March 4, 1933: The Only Thing to Fear...

By Dian Vujovich

Even Warren Buffett’s company’s stock is deep in dodo too.

When the Oracle of Omaha, considered one of the greatest investors of all time, can’t keep Bershire Hathway stock from halving in value, we’d all better a take a second look at our investment holdings.

As of the close on Friday, February 27, 2009, shares of Berkshire Hathaway stock (symbol: BRK-A) were trading at $78,600. That’s per share, folks, per share. The 52-week range for those shares has swung between $73,500 and $147,000.

While the dollars it would take to purchase only 10 shares of it at the stock’s current price would be enough for most mortals to retire on, the drop hasn’t made Buffett happy about some of his stock picks last year and hence the holding company’s performance: It dropped 62 percent in 2008. That’s the worst performance since he took the company over 44 years ago.

Buffett said that he “did some dumb things in investments” last year but his outlook for America’s future is a bright one.

You may read Buffett’s Berkshire Hathaway ‘s 22-page shareholder letter at http://www.berkshirehathaway.com

Or, here are some excerpts from it:

-Regarding the mess in the credit market: “The watchword throughout the country became the creed I saw on restaurant walls when I was young: “In God we trust; all others pay cash….”

-On fear: “By the fourth quarter, the credit crisis, coupled with tumbling home and stock prices, had produced a paralyzing fear that engulfed the country. A freefall in business activity ensued, accelerating at a pace that I have never before witnessed…”

-Regarding the Treasury and the Fed’s actions: “This debilitating spiral has spurred our government to take massive action. In poker terms, the Treasury and the Fed have gone “all in.” Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome after effects. Their precise nature is anyone’s guess, though one likely consequence is an onslaught of inflation… Whatever the downsides may be, strong and immediate action by government was essential last year if the financial system was to avoid a total breakdown…”

-On the future: “Amid this bad news, however, never forget that our country has faced far worse travails in the past. In the 20th Century alone, we dealt with two great wars (one of which we initially appeared to be losing); a dozen or so panics and recessions; virulent inflation that led to a 211⁄2% prime rate in 1980; and the Great Depression of the 1930s, when unemployment ranged between 15% and 25% for many years. America has had no shortage of challenges…… Though the path has not been smooth, our economic system has worked extraordinarily well over time. It has unleashed human potential as no other system has, and it will continue to do so. America’s best days lie ahead…”

Read the rest of the story at
http://www.nytimes.com/interactive/2009/02/20/business/0222-pay-graphic.html?ref=business and weep.