Warren Buffett's $34 billion gamble on the US economy
Seasoned investor Warren Buffett has agreed to pay $34 billion for Burlington Northern Santa which is one of the largest railroad operators in the US. The deal is effectively a tidy-up as Buffet's Berkshire Hathaway vehicle already holds 22.6% of the business and was looking to take effective control. However, it is potentially a massive gamble on a recovery in the US economy which few investors have so far dared to take.
Despite the fact that Warren Buffett believes that the US economy is on the verge of a strong recovery, Wall Street was not so positive and the Dow Jones index fell by just over 70 points amid wider concerns about the economy. History shows us that Warren Buffett is not a man to follow the general trend of investors and has in fact made billions upon billions of dollars by "doing his own thing" and sailing against the wind.
It takes a brave investor to put down $34 billion for a company which is effectively a pure and simple play on a US recovery in the short to medium term. Whether he will be proven right remains to be seen but there are few investors who have the courage of their convictions to the same degree as Warren Buffett.
Share this..
Related stories
City of London police in alleged £50 million fund management fraud arrests
The city of London police have arrested two men in connection with allegations of a £50 million fraud committed in the heart of the UK financial sector. The raids took place on Thursday morning in London and Surrey and concluded with the arrest of a 40-year-old and a 43-year-old man. While one of the men involved remains under arrest the other has been released on bail pending further investigati...
Read MoreMoody’s Credit Agency See Negative Outlook For UK Banking
Just when the banking sector thought that the situation could not get markedly worse, it seems that the cost of credit may well increase a notch or two for many in the UK Banking sector. Moody’s, the leading credit agency, has highlighted the short to medium term risk to the UK Banking sector, citing a weakening economy and restrictions on lending to customers. They believe that this will...
Read MoreNo honey, I got it in the sales…
A quarter of people in Britain have lied to their partners about how much an item they bought cost, with men most likely to lie about gadgets and women pretending they bagged a bargain on their latest fashion purchase.According to Halifax Home Insurance, 8.5 million of us have lied at least once over the last year, knocking an average £772 of our purchases over twelve months. Eighty per cent of w...
Read MoreChildren's bank accounts attract record low interest rates
It has been revealed that the differential between a child bank account in the UK and an adult bank account has widened significantly over the term of the ongoing recession. Children's accounts are now paying as little as 0.05% (i.e. five pence on every £100 saved) while the same bank may well be paying £1.60 on each £100 saved for adult accounts.
It would appear that this differ...
UK pension funds hit by dividend downturn
As we covered in one of our earlier articles, the average UK company dividend fell by 15% during 2009 compared to 2008. Even though dividend payments still totalled £57 billion in 2009 the £10 billion shortfall compared to 2008 has and continues to hit pension funds hardest. These are investment vehicles which offer some tax advantages as well as long-term investment strategies which tend to dep...
Read More