The Secrets of Successful Investing
According to Bloomberg Data, 60 mortgage companies have “halted operations, gone bankrupt or sought buyers since the start of 2006.” On August 17, The Guardian reported that Countrywide, which wrote more than $400 billion in mortgages a year and employs 54,000 workers, is teetering on the brink. This past Monday, Capital One closed its GreenPoint mortgage division and will take an after-tax charge of $840 million. Yesterday Lehman Brothers announced that is was folding BNC Mortgage, its subprime unit, and firing 1,200 employees in 23 cities. This morning, the AP reports that the mortgage industry job loss has been 40,000 since the start of the year with many more to come.
Waiting in the Wings?
And this past Tuesday in a Wall Street Journal story titled, “After the Tumult, Is It Buffett Time?” Karen Richardson surmises that the “Sage of Omaha” may be ready to make some serious moves now that stock prices of the mortgage companies are in the gutter and it’s a buyer’s market. She reports that Buffett is sitting on a war chest of nearly $50 billion cash. Citing the former Philippines’ first lady, Buffett told an interviewer, “I can spend money faster than Imelda Marcos when things are right.”
Buffett and Marcos are alike—judicious spenders. “I did not have three thousand pairs of shoes,” Imelda said huffily in 1987. “I had one thousand and sixty.”
Where’s the Outrage?
An occasional reader of this cranky little e-zine—such as my former client Steve Warsaw, a savvy direct marketer and crack sailor now living in Phoenix—weighed in on the subprime crisis. He writes:
Where are all the talking heads, Wall Street pundits and editors who so earnestly proclaim the virtues of a free capitalistic economy? Today, they are sitting on the curb with their begging cups in hand. Stand by, Mr. & Ms. Taxpayer. After all, we cannot expect these moguls of finance to be forced to sell their 200’ yachts or one of their three or four 12,000 sq. ft. offshore or Belle Haven mansions. Once again, for the third time in recent memory, you, Mr. & Ms. Wage Earner or fixed income retiree, will be forced to pay for the miscreants’ malfeasance, mistakes and mismanagement.