CHANNER INVESTMENT MANAGEMENT
SPECIAL REPORT – NOVEMBER 2009
“It’s an all-in wager
on the economic future
of the United States”
Warren Buffett has done it again.
This is a story that every American investor needs to understand and appreciate.
11/3/2009 – NEW YORK (MarketWatch) — Warren Buffett’s Berkshire Hathaway on Tuesday said it is paying $100 a share to acquire railroad firm Burlington Northern Santa Fe. It will also take on $10 billion of Burlington Northern debt, valuing the total deal at $44 billion. Berkshire said the deal is its biggest acquisition ever.
“Our country’s future prosperity depends on its having an efficient and well-maintained rail system,” Warren Buffett said in a press release. “Conversely, America must grow and prosper for railroads to do well. He added, “Most important of all, however, it’s an all-in wager on the economic future of the United States. I love these bets.”
Yes, Buffett is bullish.
And under the circumstances, could there be better news?
Once upon a time, a very large Wall Street firm loved to say they were Bullish on America. But two things changed. First, that firm had to be merged into a bank, to save it from collapse. And second, Wall Street and the Mega-Banks have not only damaged the Country to its core, they have left many American’s wondering if our country has seen it best days. And who can blame those worried investors? The average American investor has been betrayed. It was not an event, it was non-stop greed and wrong-doing from the very people who held themselves out to be the investors’ friend. When many in corporate America stop behaving honorably, and trillions of dollars in market value are at stake, the psyche of American investors can be in need of repair.
Those who study history know that America is at a point of inflection. It is at a point where those who surrender to their feelings are not likely to be part of the solution. Rather it is those who think about problem solving and unobvious opportunity who will lead the country to its next round of success. History is a great teacher. It teaches us to not repeat the mistakes of the past. In addition, it teaches us to not underestimate the strength of America, the American spirit, and the opportunity that is born out of adversity.
We do not mean to understate the magnitude of today’s challenges. They are great, and they could have been as serious as the 30’s. Yet, they are not because we learned from our mistakes, our resources are far greater, education is everywhere, and our standard of living has given us so much to fight for. And fight is what will take us to where we want to go. In addition, one’s response to leadership is what will determine who moves forward first, and who moves last.
Buffett is the most financially successful investor ever. Yet, it is his character that should impress investors most. He lives humbly, outside of the influences of the foolish, the immature, and greed infested cultures. His greatest accomplishment is not financial wealth. It is personal character. And one of his most valuable character traits is his leadership. He is leading now, and his current wave of leadership began with his letter to investors last year (October 17, 2008) that has become famous for its instruction:
“Buy American. I Am.”
He further said (last year), “ The financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.” (So true.)
“So … I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.”
Warren’s leadership continues today. He just made his biggest investment ever. Right here in America – at the heart of American commerce and transportation. And, while we would prefer that he used less gambling rhetoric, we love his message: “It’s an all-in wager on the economic future of the United States”. His money is where his mouth is. $44 billion more on our recovery, and the future of American business.
One more point for the history fans. Great fortunes have been made in America, and many of them got started in devastating circumstances. In fact, one of our other investing heroes was John M. Templeton. He got his start buy buying stocks no one else had the courage to buy, during the most painful days of the depression. The average person thought he was nuts. He was not. He was courageous, yes, and a believer that maximum opportunity presents itself during maximum pessimism.
Charles Githler, chairman and co-founder of Intershow, the company that has produced numerous well-attended investment conferences over the last three decades, many which featured John Templeton, said that Templeton was “the consummate value hunter [who] seemed to never fade from bargains created from the crowd’s excess pessimism or just plain panic…. Buy at the point of maximum pessimism, Sir John would insist.”
THE AMERICAN INVESTING HEROES HAVE SPOKEN.
WE THINK IT IS SMART TO LISTEN.
The opinions voiced in this report are for informational purposes only and are not intended to provide specific recommendations for any individual. Consult a financial professional to determine what is appropriate for you. The information and data were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed, and the giving of the same is not deemed an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. For additional information, call 1-847-934-3800.
© 2009 – a Channer University™ Publication.
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