http://www.nytimes.com/2009/05/03/business/03buffett.html?_r=1&hp Buffett Says Bets May Cost His Company Money By REUTERS Published: May 2, 2009 OMAHA (Reuters) â Warren E. Buffett acknowledged Saturday that his company, Berkshire Hathaway, would probably lose money on some of the derivatives contracts that have prompted some analysts to speculate that the worldâs most famous investor has lost his touch. At Berkshireâs annual shareholder meeting, Mr. Buffett offered a gloomy forecast for parts of the American economy and Berkshire itself, and he said federal efforts to stimulate activity could pay off at a possible cost of higher inflation. âIt has been a very extraordinary year,â Mr. Buffett said. âWhen the American public pulls back the way they have, the government does need to step in.â He added, âIt is the right thing to do, but it wonât be a free ride.â The meeting attracted a record 35,000 people to downtown Omaha to see Mr. Buffett, the worldâs second-richest person. But it had a decidedly more serious and somber tone from years past as many investors expressed worries about the economy, Berkshireâs investments, and how long Mr. Buffett, 78, planned to stay on the job. Mr. Buffett said that housing prices had yet to stabilize broadly, that retailers may be under pressure for a âconsiderable period of time,â and that he would not buy most American newspaper companies âat any price.â He also said that in insurance, which represents about half of Berkshireâs operations, the earnings power âwas not as good last year as normalâ and âwonât be as good this year.â Mr. Buffett also said that the four candidates to succeed him as Berkshireâs chief investment officer failed to outperform the Standard & Poorâs 500-stock index last year but that he remained confident they could perform well over time. Berkshire still has three internal candidates to succeed him as chief executive. Berkshireâs stock has fallen 39 percent since December 2007. Profit last year fell 62 percent from a year earlier. Mr. Buffett said he would not buy back Berkshire stock because its price is not âdemonstrably belowâ the companyâs intrinsic value. Mr. Buffett had transformed Berkshire since 1965 from a failing textile maker into a conglomerate with close to 80 businesses that sell things like Geico car insurance, paint, ice cream and underwear. It also has tens of billions of dollars of investments. Charles T. Munger, vice chairman of Berkshire, on Saturday defended the decision by Bank of Americaâs chief executive, Kenneth D. Lewis, to complete the acquisition of Merrill Lynch and not to disclose Merrillâs mounting losses before the merger closed. âI think the Treasury people behaved honorably and intelligently, and so did Bank of America.â In addition, Mr. Buffett said that âwe were dealing with a fragile situation,â and that if Bank of America had backed away, Merrill might have suffered a fate similar to that of Lehman Brothers, which went bankrupt.