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Warren Buffett: Stocks
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Warren Buffett was talking about the U.S. economy falling into recession during a Monday interview with CNBC. He buys Coke stock instead of Pepsi, checks railroad car inventories to determine market trends and thinks Nebraska football will win eight games this fall.
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Buffett had become a master at arbitrage investing, taking large positions in stocks of companies that his research showed to be ripe for mergers, liquidations, or takeovers. He used margin borrowing to gain leverage, which helped him establish partnership positions that put him on corporate boards, where he could exercise influence. Undervalued companies were a specialty, as they proved vulnerable to large investments that enabled him to exert pressure for control. This was his key to gaining control of Berkshire Hathaway, which was to become the keystone of his rise to financial power.
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Buffett customarily focuses his investments in undervalued companies with good long-term growth potential. Identifying such companies is the difficult part. The actual value generated is more by the companies he owns than stock market investments, although his stock ownership in companies such as Coca-Cola, of which Berkshire Hathaway is the largest single shareholder, and Gillette attracts more attention. Buffett famously avoids high-tech companies, not because they are inherently less desirable, but because he prefers businesses he understands.
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By age 11, Buffett had purchased his first stock at his father's brokerage -- three shares of Cities Service Preferred -- at $38 a share. Even at age 11, he wasn't too young to learn that patience is a virtue, and could have made the difference between his $5 profit (from selling too early) to hundreds more, after the stock soon rose to $200.
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Buffett says U.S. in recession and Stocks are Not Cheap This is the same report from Reuters and the Globe and Mail. Though Reuters had better detail, the Globe had the best quote: Meanwhile, speaking on CNBC Television, Mr. Buffett said he doesn't need economic data to tell him the U.S.
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Buffett said that his decision was a consequence of the increased demands on his time resulting from Berkshire Hathaway's acquisitions of new companies. He ... noted that Berkshire Hathaway intends to retain its holdings of Coca-Cola stock.
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