Blogs & Comment

Deflating Buffett

Some folks think deflation is still a real threat. Not Warren Buffett. Yesterday, the worlds second richest man said the U.S. economy has no bounce, but he dismissed any risk of deflation while praising the Obama administration and Federal Reserve central bank for applying powerful jumper cables to keep America’s engine running.
I am not sure I agree. After all, deflation has certainly hit the value of a Buffett lunch. Indeed, recent bidding to dine with the 78-year-old U.S. billionaire (and help the Glide Foundation, a San Francisco charity, fight poverty) was well under US$200,000. In 2008, a Chinese hedge fund manager paid US$2.1-million to share a buffet with Buffett.
The Oracle of Omaha, of course, hasnt been firing on all pistons lately. In fact, he was recently blasted in the press by American trader Dennis Gartman, who attacked Buffett’s buy-and-hold investing philosophy and the related share performance of Berkshire Hathaway Inc., which has seen its stock price tank over 40% from its 2007 peak.
Warren Buffett is an idiot, Gartman told The Oregonian, after delivering a speech to Portland brokers. Shame on Warren Buffett. That’ll be a good quote for your article.
Gartman, a CNBC regular and market newsletter author (with a loyal following), is a momentum investor. He admits to losing money on two-thirds of his trades. But he claims his wins are big enough to cover the losses. Either way, he actually has a lot of respect for Buffett, which is why, in a subsequent CNBC interview, he called Buffett a brilliant investor.
So whats up the idiot comment?
If truth be told, Gartman knows the investing world still holds Buffett in very high regard. He also knows that verbal attacks on U.S. market gods often get picked up by media outlets around the globe. And he is a short seller who thinks Berkshire shares will dive when Buffett dies.
Simply put, when you play the momentum game, it never hurts to use the press to get your opinions known.
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THOMAS WATSONis a senior writer, market columnist and editorial board member at Canadian Business magazine. Since winning a community journalism award as a cub reporter with the Hamilton Spectator in the early 90s, he has covered business, finance, politics and technology for various news outlets. Prior to joining CB in 2001, he reported on the steel and automotive sectors for the Financial Post. Watson received two National Magazine Award nominations for business feature writing in 2008, winning a silver award for his coverage of Canadas ABCP fiasco. He landed his first NatMag nomination for exposing a stock manipulation plot aimed at Waterloo, Ont.-based Open Text during the dot-com boom, when he headed investor relations for an international venture capital outfit in the City of London. Watson holds graduate degrees in journalism, international relations and public finance and undergraduate degrees in history and politics.