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Friday, November 06, 2009

Buffett takes a ride on the railroad

“The press seems to say,” a reader writes, “that Warren Buffett was making a statement on the recovery of the U.S. economy with the purchase of his favorite railroad. But I read a quote that he didn't know when the recovery would occur. What would a rational person with over 20 billion in U.S. cash do when the dollar is about to collapse? Buy railroads or other tangible stuff. And he thinks the cost of energy will go up radically. Sell trucking, buy rail.”

The 5: Good points. It’s also worth noting Buffett offered lots of BRK shares to complete the deal. In other words, he’s implicitly saying that the assets of the Burlington railroads have more value than the stocks in the Berkshire portfolio.

--from "Extend and Pretend, Understanding The Fed, Biometric IDs and More!" by Addison Wiggin and Ian Mathias


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