Not again Warren!

Loud were the cries that Mr. Buffett just didn't get what was happening in the late 1990s into 2000. He was out of touch with technology because it was "different this time." Here he goes again, missing the mark on real estate.

He doesn't understand it is a one way ticket to a life of untold riches. He doesn't understand all you have to do is "get in" because real estate only goes up. And those "interest only" LIBOR mortgages are just the ticket.

Buffett: "A lot of the psychological well being of the American public comes from how well they've done with their house over the years. If indeed there's been a bubble, and it's pricked at some point, the net effect on Berkshire might well be positive [because the company's financial strength would allow it to buy real-estate-related businesses at bargain prices]....

"Certainly at the high end of the real estate market in some areas, you've seen extraordinary movement.... People go crazy in economics periodically, in all kinds of ways. Residential housing has different behavioral characteristics, simply because people live there. But when you get prices increasing faster than the underlying costs, sometimes there can be pretty serious consequences."

Munger: "You have a real asset-price bubble in places like parts of California and the suburbs of Washington, D.C."

Buffett: "I recently sold a house in Laguna for $3.5 million. It was on about 2,000 square feet of land, maybe a twentieth of an acre, and the house might cost about $500,000 if you wanted to replace it. So the land sold for something like $60 million an acre."

Munger: "I know someone who lives next door to what you would actually call a fairly modest house that just sold for $17 million. There are some very extreme housing price bubbles going on."

The guy makes it here and he missed out on Cisco in the $60s and now acreage at roughly $60 million per. Even a blind squirrel finds a nut every now and then.