book Two of the essays this weekend, and found the first three — Of the inconsistency of our actions, Of drunkenness, and A custom of the island of Cea — quite engaging and worth rambling about, I didn’t have time to do so. I didn’t get into a writing mood during the train ride up to Boston yesterday, and the loud 3-second buzz that occurs every 3-4 minutes in my hotel room has left me a frazzled wreck.

Really, the fact that I’ve put these sentences together is something of an accomplishment.

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Bio Logic

I’m off to the BIO conference in Boston, dear readers! Blogging may be pretty light, as I likely won’t have much free time, between exhibit hall hours and dinner. Still, I’ll try to take neat pix, make funny observations, and otherwise entertain you when I’m back.

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He hath a way

Berkshire Hathaway just held its annual meeting, in which Warren Buffett fields questions from shareholders. For six hours. He’s 77. I’m just sayin’.

Anyway, the Wall Street Journal had some highlights from the Q&A (I think it’s $-to-read, but that’s probably why Rupert Murdoch bid $5 billion for it, and not the Times or the WaPost). I never really knew anything about Buffett till the dot-com boom, when he was getting lambasted in the press for not buying into internet companies. At the time, he basically responded that none of those companies had a viable business model, and he didn’t understand how any of them could make money. Since he wasn’t one to trade on volatility, he stepped aside, was regarded as a dinosaur, and is now back to being regarded as the sage of investors. Perspective’s a funny thing.

I think his aversion to derivatives mirrors his dot-com experience:

In fielding a question about derivatives, which he once referred to as “financial weapons of mass destruction,” Mr. Buffett told shareholders that he expects derivatives and borrowing, or leverage, would inevitably end in huge losses for many financial participants.

“The introduction of derivatives has totally made any regulation of margin requirements a joke,” said Mr. Buffett, referring to the U.S. government’s rules limiting the amount of borrowed money an investor can apply to each trade. “I believe we may not know where exactly the danger begins and at what point it becomes a super danger. We don’t know when it will end precisely, but . . . at some point some very unpleasant things will happen in markets.”

And, in fact, he brings the derivatives issue back to the mentality that ruled the dot-com era: volatility.

Exacerbating the problem of derivatives and leverage is the short-term trading mentality and high turnover in the stock and bond markets, Mr. Buffett and Mr. Munger added. “There is an electronic herd of people around the world managing an amazing amount of money” who make decisions based on minute-by-minute stimuli, said Mr. Buffett, adding, “I think it’s a fool’s game.”

It seems that the Q&A is also a venue for people to grill Buffett about his personal life:

A shareholder from St. James, N.Y., who said he brought one of his five daughters to the meeting, asked Mr. Buffett to explain why he supports organizations such as Planned Parenthood. “It just doesn’t seem to jibe with the hero that I studied,” the shareholder told Mr. Buffett amid boos from the audience.

“Men set the rules for a lot of years, and I think it’s wonderful that women can make reproductive choices,” Mr. Buffett replied, as shareholders applauded and cheered.

Almost makes you wanna raise $109,500 to buy a single share of Berkshire Hathaway.

(Speaking of which, here’s a link to a PDF of the tangled web of investing in PetroChina.)

(Update: more coverage from a variety of sources.)

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Backdating Option

I hit a nearby Apple Store after work yesterday to pick up a pair of iPod Nanos. I’m using them as giveaway incentives for a couple of surveys we run at my magazine. While I was at the counter, a strange transaction took place nearby.

I had missed the early stages of it while I was shopping (I found a neat future purchase), and it reached “I want to speak to your manager” level by the time I was checking out.

The gentleman next to me was in his mid-30s, wearing a t-shirt, athletic shorts, and flip-flops. He asked the store manager, “What’s the problem with returning this? I didn’t open it.” and pointed at the box on the counter.

The manager replied, “The box is still sealed, so that’s fine, sir. The problem is that we stopped selling this version of the iPod in early 2005.” At this point, I looked over. It was a 40gb iPod Photo, which would’ve dated it late 2004/early 2005.

“So?”

“So, if you bought it from Apple, that means it’s been sitting in that package for two years. If we accepted it as a return, what are we supposed to do with it? We can’t resell something that’s been obsolete for two years.”

“Why is that my problem?”

“Because you don’t have a receipt and you’re asking us for $499 credit for something with no value.” I forgot how much those were selling for. The biggest iPod nowadays costs $150 less than that, with twice the capacity, video, and longer battery life.

“I’m going to take this up with your corporate office.”

“Do you want their number?”

He stormed out, flip-flops slapping at his heels.