It is utter contempt to even attempt picking holes in anything that Warren Buffett does but I could not resist myself from putting in a few thoughts relating to the great man�s vision for India that Indian will live better � 20 years hence.
First everyone knows that Indians will live better then what they are in 2030. Any attempt to quantify this statement would be boringly repetitive. But Mr. Buffett took about 20 years to predict what Indian would be in 2030. A man of his class and repute should have had his predictions the moment India opened its gates of liberalization in 1991 so here we go, no points for that prediction.
Secondly it is bizarre to see why he needs one year prior notice to be in India He can come through his private jet which he has named �The indefensible�. He can use that and be in this country of snake charmers as it was known a few generations earlier. Well, these days we have charmed the richest men from the Forbes list is a giant step for the Investing community but only a small one for India.
But why does he need to be In India to invest. From all the history he had invested in quite a few companies without being to the point of operation so the India trip is more for the formality then for the analysis.
Indian journalists, brokerages, analysts and research houses should realize that anyone coming to India is doing no favor to us. They are coming here for their returns and the opportunity that India presents. We do not need anyone�s mark of approval to discover ourselves. Indians have already discovered themselves. It is now the turn of the world to discover India.
Now to the question, what stocks will Buffett buy in India? Insurance, Banks, Consumers the list is limited and conceivable but what may be good for Buffett may not be good for the average Indian investor. Why?
Firstly the Warren through his company Berkshire would intend to invest at least US $ 5 billion in India if that investment is to make any (meaningful) difference to his overall returns.
With that kind of a corpus he would look at the top 100 names a few that come to mind are the HDFC twins (after all Deepak Parekh has modeled HDFC on the lines of Berkshire), an operating company that goes into Insurance with an Indian partner. I doubt if he would buy the existing insurance companies because he has his own standards of risk, Indian TV stations are a highly fragmented property and newspapers might just be living on its edge over the next 20 years so that is ruled out, most of the world class consumer companies that exist in India are subsidiaries of their US or European parents so that is not exclusive material either, credit rating agencies less said the better.
Buffett likes buying cheap so it might just happen that he buys absolutely nothing from the secondary market and concentrates on how he can get his operating business going. That helps India in the long run but who cares about the long run these days.
Personally I feel that we should be proud that at least when it came to investing in India Indians were ahead of the man who has been amongst the top 3 in terms of individual wealth. Whether the process of discovery for Indians about their own stock market was by default (regulations prevent them from investing abroad) or by design is inconsequential.
As for Buffett he took longer to invest in India because when he could have bought a company in Israel he could have identified a few outstanding businesses in India but as they say �Better late then never�.
Slightly out of context perhaps: WB once said Berkshire can only invest in about 200 companies in the world to make any difference to it's bottomline.
Despite better Corporate Governance & Reporting Guidelines, retail
investors lose out even in developed countries. They are fed rumors
that are unfounded, purposely misleading and generally left to grope in
the dark,while information from analysts are contradictory. By the time the
truth emerges, they act after the proverbial horses have bolted!
But the game will go on; the fool & the money are easily parted
time & again! Success stories make some rue the missed
opportunities while the majority losers are left to lick the wounds.
What looks like sure-shots, with marketing hype, soon turns out to be
duds. For every successful company, there are many who bite the dust
sooner or later. The retail investor is unlikely to cut losses with
stop-loss etc.
Buyer beware is the dictum, but falls on deaf
ears, mostly! The great rewards, that are touted, easily lead many to a
path of ruin. Most technology companies were a big let-down except the
few, not many could have picked the winners. And when the market
melt-down happens, some are forced to liquidate their positions, losing
all their savings overnight.
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We do not need anyone�s mark of approval to discover ourselves. Indians have already discovered themselves. It is now the turn of the world to discover India.
Basant - You've said it!
The G-20 finance ministers and Central Bank governors met over the weekend in St. Andrews, talking about the data they will need to look at in order to monitor each other�s economic performance and sustain growth (seriously).
The underlying idea is that if you talk long enough about the US current account deficit and the Chinese surplus, stuff happens and the imbalances will take care of themselves�or move on to take another form.
Warren Buffett seems to agree.
Buffett�s big investment in railroads looks like a shrewd way to bet on growth in emerging markets�which is where most incremental demand for US raw materials and grain comes from. It�s also a polite way to bet against the dollar or, even more politely, on an appreciation of the renminbi.
When China finally gives way to market pressure and appreciates 20 to 30 percent, their commodity purchases will go through the roof. You can add more land, improve yields, or change the crop mix of choice (as relative prices move), but it all has to run through Mr. Buffett�s railroad.
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we have acquired a more stringent. And 15%, and your open invitation. If the offer is not open, you are left to hold some shares, but not all (you have to sell U.S.). Then there is the lack of debt capital markets to make / to protect the money, and you can not take the money out of the country.
[QUOTE=funkyappu]I think these people have a mental block, when things come about India. I think the Western population hasn't been able to digest India's progress.....So, they're kind of igoring it.
[/QUOTE]
warren buffett's recent op-ed in nyt :
http://www.nytimes.com/2010/11/17/opinion/17buffett.html?scp=1&sq=warren&st=cse
An excellent insight into how Buffet has acheived stellar reurns over decades available in the shareholder letter released today http://www.berkshirehathaway.com/letters/2010ltr.pdf
I think the candor and honesty and brilliance is evident when you look at the contents and the acquisition of GEICO and other businesses. Any ideas on similar businesses here in India - which can last the next 50 years and help us get ahead of the curve like Buffet.
Posted on:6/21/2010 2:39:00 AMsrisaurabh2000