The clown of crypto is to meet the clown of wall street in what may well be quite an iconic ridiculous display to show how the stupid still rule the world.
Harsh, but the copy pasta master of marketing could do a lot more good with all that money than elevating for a new generation the other master of marketing.
The sucker of value, whose words towards this space have been a lot harsher than ours and that’s because the democratization of finance here threatens the “free money” dividends he gets from an amazing concentration of money into the hands of this one man.
“I’m a long-term believer (and certainly a big fan) of Buffett and his long-term value investing strategy,” says Justin Sun, Tron’s founder.
Bullshit of course, and we don’t mean that Sun is a far bigger admirer of the free publicity he bought at a very cheap cost of $4.5 million.
What is bullshit is this value investing trope that the media – much of it owned by Warren Buffett including some 30 daily papers and TV media – like to sell as the way Buffett made his wealth in a sort of: you can do it too, just buy Buffett owned stocks like Coca Cola which he partially owns.
How Buffett Really Made His Wealth
The secret to Buffett’s wealth starts first with being born rich. Son of Howard Buffett, a congressman who had an investment business, boy Buffett had the privilege of the best of both worlds: politics and business.
As the second world war was ending and the economy was to boom, Buffett goes to Wharton School at a time when very few had the privilege of going to university.
Fewer still had the privilege of the connections provided by Yale’s Alpha Sigma Phi fraternity. This boy was not just born rich, he was being groomed for the very top mainly by his father who had first carved the hard path.
Fresh out of university, with plenty of connections, many of them rich, the congressman’s son was pretty much just handed over money by what they call “partners.” Doctors, businessmen, people with plenty of savings to invest which now Buffett was managing all the way back in the 50s.
That’s another privilege, although more subtle. Nowadays you need a license, specific course training, exam passing, and all sorts of things, all tailored to managing others money, before you can do so. Back then, however, the state minded its business a bit more than nowadays.
Afforded the privilege of not having to earn a wage, flush with money by his “partners,” undoubtedly with much help from his father, Buffett created something that we hear in words, but most of us don’t quite know what it means.
Creative destruction they call it to sound more nice, but that’s usually limited to entrepreneurs, disruptors, who are creating something new and usually better, so “destroying” the old.
Buffett hasn’t quite created anything except for billions for himself. He has not invented one product, he has not even really run himself one company, but he has destroyed many by sucking their value and letting the rest burn. Here we quote Forbes at some length:
“Sanborn Map’s operating business had sharply declined in profitability in recent years due to new competition.
The company had an investment portfolio of bonds and stocks worth approximately $65 per share.
Warren Buffett was able to acquire a meaningful minority ownership in the company at a price of approximately $45 per share.
He used his large stake in the business to get on the board of directors and agitate for change, namely separating the investment portfolio from the remaining business in order to unlock the value.
Warren Buffett ended up settling with the company, with the latter agreeing to an exchange of stock for each shareholder’s share of the investment portfolio to stockholders who desired such an exchange.
This meant that shareholders who agreed to the exchange had to give up their ownership of the greatly-diminished map business, but were given a portfolio of securities worth $65 per share that they could then sell on the open market.”
He basically took their money, despite significant opposition by those who actually created value, and effectively left the rest of the company to burn.
“We will simply take the lush earnings of the business and use them to buy similar businesses elsewhere. There’s no rule that you have to invest money where you’ve earned it. Indeed, it’s often a mistake to do so,” Buffett said.
So then you repeat the above with other struggling businesses. Find what part of the business has value, take it, and let the rest burn.
Another – though a somewhat different example – is from just this year. General Motors (GM), of which Buffett’s company has some 52.4 million GM shares, made $11.8 billion in profits in 2018.
Yet this February, 1,300 workers at the GM Tech Center in Detroit were laid off, the first of 4,000 engineers, technicians, managers and other white-collar workers.
Instead of investing in advanced manufacturing, GM has bought back shares to the tune of $10 billion since 2015, so making Buffett and BlackRock even richer than they are. Not to mention the billions they get in dividends.
The trick here is somewhat simple. Get minority shareholdings of a company, and you effectively have whole ownership of the entire company because of broken corporate governance.
Now, you chop up the struggling company. You ditch all the “bad” bits into bankruptcy basically, while putting its assets into a “good” company. Then repeat.
Obviously eventually others caught on. Suddenly there were too many vultures fighting for “good” assets or as Forbes puts it in guild language: “investments available at large discounts to liquidation value were becoming more rare.”
Thus Buffett goes to exploit something a bit different: perception. That’s brand name, or intangible assets (usually copyrights, patents, trademarks and other state enforced privileges), but really he never left his first trick, he just went bigger scale.
The Modern Robber Barons
Finding a struggling business and stripping it off at a small scale was somewhat easy in the early days, but to do the same at larger scales you have to be a lot more sophisticated.
You start first with the media. A paper here and there, which of course you don’t interfere in, but you do sort of nudge em to call you the saga of omaha and to tell the public you are “value” investing.
Then, you scoop up stocks in say Goldman Sachs – 10% perpetual preferred stock at the depth of the crisis – enough of course to sort of order them around, but not be seen to do so. From that you can enjoy $1.4 million in dividends a day.
Then, or preferably before hand, make sure to have about 20% of the “perception managers” of the relevant industry. In this case, 20 percent in Moody’s Corporation.
This is of course because Moody is profitable. Nothing to do with the fact you are controlling both the rating agency – which then “pressures” other rating agencies so effectively controlling the entire industry – and the bank/s they are meant to rate.
It is only 20% anyway. The rest are not so distributed that it effectively amounts to full ownership. And of course, if anyone criticizes the rating agencies, you are completely impartial when you say as a business owner they didn’t do nothing and there’s no better alternative anyway.
At this point you are so big that of course you don’t have a finger in every pie. You don’t have congress on your hands by deciding who to give money and who to have your media parrot. You certainly don’t order pretty much all business executives to give you more and more in dividends, share buybacks, and all the rest. Obviously, you don’t lobby to protect any industry you please, such as sugar (coca cola) that is now found even in bread. And most importantly, you don’t think there is anything wrong with this statement because none in the media or politics will dare say a thing:
“I’m going to be the Osama bin Laden of capitalism. I’m on my way to an unknown destination in Asia where I’m going to look for a cave. If the U.S. Armed forces can’t find Osama bin Laden in 10 years, let Goldman Sachs try to find me.” – Buffett.
That’s highly emotional language aimed to numb rational thinking. Resist it. What he is saying is that he scooped controlling interest of the bank at utterly rock bottom prices and now he is not willing to give back such controlling interest regardless of whether it is good for the bank he does so, or the public.
In effect, he is openly stating he is a thief who doesn’t care one bit about equity, common sense, or the good of the people.
And though of course here he is using a metaphor, this is a man who has ruled primarily during the past two decades when his ownership of much of the US economy has in effect determined plenty of what has gone wrong.
His billions didn’t come from any creation of any value. His billions came from the destruction of value and from the sucking of value.
Opportunistic moments while flush with money exploited to buy effectively gold at a penny and so concentrating holdings in a way that even bankers who print money can’t dream of it for their interest is usually 5% to 10% while Buffett’s interest sucking can be 1,000% or more.
This is the man that has ruled America – with his buddies who he leads – down to the gutter of wage stagnation, licenses and barriers in every single step for new climbers, legal restrictions of pension funds and savers in general to buy only his publicly traded stocks, and though he now speaks of charity, he has uttered not one word on the current blaming of the poor for the mess he has created.
He meets with presidents, kings and queens. He owns so many companies and orders them. Much of the media. And as he says himself, he truly is “the Osama bin Laden of capitalism.”
We hope to live to your old age grandpa, and we hope to do a lot better than you have. We also hope you enjoyed it all now that time necessarily has come to leave this world.
All of that, gone is it not? Not a penny of your billions will come with you wherever you go. Yet god does have mercy and understanding. So were the times. We didn’t know. We truly thought it was right.
Eh, grandpa. Why don’t you look back now that you face days gone and tell the world, ney use your clout, for the sake of your family name because today’s media won’t be writing history and that is where is fame.