TALK BACK: Buffett Is Doing His Thing - Investing Wisely
By Daniel at 25 September, 2008, 8:03 am
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TALK BACK: Buffett Is Doing His Thing - Investing Wisely
Last Update: 9/25/2008 7:53:54 AM
The comment below responds to the following question we posed on Dow Jones
NewsPlus: Does Warren Buffett’s $5 billion investment in Goldman Sachs give you
more confidence in shares of the remaining banking companies?
Email us at TalkBackAmericas@dowjones.com.
A reader from Newport Beach, Calif. wrote:
I think it is because he sees a good investment.
The real problem is there is no logical way to value the properties today such as
housing that the market can’t handle. That doesn’t mean a house isn’t worth
anything, it is. But in a sense right now, if it can’t be sold, what is it worth?
This is a crisis of confidence with many people acting prudently -or panicking -
depending on how you look at it.
I think banks should refinance based on the value they thought the property held
when they first loaned on it. After all, they are already out the money and that
would stop foreclosures. As it is they haven’t adapted (like they did with home
loans) to the fall and are still going by the old rules, can’t refinance if there
is not enough value in the home to cover the loan.
What is the measure of that value? If this turns around, like it should because
homes are desirable and really are worth something, then he will make a bundle.
And being the great investor he is, he knows better than to try and time the
bottom. Its a great value now, he got a great deal, so he did it.
Some may ask, why doesn’t he invest in more? Well he already has a significant
amount invested and no one puts too many eggs in one basket, which he also knows.
Warren is being himself, a great investor.
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