Warren Buffett enters the market with $5 Billion for Goldman
Warren Buffett, the king of buying stocks in depressed markets has stepped up with $5 Billion to invest in Goldman Sachs. Buffett’s last big purchase of part of a financial institution came during similar economic turmoil when he purchased a hefty stake in American Express. Along with his $5 Billion purchase of preferred stock, the deal also gives Berkshire Hathaway the ability to buy an additional $5 Billion of common stock.
Warren Buffett’s investment was favored on Wall Street as the most famed and profitable investor in the world put cash into what others view as a quickly failing market. If anything the vow of confidence in the future of the market gave investors reason to avoid the negativity surrounding the market and look forward to a market turnaround.
Buffett was quick to throw a little politics into his message stating that his investment was of confidence that Congress would work with the Federal Reserve and the team of Paulson and Bernanke to give the $700 bailout package to failing banks. Buffett was approving of the bailout, something that is heard frequently on Wall Street but ordinary investors are wondering why their $2800 each should be given to the banks and not to the people themselves. The argument of trickle down and trickle up economics is coming full circle. Bailing out the people of the United States seems to be much smarter than bailing out the investment banks. Giving individuals money means that they’ll spend it on necessities and be likely to make payments on their mortgages, trickling money upward to the banks and institutions.
