Warren Buffett Buys $5 Billion Worth Of Goldman

Warren Buffett buys $5 billion in Goldman Sachs stocks, causing a subdued “yay” to rise among investors. Is the contemporary equivalent to J.P. Morgan helping to calm the Panic of 1907 by walking onto New York Stock Exchange and buying bank stocks?

[NYT]

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  1. laserjobs says:

    Taxpayers should ask for the same deal in the bailout

  2. xsmasher says:

    Is the contemporary equivalent to J.P. Morgan helping to calm the Panic of 1907 by walking onto New York Stock Exchange and buying bank stocks?

    Yes, yes it is. It’s also the epitome of “buy low, sell high” – he’s getting in when Wall Street is running red with blood, and fear is rampant.

    The revitalized Goldman Sachs will be able to snap up assets on the cheap now, as other less fortunate firms collapse. This is a far more free-market solution than the government bailout. All we need now are a few more billionaires to play adopt-a-bank; they can cherry pick the firms that they think are salvageable, and the rest can get crushed by the press of the invisible hand.

    • mir777 says:

      @xsmasher:

      My thoughts exactly.

      • smythe says:

        @mir777:

        I’m not sure you are seeing the bigger picture. Aside from trying to make money, he is essentially saying that he believe that the stock will go up and that our economy will not crash. Then he’s backing that statement by putting his money where his mouth is $5 billions dollars worth from one of the most prominent investors around.

        We need to stop being so cynical and look at the overall message that he is sending.

    • rushevents says:

      @xsmasher: So what’s the problem with this? Why is it a bad thing for him to make money in this deal?

      If it helps Wall Street and calms the populace down I don’t care if he makes a trillion off the deal. He desrves it for taking the risk.

  3. Mfalconieri says:

    So now Berkshire’s stock will be……….1 Million dollars!!!!!!!

  4. mugsywwiii says:

    Is the contemporary equivalent to J.P. Morgan helping to calm the Panic of 1907 by walking onto New York Stock Exchange and buying bank stocks?

    It’s also the contemporary equivalent of what happened after Black Thursday in a failed attempt to prevent the Great Depression. Oh snap!

  5. Tightlines says:

    I’m surprised the Obama team doesn’t make more of the fact that one of the greatest investors ever is advising the campaign.

    • Underpants Gnome says:

      @Tightlines: That, and that McCain’s advisors, Fiorina and Whitman, are at least partially responsible for the crashing and burning of HP and EBay, respectively.

      • rushevents says:

        @Underpants Gnome: Oh it could be the fact that the financial advisor to Obama is almost entirely responsible for the downfall of Fannie Mae and will probably see prison eventually as the FBI started their probe today.

        HP & Ebay didn’t cost the taxpayer a frickin’ dime. Freddie Mac & Fannie Mae is costing us 7 TRILLION dimes.

      • papahoth says:

        @Underpants Gnome: Fiorina is gone after saying McCain and slut mother could not run a big company like she did at HP.

  6. BeeBoo says:

    $5 billion is not a truly significant investment for Berkshire Hathaway. They are sitting on a great deal of cash. The terms of the investment are such that unless Goldman Sachs becomes completely worthless, Buffett will make a good bit of money with little risk. I’m not impressed by this and I don’t think Wall Street will be, either.

  7. adamcz says:

    This is just Buffett doing what he does best. Finding great deals that provide a good return with little risk. The only risk involved is that Goldman goes bankrupt, and meanwhile Buffett is using his clout to back the bailout plan which will prevent that from happening.

    Any reports of Buffett doing this as an act of patriotism to rescue the economy are a joke – Buffett himself would tell you he has his own interests in mind and expects to make a lot of money.

  8. ironchef says:

    Goldman is an amazing bargain. Plus their exposure to mortgages is relatively low since they dumped much of their underperformers a full year before the crash.

  9. sirellyn says:

    Holy cow, will you guys recheck your history? JP Morgan was RESPONSIBLE for the crisis in 1907. He was the one who started the rumour that Knickerbocker trust was insolvent which he knew would promote a run on the bank. He swooped in to save everyone knowing that this would be cause for creating a central bank (the federal reserve) for which JP Morgan (the company, not the person anymore obviously) STILL to this day has a large share in.

    And ironically instead of fixing the a bank system where you can actually run out of money by demanding higher reserves for banks, they make one bank to rule them all. Yes PLEASE learn from history and don’t follow in those ill-begotten footsteps.

  10. Warren showing how capitalism and the market will correct itself. Kind of what conservatives believed in before Bush decided to be compassionate with Millionaires and conservative with people who need crap like healthcare.

  11. admiral_stabbin says:

    Anyone know if he had to actually buy the ice cream sundae, or was it a freebie with his $5B investment?

    • BeeBoo says:

      @admiral_stabbin: He doesn’t own Dairy Queen, the company he owns stock in and works for does. No doubt he pays for his meals; it would be out of character for him not to. My guess is he usually has the correct change and doesn’t waste napkins, either.

  12. costanza007 says:

    All he’s doing is buying Goldman shares now, so when Bank of America turns around to buy out Goldman, he can make a tidy profit by selling his at the higher price too. Subdued hoorays all around.

    • rushevents says:

      @costanza007: Again I have to ask… So What? Why should he invest a dime unless he expects to make a profit?

      • kccricket says:

        @rushevents: So far, neither of the comments you’ve replied to about this said that was a bad thing. They’re just explaining his actions in a different light.

        • rushevents says:

          @kccricket: I disagree. I think people are so used to putting down capitalism that they no longer even see it as a put down; only a “different light” as you put it.

          “So he may be saving Wall Street and maybe even the US economy… big whoop! He’s only doing it to make more evil money.”

          Those types of thoughts strongly illustrate the complete and utterly illogical contempt many have for the rich and more so their own SHOCKING ignorance of how the US economy really works.

          I know I come on strong with this issue but it is one in which I passionately believe.

  13. UdoCursor says:

    Paulson came to the government from Goldman Sach’s…. I think you can find you reason why they’ll be ok. That reminds me, anyone seen how Halliburton’s doing lately?

    • SayAhh says:

      @UdoCursor: Plus, Buffett knows that when the $700 billion (hopefully only $150 billion up front to see how Paulson will screw it up) most of it will go (back) to Goldman Sachs, making Buffett look like a genius, when all he did was buy low and sell high (and have $5 billion).

  14. papahoth says:

    And he is not leaving most of his money to his children and they don’t expect him too. He believes quite correctly that he is under taxed and that the inheritance tax is a good thing.

  15. Brontide says:

    He is actually only buying a warrant for 50 million in GS stock. If the go up he will cash in quite nicely by pocketing the difference, but if the stock goes down he could be out 5 mil

  16. SayAhh says:

    Eliminate day-trading and Michael Douglas’ “Wall Street” style greed and/or impose a tax on the selling of shares within 30/60/90 days of purchase to eliminate market speculation, whose instability is what’s causing this financial fiasco (along with other things, such as deregulating industries, privatizing government, eliminating the middle class and manipulating the market in the first place).

    • SayAhh says:

      @SayAhh: For those who say another tax will bankrupt individuals and the entire system, remember that if you DON’T sell and hold the shares of stock as intended (faith in the company–it’s called capitalism, people!) then you’ll still make money from dividends, which I don’t think should be taxed, but since they’re taxed already, we won’t have a problem there. Buying and selling petroleum is the same thing, because it’s based on speculation, not actual market conditions of supply and demand, and allowing oil companies to speculate on their own product will of course drive up the commodity’s price, which is what happened, until everybody started buying and the oil companies themselves started selling.

      Investors who buy what the radio tells them to buy are idiots. That’s why I’m never buying gold. Or oil (it’s use as gasoline is harmful to the environment, anyway). Or Halliburton stocks (on principle).

      • rushevents says:

        @SayAhh: You need to read my reply to Underpants – you sure sound like you know what you’re talking about using all those words like speculation.

        By the way you already pay THROUGH THE F’ing NOSE in cap gains for speculation profits!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1

  17. RvLeshrac says:

    I’ve said it before, and I’ll say it again: If *all* executives followed Buffett’s lead, we wouldn’t be in this mess to begin with.

    He pays himself a reasonable salary, he doesn’t invest in anything he doesn’t understand, and he doesn’t even have an Army-Surplus Parachute – if Berkshire suddenly went belly-up, or if he were canned, his severance package is the same as those of his employees.

  18. RvLeshrac says:

    Oh, while I’m on it – why are trash like Paulsen and Bernanke running the bailout when we have individuals like Buffett available – individuals who, despite their wealth, are in-tune with what the average working-class individual wants?