Earthquake, Hurricane, and Warren Buffett

13 thoughts on “Earthquake, Hurricane, and Warren Buffett”

1. Thanks Jeremy

2. Adam/Jeremy,

   Any chance of posting Wednesday's show? I had to miss it because of a previous commitment?

   Thanks.

   1. Dale,

      Wednesday's show is posted on your MC homepage on the right side. It's in the member's video section. It's labeled MarketClub TV 8/24/11 with an orange picture.

      Best,
      Jeremy

3. Buffet's investment in BOA is a no-lose for him. He bought PREFERRED shares -- not common. It pays him a 6% dividend. It also means he's a preferred creditor, so if BOA goes under, he's virtually guaranteed to be paid because their assets easily cover his preferred $5 billion. And he gets paid first with the other debt holders. The holders of common shares get paid last -- if at all -- because they are owners of the company.

   He also has warrants that allow him to buy common shares at just over $7, but the warrants are just a kicker. He's already guaranteed 6% with virtually no risk. That's $300 million in a year.

   BOA, just like GE and Goldman two years ago, are leveraging off Buffet's name. Both GE and Goldman proceeded to issue more shares after the same deal with Buffet during the credit crisis. They were able to get a premium on the shares because people tend to be headline readers and all they saw was, "Buffet invests in GE/Goldman/BOA," without looking into the details of Buffet's zero-risk investment.

   Anyone who followed Buffet into the GE and Goldman deals by buying common shares is still under water two years later if they didn't sell when Goldman peaked in the $180/share range.

   Lesson here? As Jesse Livermore said a hundred years ago: "Anyone who gets their investment advice from the papers is a sucker."

4. Buffet's 5 billion is a drop in the bucket. BofA is far, far under water from derivatives, bad mortgages, and lawsuits. Five billion is a bandaid on a huge, profusely bleeding wound.

5. Mr. Buffett supposedly bought preferred shares of that bank--those have guarantees and high dividends!

   Mr. Buffett is not a stupid man.

6. Regarding BAC, on balance, it seemed like a sell-off once the stock opened up higher. There may be some good shorting opportunity here to fill the gap that was created by the announcement. Ken.

7. C'mon Warren you shoulda donated the 5 billion to Uncle Sam as he needs it and you are so under-taxed.

8. Buffet: "Buy when others are scared". Warren did not get to where he is by being stupid, he did it by research, research, research, then buying the best value for the expected return. Do any of you realize that Buffet has PROFITED AND MADE $1.4 billion on the deal, so far?

   Oh how I wish I had learned methods when I was a kid.

9. Did you recommend hsco to buy

   1. Dennis,

      At the present time our Trade Triangle technology has us in a sidelines position.

      http://club.ino.com/members/scan/analysis/?s=NASDAQ_HSCO

      Best,
      Jeremy

10. I would be more impressed if Buffet paid 5 billion
    in gold or silver for Bank of America. I guess he
    wants to get rid of his funny money while it can
    still buy something.He makes me want to barf.

11. Adam,
    There is an old saying that when bad stuff comes, it comes in bucket loads... A falling market, earthquakes and now a hurricane... Geeezzz As for Buffett, this may be one of his less than stellar moves... If I remember right, there were a number of Millionaires who stepped forward during the sell offs of 1929 and 1930 to show support for the market and they got run over by the selling.... Is it possible that the famous Mr. Buffet could have just stepped in front of an out of control freight train? Hmmm...

Comments are closed.