Warren Buffett Weighs In On The Housing Bubble
Hold on to your hats because the Oracle from Omaha just threw a ton of controversy into the bubble discussion. "He and Munger issued stern new warnings about the residential real estate 'bubble,' the destabilizing effect of hedge funds on the financial markets, and the possibility of another terrorist strike against the United States."
Buffett may have been reading this blog! "A lot of the psychological well-being of the American public comes from how well they've done with their house over the years. If indeed there's been a bubble, and it's pricked at some point, the net effect on Berkshire might well be positive [because the company's financial strength would allow it to buy real-estate-related businesses at bargain prices]."
"We're like an incredibly rich family that owns so much land they can't travel to the ends of their domain. And they sit on the front porch and consume a little bit of everything that comes in, all the riches of the land, and they consume roughly 6 percent more than they produce. And they pay for it by selling off land at the edge of the landholdings that can't see. They trade away a little piece every day or take out a mortgage on a piece."
"Buffett to Munger: 'What do you think the end will be?' Munger: 'Bad.'"