Financial Freedom SG

Whereas our million dollars paid quasi civil servants at Temasek failed to hold their nerves and sold off their financial stocks at near the point of maximum pessimism, at near the bottom of the market, Warren Buffett the investor extraordinaire held on.

Buffett made a US$2 billion paper profit from Goldman Sachs Group preferred stock. And paper profits of US1 billion from investing in BYD.

If you look at the background of Warren Buffett, of Berkshire Hathaway, you'd understand a lot more what just happened. Buffett has been investing and honing the art of investment since he was young with experience in looking for value in companies since 1960s. Whereas the head of Temasek, Ho Ching, is first a scholar and an engineer not an investor.

Actually, the writing was already on the wall, with "spectacular misjudgment" by her in the purchase of Shin Corp by Temasek in 2006 (according to Fortune Magazine). Even before that, $340 million were blown by investing in Micropolis as Singapore Technologies CEO.

As an investor, what lessons can you learn from this episode? A CEO's or leader's track record matters. And an investor like Warren Buffett is what some people call a six-sigma event, which is at the very extreme end of a statistical table- the extremely astute end.

To top it off, this guy gets paid $200,000 a year compared to the fat cats at Citibank whose CEO's pay is $38.2 million despite losing money. At a few years ago, Buffett gave away his billions to the Gates foundation.

One of the quotes attributed to a hedge fund principal, Guy Spier, of Aquamarine Funds LLC, says it best, "When Warren Buffett says the sun shines out of somebody's backside, it's worth paying attention."

I've paid attention. Did you?

Sources:

1. http://www.bloomberg.sg/apps/news?pid=20601087&sid=aMxWXJAaHF34

2. http://online.wsj.com/article/SB124884829105889367.html

3. http://www.reuters.com/article/marketsNews/idUSN3141974420090731

4. http://www.chinadaily.com.cn/bizchina/2009-08/01/content_8502800.htm

5. http://www.bloomberg.sg/apps/news?pid=20601087&sid=amaKePJpsGCk

6.http://valuehuntr.com/2009/07/30/warren-buffetts-stake-in-chinese-electric-car-company-generates-1-billion-profit/

7. http://en.wikipedia.org/wiki/Ho_Ching

8. http://www.singapore-window.org/sw02/020624b1.htm

9.http://money.cnn.com/magazines/fortune/fortune_archive/2006/10/16/8390330/index.htm

10. http://compuserve.businessweek.com/magazine/content/02_25/b3788068.htm

11. http://projects.nytimes.com/executive_compensation?ref=business