How I Met Warren Buffett in Prison
by Dr. Mark Skousen, Contributing Editor
Thursday, June 10, 2010: Issue #1278
Yes, it’s true. Last Wednesday, I met the “Oracle of Omaha” in Sing Sing penitentiary – the notorious maximum-security prison “up the river” from Manhattan.
It just goes to show what lengths I’ll go to for an Investment U interview!
The occasion was the graduation ceremony for prisoners who had completed their college degrees at the correctional facility. Buffett’s sister, Doris, is a donor of the college program and invited Buffett to the event.
I was there with my wife, Jo Ann. We teach in a four-year college degree program at Sing Sing through Mercy College. She teaches English Literature and Writing; I teach Economics. The program is privately funded and has been so successful that it attracted Buffett’s interest. A number of celebrities have also spoken at the commencement address, including singer Harry Belafonte, rap singer Ice T and actor Tim Robbins.
What’s so special about the Sing Sing college degree program? In 10 years, nearly 200 have graduated. Of those 200, 42 have left prison and re-entered the outside world. None have returned! All are living productive lives, working and supporting themselves. Meanwhile, the national rate of recidivism is 67%…
When Prison Becomes Paradise
Warren Buffett must have felt like he’d gone from one prison to another.
He arrived at Sing Sing direct from New York City, following a grueling two-hour interrogation by Congress’s sanctimonious Financial Crisis Inquiry Commission. It had subpoenaed Buffett against his will to testify about Moody’s rating of mortgage securities.
At the hearing, Buffett, who is Moody’s majority shareholder, was peppered with questions, demanding to know why neither he nor Moody’s accurately rated mortgage securities during the real estate collapse of 2007-2009 and failed to anticipate the crash. Buffett admitted that he, like practically everyone else, was surprised by the size of the real estate bubble and its role in threatening to bring down the entire financial system. It was “the greatest bubble I’ve seen in my lifetime,” he said.
Nevertheless, after a long day of testifying and appearing on television, Buffett was surprisingly energetic at the graduation ceremony. He told me how impressed he was with the college program at Sing Sing: “I’m blown away. This is a great program that nobody knows about.”
That’s about to change. A New York Times journalist was there to report on the event and a documentary will be released later this year, too.
It didn’t take long for Buffett and me to get down to business…
Warren Buffett’s Views on Europe, Debt and Gold
~ The European Crisis & Wall Street Selloff: Despite these two major events, Buffett told me he was quite bullish about the markets and expressed optimism about employment and the recovery: “It’s bound to go up,” he said.
~ The Debt Crisis: In response to his bullishness, I asked Buffett whether the growing budget deficits concern him. His sister, Doris, expressed deep concern about the debt crisis, but Buffett was less worried. With regard to the massive unfunded Social Security and Medicare liabilities (which Alexander Green mentioned in yesterday’s column), he told me he favors means testing as a way to reduce the costs of these entitlements: “I get Social Security and Medicare, but I don’t need it.”
~ Gold: I asked Buffett about gold – “the ultimate salvation investment.” Does he believe it’s a good long-term investment?”
“No – I’ve never invested in gold.” Buffett’s father, Howard, a conservative Republican congressman from Nebraska, believed in the gold standard and gave Buffett some gold coins. He told me he still has them, but “only as a keepsake, not as an investment.” He told me he’s no gold bug and instead prefers to invest in well-run businesses, on the belief that investing in free enterprise does more social good than investing in gold. He’s not interested in gold even as a speculation, although he did take a position in silver several years ago (not as a monetary metal, but as an industrial metal).
“So are you a collector of anything?” I asked Buffett. “Stamps, cars, art work?”
His response: “I collect businesses and friends.” (And with his Berkshire Hathaway stock is worth at least $50 billion, I’ll bet he has plenty of the latter!)
If you want to buy a value stock that Buffett currently favors, buy Goldman Sachs (NYSE: GS). It’s selling for only six times earnings and has profit margins exceeding 30%.
Good trading – AEIOU,
Mark
Related Investment U Articles:
- Three Investment Lessons I’ve Learned From Warren Buffett
- Five Takeaways From Warren Buffett’s Annual Letter to His Shareholders
- Warren Buffett: The United States is No Europe
- Warren Buffett and the Berkshire Stock Buyback
- Warren Buffett Just Said “Buy!”
7 Responses to “How I Met Warren Buffett in Prison”
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I think this is wonderful for incarcerated people to improve themselves receiving college degrees.
As a single parent, I have had less opportunity to do the same. This disturbs me.
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I believe such prograams are Economically Productive to the nation.First,the USA is faced in the future with a tremendous labor shortage because twice as many Baby-Boomers will be retiring than new entrants into the labor force and thus we will need every well trained skilled Knowledge worker we can get.Such a progeam should include a good dosage of Humanities to help prepare them for civil life.Many felons have above average intelligence and such a program will be both benneficial to them as well as society.Furthermore it will reduce and possibly eliminate the rate of recidivism. I believe that an educated individual would not want to return to criminal behaviuor once given a second chance on life.If such a program is to be totally successful then all records of past criminal behaviour must be expunged after returning to civil society for a period of seven years and in which no recidivist bahaviour occured.
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While I applaud Warren and his great investment achievements I have my reservations about his investment perspicacity.
He did after all mis out on the huge growth of Microsoft and all IT related companies because he did not UNDERSTAND them and their business methods.
HE like Gordon Brown(ex Prime Minister of U K) does not believe in Gold that is because he sits at the top of the Financial Card game pulling the strings.
There are millions of middle class investors who have lost their boots because they did not believe in GOLD and will continue to do so in the future. Go tell the citizens of Spain, Portugal, Ireland, Italy, and Greece that their life savings are safe in paper, HA HA HA I am really am busting my sides on this one.
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I delt with Gold & Silver investments. There
investments went up so I doubled. Bad timing
that was the 80s, gold & Silver fall, I lost
all my funds. Right now both are up. There is
one more metal that starts with a P, which I
learned to play against gold. When P is below
G bet on P. It worked for me. I only wished I
had more guts to put more on P. Warren knows best,
I’ve been in the Market longer but done less.
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Buffett despises gold, thinks Obama is great, and recommends GS.
Every day there is an article in some publication worshipping at the alter of Buffett, and I am sick of it.
He can pick stocks. Does that make him an expert on everything? Again, he thinks Obama is great and loves Goldman Sachs. Pattern here?
I don’t think Buffett is to be listened to as a serious thinker. He seems to be a good stock picker.
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I believe in the rehabilitation of prisoners. I did not think there was anyone outside of prison intelligent enough or care enough to do it. I though prisons were just another government program that fails because that is just what government does (fails).
I do not believe Buffet did not see the derivative crisis coming. He was just protecting himself in front of congress.
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“He did after all mis out on the huge growth of Microsoft and all IT related companies because he did not UNDERSTAND them and their business methods.”
Frank, I agree with him here completely. If you don’t understand a company’s business model to it’s core, you shouldn’t be investing.
And that’s where I like gold, because it’s macroeconomic factors that push it around, all stuff I understand – but I’m also going to agree with Buffett that it’s only for trading, not long-term investment. Returns on gold have been absolutely pitiful when averaged over periods of 30+ years, it’s probably really only sensible to sink money into commodities during periods of speculative frenzy…with caution.
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