Buffet Biggest Bet…
In his biggest bet yet, Warren Buffet (via Berkshire Hathaway) is buying a 77% stake in Burlington Northern Santa Fe (a railroad company). Do the purchase price and long-term financials make sense? I have no clue . One assumes they do unless Warren’s lost his mind. The basic argument for rail makes sense:
- American’s buy stuff
- Stuff has to get from manufacturer to marketplace
- Pending any breakthroughs in teleportation, rail is going to be a big part of that moving stuff
So it’s an industry with a long-term future. The long-term outlook for oil and coal probably played a part investing in rail, too. But, I still have to ask…
Has Warren Lost His Mind?
This is a semi-serious question. Or is he telling the whole story?
You’ll have to judge for yourself, but the most interesting parts of the video below were not Warren’s thoughts on rail, but on the American economy.
- Does he really give the Fed an “A” or “A+” on performance?
- Does he really think the short- (5 year) and long-term future of the American economy is great?
One has to assume he knows the numbers:
- our budget deficit
- trade deficit
- national debt
- personal debt
- low savings rates
- social security, medicaid & medicare obligations
- the probable move away from pricing oil in dollars
- the collapse of many of our biggest financial and industrial companies
- And great powers with great pasts HAVE fallen (in no particular order…Rome, Venice, France, Spain, Great Britain, etc.)
Certainly the United States has overcome many challenges in the past (Warren sites WWII as an example). But the challenges–and the world in which those challenges must be met–are fundamentally different from the past.
I’m all for optimism, but for optimism to be more than wishful thinking it has to be based on something more than past successes and clever metaphors. As Peter Drucker said, “plans are only good intentions unless they immediately degenerate into hard work.” Until we see evidence of a good plan and the willingness of everyone–corporate leaders, politicians and citizens–to do the hardwork and make the hard choices required to overcome these challenges, I’ll have to take Warren’s enthusiam with a grain of salt.
Of course, that grain of salt was probably transported to me on a rail car.
