Warren E. Buffett, the billionaire investor, has a $12 billion bet against the United States. Mr. Buffett said over the weekend in an annual letter to shareholders of Berkshire Hathaway Inc., his holding company, that he began investing in foreign currency for the first time in 2002 and expanded his positions in 2003.
By the end of 2003, Berkshire Hathaway held foreign-exchange contracts valued at $12 billion that were spread among five unspecified currencies, he said in the letter, which was released on his company's Web site.
He said Berkshire also owned $1 billion of euro-denominated junk bonds. Mr. Buffett, who still has the bulk of his assets in the United States, bought into the foreign currency as the United States trade deficit swelled and enjoyed large investment gains as the dollar continued to weaken. 'As an American, I hope there is a benign ending to this problem,' Mr. Buffett wrote, referring to the trade deficit and the weaker dollar. He said, however, that the impact could reach 'well beyond currency markets.'
One Berkshire shareholder said the move was an about-face for Mr. Buffett.
'I've attended the annual meeting for well over the past 15 years, and every year until this year when asked about the dollar or foreign currency, Berkshire's basically said, 'You don't make money betting against the United States of America,' said Tom Russo, a partner at Gardner, Russo & Gardner, which owns about 1,000 Berkshire shares. 'Something must have really scared him.'
And so it begins. Seriously, about 1-2 years ago, looking at the Bush budgets, I looked for an easy way for a small investor to bet against the Bush budget. I didn't have the time or expertise to devise a strategy. Buffett is less constrained.