James Pethokoukis

Politics and policy from inside Washington

A different take on Buffett’s new bet

Nov 3, 2009 19:10 UTC

Michael Mandel of BW doesn’t think the Oracle’s purchase of Burlington Northern Santa Fe should be interpreted as a positive economic sign:

Let’s take a look at what Burlington Northern carries. Its major freight revenues (as of 2008) come from coal (23% of revenues); agricultural products (20%); international intermodal shipments of consumer products, which is probably mostly imports (16%); construction and building products (14%); and petroleum products (4%).

In essence, Buffett is betting that the next ten years will look a lot like the last ten: A lot of growth in imports, construction, energy and agricultural products. If he thought that innovation was going to be the driver of the next ten years—biotech, energy, and infotech—he wouldn’t be buying Burlington Northern.

I’m not saying that Buffett is wrong. His skepticism about the tech sector in the late 1990s, and innovation in general, turned out to be right on the mark. Berkshire Hathaway stock over the past decade has risen by 84%, whil the S&P 500 is down by 18%.

But his “all-in wager on the economic future of the United States” paints a remarkably gloomy picture of where we are heading.

COMMENT

I think Buffett and GS are co-conspirators to make money by deception. Why the anouncement today ? The market was going to tank. Also GS longed Burlington couple of days ago and Buffett is in it.
Remember when he lobbied Obama to approve TARP? It was a stunt to make his holding in GS pays off.
That old fart is becoming a GS hit man.

Posted by Dr Georgy | Report as abusive

Buffett speaks …

Jun 24, 2009 16:05 UTC

Warren Buffett just did a spot on CNBC. A few bits: Buffett thinks Obama should reappoint Bernanke; he doesn’t see any green shoots; he wants Obama to slowdown on cap-and-trade and healthcare; he caledl cap-and-trade a fairly “regressive tax.” … My favorite quote: “Can’t produce a baby in one month by getting nine women pregnant.”

COMMENT

a pithy aphorism

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