Let’s begin with something we all already knew: Warren Buffett isn’t timing the market, doesn’t think we’ve hit the bottom and has bought into an investment bank that has suddenly found itself as a part of a small oligopoly of independent financial institutions.
Market timing isn’t something Buffett does, and it certainly isn’t something he is known for. In fact, he’s known for scepticism about market timing at all. “I don’t try to time things but I do try to price things,” he told CNBC’s Becky Quick this morning.
His philosophy of buying companies that are unpopular with investors obviously attracted him to the financials firms. “Be fearful when others are greedy. Be greedy when others are fearful, ” he has famously said. Unlike many investors, Berkshire Hathaway can ignore concerns over market timing because of its size and almost cult-like dedication of it’s shareholders. Buffett can stay solvent longer than the market can stay irrational. And the terms he got for his $5 billion–a 10% dividend, a strike price on warrants well within Goldman’s recent trading range–demonstrate that Buffett knows very well how to use his greed and wealth to his advantage in a market wrought with fear.
Buffett is known as the world’s most famous fundamental investor. “I try to bet on brains,” he said this morning. So whose brains is he betting on? Buffett praised Goldman Sachs, a firm with which he has long done business with. But, in his conversation with CNBC this morning, he revealed that his investment in Goldman Sachs is driven largely by the Hanky Panke (Hank Paulson-Ben Bernanke) Bailout Plan.
“If I didn’t think the government was going to act, I would not be doing anything this week,” Buffett said.
See Also: Warren Buffett Saves The Day
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