The "Oracle of Omaha"If you ever been an investor (or not) then you have certainly heard of the "Oracle of Omaha" Warren Buffett and even perhaps his billion dollar company, Berkshire Hathaway. Buffett's personal wealth has certainly made him a legend in the annals of American finance and philanthropy. Not bad for a man who started in finance by buying his first share of stock at the age of 11 and then filing his first IRS tax return at the age of 13 (Warren deducting his bicycle as a work expense for $35).
"The banking business is no favorite of ours," Buffett wrote in his 1990 letter to Berkshire Hathaway shareholders. "When assets are twenty times equity--a common ratio in this industry--mistakes that involve only a small portion of assets can destroy a major portion of equity. And mistakes have been the rule rather than the exception at many major banks." While Buffett was referring to the S&L crisis at the time, he could easily have been discussing the current problems in the mortgage market.
Here is a very interesting article that I came across in Yahoo! Finance this week that is certainly worth a read.
