Finl data: 3q08 revenue fall 8% (mainly on insurance premium), profit fall 77% mainly due to fall in gain / loss on investment (it sold Petro China in 3q07 which recognized a huge gain of $2B) and $2.2B loss in derivative on equity index put option (sell position). During the period, its cash flow position fall by $14B, excluding huge acquisition in 08, it actually up $3B, net cash flow as of Sep 30, 08 is $33B which equal to 27.5% of total equity or 11.7% of total asset.
Issue: total equity only fall 0.5%, once again, Warren Buffet managed its portfolio well to loss 0.5% only in 2008 while S&P 500 has already dropped by 34% as of Sep 30, 08. According to Warren, he thinks the current equity market situation is good to acquire/invest even though he is not able to catch the lowest point. In Oct, Warren invested $5B in Goldman Sech at $115 & $3B in General Electric at $22.5 with 10% special dividend each. However, those 2 stocks are underwater now trading at $75 & $17.81. (Historically, if a person follow exactly of what Warren's buy/hold/sell within 6 months, that person will have an average of 20% return per year in the past 50 years - compare to 26% of what Warren making.)
Comment: price per book fall to historical lowest 1.34, very attractive from a value prospective. Given a 1.9 times historical price / book, it should worth $4900.
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