This Financial Times LEX column just came out and summarizes the issue very well: Buffett runs Berkshire, a company that for over 50 years has taken calculated risks better than most; he has avoided and profited from most crises including the last one; and he has written and talked extensively about excessive risk-taking, the dangers of leverage and spendthrift economic policies and so on and so forth. And yet he has been soundly ignored by most investors, CEOs, regulators and policy makers.
A note: we realise the LEX column isn’t free, but it’s worth every cent.
“He has opined on the wonders of modern capitalism but he also has been prescient about its weaknesses. Among these are perverse management incentives, deceptive accounting and a general under-appreciation of risk. More than his folksy wisdom though, the way Mr Buffett has managed Berkshire, a conglomerate in the business of taking large, calculated risks, is instructive. Even at the depth of the crisis, it was never in danger of going under and played the profitable role of backstopping companies such as Goldman Sachs and General Electric.”
(…) “In spite of fame that could send a stock soaring on mere whispers of his involvement, his entreaties on thrift, prudence and governance fell largely on deaf ears.” (…) “Anything Mr Buffett says about risky behaviour on Wednesday will have to wait for another crisis to become conventional wisdom.”