Tuesday, September 23, 2008


We posted last Thursay - September 18 - that the foools were panicking and fleeing the market and the shrewdies were buying (excerpt):
WHY NOT, THE PRICES ARE CHEAP! About 50 cents on the dollar.

Morgan for instance had a good quarterly report - just before crashing 50%!

Fools buy into a market which is high and sell out of one crashing.

Ya gotta do it the other way to make money!

REMEMBER: In the movie IT'S A WONDERFUL LIFE, when there as a run on the banks -and Jimmy Stewart/George Bailey had to cancel his honeymoon with Donna Reed/Mary Bailey, he implored the depositors in THE BAILY BROS BUILDING AND LOAN not to withdraw their money by telling them this: "Don't you see, Potter is BUYING; he isn't selling!"
We even posted the BANK RUN scene from It's a Wonderful Life. (It's been taken down.) here's another one:

Well, Buffett is taking our advice:
Goldman to Raise Capital, With $5 Billion From Buffett

Warren E. Buffett, the country’s most famous investor and one of the world’s richest men, announced on Tuesday that he would invest $5 billion in Goldman Sachs, the embattled Wall Street titan, in a move that could bolster confidence in the financial markets.

Until now, Mr. Buffett, who has navigated the stock market with legendary prowess, has largely refrained from investing in the stricken financial industry, saying repeatedly that things could get worse.

Thousands of people on and off Wall Street follow Mr. Buffett’s moves, so his decision to invest in Goldman immediately heartened investors. After falling nearly 1.6 percent during the day, the Standard & Poor’s 500-stock index erased half its loss in after-hours trading Tuesday evening on news of the investment.

“Buffett is saying he’s confident,” said Brad Hintz, an analyst at Sanford C. Bernstein & Company.

Mr. Buffett’s conglomerate, Berkshire Hathaway, unveiled the move only days after Goldman, long the premier investment house on Wall Street, embarked on a radical plan to transform itself into a traditional bank to ensure its survival. Goldman, which examined various options over the last week as its shares tumbled and some clients abandoned the firm, also said Tuesday it would sell at least $2.5 billion of common stock to the public.

Since credit markets tightened more than a year ago, Mr. Buffett had stayed his hand even as other investors, including government-controlled funds from the Middle East and Asia, poured money into American financial companies like Citigroup and Merrill Lynch, only to see their investments plunge in value.

Such wariness is a hallmark of Mr. Buffett’s investing style, and many on Wall Street have wondered when he might jump in. Over the last four decades, he has built Berkshire, which is based in Omaha, into one of the world’s largest and most successful insurers. Along the way, he has also assembled a stable of holdings in widely known companies like Coca-Cola and the Washington Post Company, and more recently has increased his stakes in energy concerns and railroads.

... But Goldman is a classic Buffett play: It is a blue-chip institution, with a premier brand and long, successful history, that has been beaten down in the stock market, and one that he is investing in on very favorable terms. Goldman’s share price has fallen nearly 50 percent from its peak of $247.92 less than a year ago.


Always On Watch said...

Some people are not well heeled enough to buy, though. In fact, I'd be buying except that (1) Mr. AOW lost his job in January and (2) I'm paying $1200/month in COBRA health insurance coverage. Furthermore, my tenants in my one rental property (SFH) are now not being timely with the rent, and the market for renting isn't solid. Finally, even without a mortgage payment, we're struggling now in this household.

I am also concerned as to which foreign entities are doing the buying up right now.

Reliapundit said...

yes - buy 10% of goldman's is not for everyone.

besides: it's a private/preferred sale.

my point is that while folks panic and sell smarties like buffett buy.

one day you will be able to invest more.

sooner than you think.

prayin 4 u 2!