In 1963, American Express found itself on the wrong end of a very big, very bad loan to a company by the name of Allied Crude Vegetable Oil. The salad oil company faked its inventory, filling its tanks with seawater and only a modest amount of oil. Because oil is less dense than water, it would float at the top, making it appear as though the company had much more oil than it actually possessed.
Allied Crude Vegetable Oil borrowed on the basis that it had 1.8 billion pounds oil, but it only had 110 million pounds. Thus, American Express and other major banks, which took on the loan under the assumption it had ample collateral, found themselves staring down the barrel of substantial loan losses.
AmEx shares fell over 40%, as the market worried that it wouldn't survive. But Buffett was ready to buy, believing that the losses were only temporary, and that American Express's brand gave it enormous value over and beyond its accounting value.
American Express wasn't your typical corporation. It was organized as a joint stock company, which gave its owners unlimited liability for its losses. If its balance sheet were impaired, shareholders could be called on to contribute more capital. (It converted into a typical corporate structure two years after the scandal.)
In the book The Snowball: Warren Buffett and the Business of Life, author Alice Schroeder writes of the event, quoting Buffett himself:
"So every trust department in the United States panicked," recalls Buffett. "I remember the Continental Bank held over 5 percent of the company, and all of a sudden not only do they see that the trust accounts were going to have stock worth zero, but they could get assessed. The stock just poured out, of course, and the market got slightly inefficient for a short period of time."
Buffett bet big on the stock, putting 40% of his partnership's assets in American Express shares. And while he had made big bets before, this wasn't his standard fare. Previously, his large bets were concentrated in companies that could be liquidated for more than their stock-market value. This wasn't the case with AmEx, which Buffett was buying at well more than two times its book value and more than 15 times its earnings.
Up until this time, Buffett had primarily invested in companies that few would recognize, companies that would never make the front pages of a local newspaper, let alone find themselves in the middle of a national scandal. The size of his American Express investment gave Buffett a huge advantage that he never had before. Schroeder wrote that "[n]ever before had he invested like this. Never had he put to work anything approaching this much money, and so fast, in his life."
Having plunged as low as $35 per share, shares rapidly advanced to $70 per share, making Buffett and his investors millions in the course of just three years. The quick double from AmEx resulted in a return twice that of the S&P 500 over the period.
One of Buffett's most famous quips is that "only when the tide goes out do you discover who's been swimming naked."
If Buffett's investment in American Express during the salad oil scandal had turned out for the worse, Buffett might have continued on as a small-cap liquidator managing a handful of money rather than the legendary investor that he is today.
Yala.. Small flu corona people running scattering away... But Hiv uncurable for 50 years dont have any restrictions at all.. This world gone mad or what. No idea.
While HIV are deadly you are exposed only if you like to play backend or like to frequent chicken house. You are very unlikely to be infected without knowingly participating.
The following is a press statement by Attorney General Tan Sri Tommy Thomas on the novel coronavirus (2019-2CoV), reproduced in full. Lies and rumour mongering on novel coronavirus 2019-nCoV
The importance of truth can never be over-emphasised. Whether in private dealings or in the public and national affairs of the state, truth is paramount. When times of epidemic or pandemic crisis occur in any society, it is critical that truthful and honest statements are issued by health authorities on a regular and prompt basis so that the millions of individuals who make up a society can themselves make informed decisions relating to their own health and safety, and that of their loved ones. No society can permit truth to be a casualty in such circumstances.
When epidemics occur, panic must be prevented among the citizenry. Instead, calmness and firmness of authority should guide the people on the origins, scale and magnitude of the epidemic. Lies about the origins, scale and magnitude of the disease must not be permitted because they endanger public safety. That rumour mongering is repugnant to common decency is most pronounced at such times in our national life. The credibility of the internet as the pre-eminent source of news and information is therefore vital.
It is against this background that as Public Prosecutor, I take very seriously the incredible volume of lies relating to the “coronavirus” epidemic gripping the attention of Malaysians, and, indeed, across the globe. Accordingly, I have decided that it is in the national interest that persons who initiate and disseminate lies on any issue relating to “coronavirus” on the internet shall be investigated, and if a case exists, be charged.
No freedom is absolute in any society at any point of time in history. The constitutionally entrenched guarantees of free speech and expression and the statutorily guaranteed right not to censor the internet stated in Section 3(3) of the Communications and Multimedia Act 1998 do not give a license to propagate lies.
Please readsThe 2 Madams in KNM i called half full.Say sell late 30 cents.There listen to investment bank and buy back at near mid 30 cents and continue buying at late 30 cents(majority of the buying).Now 25 cents.These some of my posts.But im sure that more than these 3 posts;
Michael Kwok 1000 posts Posted by Michael Kwok > Aug 5, 2019 11:52 AM | Report Abuse X(38-40 cents)
How many times I say will below 30 cent.Overbought in weekly and monthly.
Posted by Michael Kwok > Aug 29, 2019 10:43 PM | Report Abuse X (39 cent)
Sardin is wrong.Looking at revenue.If got large revenue but less profit or big losses.Sure die lah. People looking the net profit.If it's continue to grow its will up somemore.Investors should know.Got net profit then got more cash.I already say will below 30 cent.The problems now is cost,cost,cost keep rising.
KNM page. Michael Kwok Let see its can pass 40-42 cent in high volume.That the resistance.if it can pass with high volume for 2 days,then my forecast may be wrong of below 30 cent.
Stock: [KNM]: KNM GROUP BHD(44-46 cents) Oct 21, 2019 1:17 PM | Report Abuse
It's started from 6 cent to now 46 cent.Profit do not justify the valuation.Just started.Please use the head it's up almost 8 times from the low of 6 cent.
.... nvr mind just play yr self.... General Lee always buy@goreng.... Just follow........ Up dia beli down pun dia beli.......! ..... itu mungkin suatu kelebihan utk KNM... Traders suka......!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Godofgambler
5,307 posts
Posted by Godofgambler > 2020-02-04 18:46 | Report Abuse
Anytime will fly