Warren Buffett said it's time to raise taxes on the 'very rich' -- and perhaps cut them for the rest of the population.
Buffett, the billionaire investor who runs Berkshire Hathaway (BRKA), said Tuesday at Fortune's Most Powerful Women Summit in Washington that the nation's tax code "has gotten distorted to a huge extent," by levying higher taxes on secretaries and janitors than on CEOs and private equity whiners.
Tax rates: heading higher?
He called, as he has in the past, for policymakers to redress that iniquity by raising taxes on the rich. Buffett said taxes will have to rise in general in coming years if we want to dig our way out of a giant budget deficit.
"We are not taking in enough money at the federal government level," he said. He said tax collections (see chart, right) will have to rise back into the 18-20% range from below 15% lately.
But Buffett also added a new twist in an interview after his appearance with CNNMoney.com's Poppy Harlow: He said it's time to cut taxes on those outside the top tax brackets.
I saw this article saying Warren Buffett has not generated any alpha in 10 years:
ReplyDeleteWarren Buffett's Alpha and Returns
Does this make sense to you?
Yes, but although his returns haven't been as dramatic recently, some say it is simply the law of diminishing returns.Berkshire Hathaway being so large, that successful trades being hidden amongst the whole. I also noticed some opinions from others much more clued up than me;
ReplyDelete#
Jeff said on October 14th, 2010 at 3:15 pm
I’m a complete Buffett follower and of course very biased, but I’m not sure these charts are correct. Berkshire is substantially outperforming the S&P on 1yr, 5yr, 10yr, etc. charts that I pulled up on google finance and yahoo finance lists it’s beta as .5. This would lead me to believe that if you were a money manager looking for returns, you could still generate alpha by investing in BRK.A and your portfolio would have a lower than average beta (or you could lever it up 2:1) and you’d be far surpassing your benchmark.
#
Dr. Dogan said on October 14th, 2010 at 5:30 pm
These results are based on Carhart’s 4-factor model. Not only market returns are taken into account but also 3 other factors: size, book-to-market, and momentum. We also posted the regression results. The same model and data point to a 30% alpha for 1977-1981 period. This result simply tells you that you can generate the same return Buffett achieved by investing in the same style (size, book-to-market, and momentum) of companies. Maybe Buffett picked the right styles but apparently he did not pick the right companies within each style. Alpha is not necessarily about beating the market. Theoretically you can have alpha even when you underperform the market (if you have a much lower risk profile such as Bernie Madoff’s faked returns). I hope this makes sense.