Topic: "Warren Buffett invests $6 billion in Japan's five biggest trading houses" (Read 595 times)

It could be argued as worse because the debt soft default though repaying nominal value while losing real value is borne by the Japanese citizens.   USA will see the whole world lose value for holding its debt, its partly why nobody wants to break ranks with the reserve currency because its obviously going to fall apart and lose alot of money, reset the economies they interact with.   When elected most choose to grin and bare the slow failure of sovereign default.   From what I can see the thread unwinding so that nothing holds and is inevitable in Japan or anywhere else just because economics is a study of natural phenomena not the ability gained to manipulate endlessly, ie. humans are fallible and economies are elemental.
  Anyhow the Yen and Japanese government are broke yes but Japan itself has a net trade balance but also declining demographic growth nationally.   The economy can be fixed over about 30 years but the debt will default and the currency will reset like the Rouble is equal to 10,000 of old Roubles which is default in all but name.   Soft default is when bankruptcy is not declared but no correct value is returned, so government pensions pay out but the age to claim is raised beyond life expectancy after a life time of contributions are made.   If we took a list of governments which have soft defaulted on pension plans and so chopped trillions off their obligations and debt without admitting failure, its probably more then a dozen including many of the worlds richest countries.

with a fund of $ 6 billion, if the funds were circulated in America, it would support a sluggish economy. but in fact Buffett chose to invest in Japan. so he has other plans, because America is a democracy so no one can prohibit him

Regarding the high debt-to-GDP level in Japan, there are two things to consider:

1. Most of the Japanese debt is being held by Japanese citizens. Only a very small fraction is being held by other governments and foreign citizens.
2. The interest rates on Japanese bonds remain one of the lowest in the world. Therefore the annual interest payments doesn't put a lot of burden on the government finances.

In simple words, Japan can have a higher debt to GDP ratio, because they can arrange loans at a very low interest rate and that too from their own citizens.

He .must have heard about the uk/Japan post brexit deal

WB is 90 years old now and the fund he controls is gigantic, 6bn should be a large amount but I dont think WB even decided this particular decision.   Its just about value, the gold mining firm is making such a large amount in margin profit its clear value buy.    Gold is not especially popular, its doubted because its risen so much but obviously in context this is due to the fall of the dollar standard being tied to anything fundamental and that trend is likely to continue.   So one of WB exec's made this decision and there was no great opposition as its valid risk trade with clear profit potential.   Same is probably true for Japan which has been quite unpopular at times, they have greater challenges imo but its a global economy and its possibly WB did not even use his cash but leveraged YEN which is set within QE program weakening just like dollar is likely weak vs gold in a trend of decline.

It is true that the unemployment rate in Japan is among the lowest in the world (only 2.9%), but it is also a fact that Japan has the highest debt-to-GDP ratio in the world. I would not agree that one such country can be considered "most stable and risk-free market", especially if they do not hold their destiny in their hands, but listen to the advice of others who have brought them into this situation.

But from an investor's perspective, profits can be made even in such a country, if you know where and when to invest.

There is nothing surprising with Warren's investments, he cares about money and money making money and loyalty of customers and that's about it. He finds stocks that either is undervalued compared to what the company has in assets which in today's world is not that much but back in the day there was a lot of them, let's say there is one company with 10 offices that worths 1 million dollars, but the stocks total 800k, you buy that share, obviously this could be bad example but you understand the logic.

Or you buy shares from stuff like geico which gets money from people all the time as insurance and makes profit with that money, or you invest into coca cola because let's be honest the whole world will continue to drink it. Dude actually makes very simple investments, but he does it for 20+ year plan, that is his thing.

Buffet is a great investor with an investment strategy that often anomalies the behavior of other large investors in the world. However, with his different investment strategies, Buffet has proven successful in developing his assets far beyond other stock investors. Buffett sees that investment must be made in a sector that investors truly understand to guarantee victory.

The quality of a business seen from the fundamental assets becomes the main aspect in making investment decisions and is a must. The purchase of shares is planned to invest forever, not for a moment's profit. Investment diversification is very risky, but opportunities do not come every time. Therefore, every golden opportunity must really be optimized. The stock price of a company does not represent the value of that company, so for investment, investors need to understand the company's performance. So its the reason Buffett invests in Japan.

I would agree with the last line of your post. Japan is likely to recover much faster, when compared to the other countries. Even now, the unemployment rate in Japan is much lower when compared to the other developed countries such as the United States and European Union. Japan remains the most stable and risk-free market out there for large-scale investors.

Warren Buffett has always said that he would invest in things, when other traders are running away from it. The smart thinking behind this is actually very clever, because he invest in markets when it is on a decline ...because he wants to buy at a very good price.

Before he buy anything, he looks at the "recovery potential" of that market and that is very important. Japan is basically a 1st world country with a very disciplined work force, unlike many 3rd world countries ..where corruption is rife and those markets would possibly take ages to recover after this pandemic.

He knows Japan will recover a lot quicker than most of these 3rd world markets, so his return on investment (ROI) will be much quicker.  

In the case of trading in Japan it has exported goods worth 1,012.98 million US dollars. Warren Buffett, an American citizen is recognized as one of the most successful businessmen in the world. He has been called the most successful investor of the twentieth century. Being associated with different companies the higher the amount of investment the higher the profit. In the new fiscal year Japan has invested about 1,046.28 million US dollars, which is why other countries are taking steps to join it.

In many ways, these Japanese trading companies are also well suited to billionaire investment standards Buffett. 4 out of 5 companies are trading much lower than their book value i.e. their capitalization is lower than their asset value. Some have large amounts of cash, like Mitsubishi. These companies' segments are also linked to the real economy, such as steel, shipping, cargo and retail.

It is interesting to watch him make decisions about investing money in shares of any campaign. He knows how to surprise with his decisions. I consider him a pretty wise person in this regard, because his fortune on the chart is constantly growing, just like the value of gold.

Seriously? I was thinking the opposite. Japan is the least volatile market out there and if he is investing there, that means that he is more interested in preserving his wealth rather than increasing it. Nowadays, he is not investing in blue-chip stocks. And his move away from the American stock market hints that he doesn't think that the current valuation is fair.

The older he got the more risky his investments became. I am not saying it is risky because of japan or anything, it could very well be a great investment, by all means if he did it that means it must be a good investment, however the "risky" part comes from the fact that back in the day he was a person who didn't invested into things he wasn't very well versed in, stuff like newspapers, shaving company, insurance and stuff like that were safe bets and he went with that, or even coca cola which he owns a huge lot of shares from, he invests into things he knows that are long term and profitable.

Now for the past 5 years or so he has started to invest into things he is not very well versed in for decades, he probably still studied them in depth but he hasn't studied them for decades like he did with his other investments.

Warren buffett is not an amateur business man, he is known for business per excellence, some one who is the seventh wealthiest person in the world, I believe for him to make an invest his finances into Japan's trade he must have genuine evidence of profitability, and as a matter of fact how many people here did he consulted before the made the ones he had and has he every cried to any that he lost a business before, it is too late for him to be afraid of taking such risk.

There are probably reason for this decision he made. My speculation is that this guy is a business minded person and it could be related to it that he sees huge ROI in the mining gold business he venture. Another thing is that it could be that he just wanted to live in Japan for good that is he transfer his investment or money in that country? LOL
Anyway, I agree to OP that with these big money involve it could bring down slightly the US economy. Imagine that is billion of dollars being invested outside the US, it is a huge money.

I wouldn't agree that WB has lost its sense of business, especially if you read what stompix found about this investment in Japan. Sometimes an investment does not have to bring direct or short-term profit, and all the companies you mentioned are not resilient to the changes caused by the recession, especially the helicopter money policy that could cost the United States dearly in the future.

https://bitcointalksearch.org/topic/m.55123201

Looks like the old man has lost his commonsense. He should have kept his investment with the US stocks. US technology stocks such as Google, FaceBook, Apple and Amazon have given anywhere from 50% to 100% returns, during the last 6 months. On the other hand, the Japanese stocks have remained mostly stable during the same period. He made a very bad decision this time.

Cash is king and Buffet as a real money owner understands the codes in the global economy. In Q1, Buffet released most of its shares and chose to hold cash, the goal is to have the freedom to spend in the midst of a pandemic and economic instability in many countries. Buffet invests with the aim of obtaining added value through the accumulated increase in the value of assets invested over a long period of time, even decades.
Japan is often Buffett's investment choice, in 2011, buffets also chose to invest in Japan.

Without always experiencing profits, some of Buffett's investments have resulted in losses, including when Buffett bought up shares in the oil and gas company ConocoPhillips.

All these rich dudes has been cashing out lately and also investing their money in lots of places. And to be honest, times like these are a great opportunity for these investors, whatever they are going to invest in now will be at the cheapest rate and for sure in the nearest future their value will start increasing and these guys will get even more rich, that’s just it.

Just look at Jeff Bezos becoming the first man to make $200 billion and also Mark of facebook adding more to his net worth. That’s just it, they are all making more and more money at this time. I didn’t waste my own time to invest in Bitcoin when the market crashed, because knew that times like this hardly come by, so I seized the opportunity.

Warren Buffett is not going to invest on highly volatile assets like cryptos especially bitcoin, but I will not be surprised if he invest on any crypto based growing companies because it is same as traditional investment but making on relatively new companies compared to the fiat based investment.

I think Warren is just using diversification method for his hard earned money. This man is really smart and really knows how to make his money work for him. He invests on something profitable and has a reputable name and value.

Warren is being cautious on where to invest as it is known that US had some kind of economic decline during the early times of this pandemic. Maybe he thinks that Japan has stable economy and will have economic growth more than any other countries economy that’s why he decided to entrust his money to invest in Japan’s trading houses.

This is a brilliant technique. Having multiple stream of income and different investments so that if ever unfortunate events happen to one, there are another to support him.

Sure this guy has lot of money. I do not know why he still want more when there is enough already to live even the next, next generations of his family. He is sccessful enough and prove already that he is good at investment. However, I thought of this guy do not know how to give. As I do a quick search, he actually donated his billions of $.  You can see in this link below, https://www.nytimes.com/2020/07/08/business/dealbook/warren-buffett-donations.html
Anyway, hope to see him more reaching out the poorest among the poorest of people in this world to start a living like creating livelihood for them.

stompix, you've connected some things well, but I didn't doubt that WB was doing something without careful planning - but not only him but a large number of experts he hires to give him advice on what to invest in. First investing in gas transport company and now in Japan trading houses which have LNG assets is very clever move, but as you say yourself, the WB also has failed investments that are rarely talked about.

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WB did not invest in commercial homes, but in "Japan’s five biggest trading houses", that's a pretty big difference. Japan has indeed been a major ally of the United States since the time it was forced to do so with two atomic bombs, and today there are about 50 000 U.S. troops stationed to make sure Japan doesn't change its mind - and what's even stranger is that Japan pays 75% all the costs caused by those military forces.

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fiulpro, your post is deleted because youobviously have a problem with using the quote option - it is completely unnecessary to quote the entire OP to respond to a post.

Truth. Those comments below show what were the sentiments of the people and what they're going through right now. The funny part that I've read on those comments were about the emoji's. 

What he did is just like what Japan's Softbank do with the US companies and investments that they're part of. They see both end to end investment opportunities which they think that needs funding and will make them money. Although, from what I've read from Softbank, they have a failed investment with a/some startups.

Buffet is a smart investor and his invests in Japan was not all about what he thinks about the US economy worse situation cause Japan has economy issue before the pandemic but Buffet actually sees Japan economy as an opportunity for him to make money cause Japan domestic product experienced 7.8% fall due to lack of funds as at May and the country was now analyst to do better in the coming months despite the recession.
This is the reason why he pumps his money in the top four trading companies.

What is the difference between investing in commercial homes in Japan and investing in US companies' shares? Is not Japan a strong ally of the United States, and its economy will be affected mainly by the economy of the United States?
The worst thing we can expect is an economic shock in the near term in the US market, especially after the excellent numbers of some stocks, and therefore he is investing in Japan and has not moved away much to the European Union or other countries.

You will not understand what is happening until it has occurred, and in most cases the image that the media has presented does not seem real.

Oh really? What about IBM?
He bought shares in the company starting from 2011, he also bought 2.1 billions worth of Oracle stocks before.


Seems like the move makes a lot of sense now that I started looking at some articles about his investments.
He issued yen based bonds before the pandemic, almost a year ago, and also he has tons of money, currently, over 100 billion to start purchasing things. But, the most important clue why he did that is probably other.
Remember how I said he bought a gas transport company for 10 billion, by that time I had no idea about this and how it could be related:


You don't invest in gas, oil or electricity if you're not betting on economic recovery and growth in manufacturing and demand, so probably in his mind, he's more bullish than Trump    But in the end, even if he thinks so, it doesn't mean he will be right, I think we're giving him way too much credit sometimes.

Finally we are seeing Warren Buffett branching out, it took him 90 years to be able to see other things differently but he has started doing it finally. First of all this all started when he decided that he wanted to buy shares of Apple stocks, he never really went into tech related business before and thinking how he is close friends with Bill Gates it was a shock that he bought Apple shares but he did. After that this year he has changed so much, buying gold, buying stuff he doesn't buy, and now branching out to other nations.

Japan is a great place to buy shares from because they are working to sick, it is a cultural thing, so if you buy shares from a company that is doing well, they will continue to do well until they die, failing is not an option, I have read about boss' committing suicide when they realize they are bankrupting, that is how much they care about their work.

I personally do not expect WB to ever buy BTC, but it would not be strange for him to invest in a crypto company if he estimated that it would be a good business opportunity - the world is changing and profit is profit regardless of whether it is created by investing in stocks or Bitcoin.

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WB obviously has a lot of confidence in some American companies like Apple which makes up as much as 44.18% of his total portfolio, and if I'm not mistaken, he started investing in Apple first time in 2016. I wonder what would happen if China said "Apple is no more welcome here" - it's unlikely to happen given that the number of workers working for Apple in China is around 5 million - but given that the US is doing a lot of damage to Chinese companies, the question is how long the Chinese can remain in a position not to defend themselves.

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True, I have to admit that I didn’t know about his investments in the USA recently, so I get these $6+ billion as a significant amount which it actually isn’t for him.

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Nothing unexpected when it comes to Trump, but there are definitely interesting comments below the tweet that actually show what the average American thinks - the rich get richer even more, and the poor are hoping for the next stimulus check.

He seems to be paying more attention to economies other than the US.
The Japanese have a culture that uses more of the domestic goods and they have the best selling culture in the world. It can be said that Japan can self-supply goods instead of having to import them regularly from abroad, so trade in Japan develops by itself. Another part is that Japan has a very well developed and controlled economy. I believe that Buffet was right to choose this market to invest in.

It's close to impossible that we'll see Warren Buffett investing to bitcoin or even at least stake a portion of his BH on it.

Meanwhile, the president has tweeted this as election approaches.

https://twitter.com/realDonaldTrump/status/1301249968091455488

And so this is all just a matter of not putting all your eggs in one basket, of being less dependent on US-based companies. If both countries' economic performances are indeed a factor in Buffet's decision, it might be that Japan's economy right now is a little bit more stable than the US' and that the long term outlook of Japan's market is particularly bullish.

Well, while this appears a big move, Warren is actually no stranger to the Land of the Rising Sun's market, Berkshire Hathaway being the owner of billions of USD in Japanese government bonds.^[1]

[1] https://www.forbes.com/sites/robisbitts2/2020/09/01/warren-buffett-is-buying-japan--why-you-should-consider-it-too/#134d1cd962c6

It's common sense, really. There is so much more upside in foreign equities right now. The stimulus and QE have kept a floor under the market, but ultimately American investors need to contend with a grave GDP contraction, stagnant corporate earnings, high unemployment, and bad growth prospects in the mid-term. The outlook is so much worse than elsewhere in the world.

Not only that, but both foreign developed and emerging markets have significantly under-performed compared to the US markets since the 2009 recovery. There is now much better value and growth potential in foreign markets.

Why It Might Be Time to Invest in Non-U.S. Stocks

As a matter of fact, things were already looking that way before the pandemic: Wall Street bets international stocks will top US equities in 2020 after a decade-long slump

Fair enough. He's just applying the typical investor adage "buy low, sell high" and with the current state of Nikkei 225 doing some crazy rebounds since the drop in March and low activity in April, it makes sense to just skip it out since the boat has already left and is nearing its destination. As for the trading houses though, I'm clueless on what he's thinking on investing a hefty $6bn on that facet of Japan's economy.


He still owns a lot of stocks in US companies and has even bought out some for his own reasons or whatever. Also, the US market plunging deeper and deeper means that he could buy some of these potential money makers with a huge discount without a sweat, so in the end he'd still buy some more on the US market and just try to diversify his investments outside of the US to cut losses should his gamble on the West don't work pretty well.

Warren Buffet has shown many times to have very strict investment policies which would be more of a major factor in his decision to diversify as opposed to his personal assessment of the U.S economy, in which he still holds major investments, and holds the idea that you should: 'never bet against America'
Also, world economies are more connected and synchronized now than ever before, sort of a global community. So, a global pandemic would most likely affect every country economically regardless of how well they handle the health crisis. Japan has not been left out of the economic effects of covid-19 as it is going through one of its worst economic situation;

I wouldn't say Buffett doesn't understand bitcoin completely--the man is extremely intelligent, and even if he doesn't understand exactly how bitcoin works, I'm pretty sure he knows what it is, and aside from that he's a value investor who invests in businesses (usually in the form of stocks) that are undervalued.  Bitcoin and anything crypto-related just doesn't fit his style, and I can't fault him for not wanting to break away from what he's been doing for decades.

Yeah, that's an interesting situation with MSTR and I wouldn't have predicted any big company would have purchased that much bitcoin to keep as their cash reserve.  They're really taking a risk by doing that, but their shareholders obviously don't seem to mind since MSTR's stock price has been headed upwards.  On the other hand, if there were any objections by shareholders, that could come up as an issue at their next annual meeting.

To me personally it's kind of depressing to see Warren Buffett moving money into Japan.  More often than not, he knows exactly what he's doing, and by making such large investments in those Japanese trading houses, he's demonstrating that he thinks things are going to be better over there than in the US--and probably for the long-term, since that's also how he tends to invest.  I'll be keeping my fingers crossed that the US situation doesn't deteriorate to the point where it can't be fixed.

Why would that be obvious?

Just two months ago he poured 10 billion, nearly twice as much to buy US-based companies.
Warren Buffett finally opens his wallet during the pandemic, with nearly $10 billion purchase

Then 2.1 billions in Bank of America :
https://markets.businessinsider.com/news/stocks/warren-buffett-bank-of-america-buying-years-pay-off-experts-2020-8-1029477087

If he would have been pessimistic about the US economy he would have dumped stocks, just as he did in previous years with IBM or General Electric.

This basically means he's hedging on Japan's industrial sector but he is skeptical of investing on Nikkei 225 itself. It makes sense for a guy like Buffett, because Nikkei 225 closed at one of it's lowest points almost 6 months ago on March 20th, at 16553 points. The index today is close to it's all time high that it hit several times over the last few months. He's not going to invest in something that has reached peak maturity and is poised to dip.


Well, if he was planning on selling his US stocks he would liquidate a large majority of his portfolio. His top 10 stocks by share numbers are all US companies so it looks like he'll just hold onto them during the recession. It makes no sense to sell them while they're at their lowest results.

I would have said BTC, but it is out of the picture for Warren Buffet as he considers Bitcoin a speculative asset and he doesn't understand it. But what makes the news big is that companies/corporations and billionaire individuals are investing outside the U.S/fiat economy, and even if Buffet's Berkshire Hathaway will not invest any of their assets in Bitcoin now, other firms will, when they consider moving a bit out of the U.S economy and that's good for BTC. MicroStrategy has been one of those corporations that have diversified their assets into Bitcoin this year already, with a few others. With how things are going with the pandemic, economic plunge, inflation, recession, and how companies want to invest in anti-inflationary assets, Bitcoin could have a year like never before in 2021.

After Warren Buffett surprised the business world by investing in a gold mining company (by buying a stock worth $565 million), this did not seem to be an isolated case, because as much as $6.3 billion is invested in "Japan’s five biggest trading houses".


It is now more than obvious what the WB thinks about the US economy and it is only a question of what he will sell next, and in what he will invest outside the US market. In any case, bad news for the US market, which has the worst results (in the last quarter) in the last 73 years.