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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.

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