Why is Buffett buying Burlington Northern? (capitalism, bni, costs, fees)

[treasurekidd]

i guess everybody is happy that berkshire's $8.23 billion of paper losses on the stock index derivatives was was down from $10.19 billion at the end of march.

Stop making stuff up. Warren Buffett and Charlie Munger are smarter, and just as importantly, more patient and disciplined, than everyone posting here in this thread, combined. I personally believe I'll be better off betting with him than betting against him. Long term, I KNOW I will be. Read this, posted today:

Berkshire Hathaway says 3Q profit triples to $3.2B - Yahoo! Finance=

"OMAHA, Neb. (AP) -- Warren Buffett's company says its third-quarter profit tripled as the improving economy and stock market boosted the value of Berkshire Hathaway Inc.'s derivative contracts.

Berkshire said Friday it generated $3.2 billion, or $2,087 per share, in net income. That's up significantly from last year's $1.1 billion, or $682 per share.

Most of the swing in earnings is related to unrealized gains in the value of Berkshire's derivatives, some of which are tied to credit defaults and some of which are tied to equity markets."

[Icy Tea]

He might have some inside info about a major oil disruption coming down the pike. Trains do move alot of freight, and coal.

[HappyTexan]

Originally Posted by Icy Tea

He might have some inside info about a major oil disruption coming down the pike. Trains do move alot of freight, and coal.

Buffet may be hedging for a number of reasons:
- oil shoots up making rail a good bet
- China trade policies are edging to rocky ground..we just upped steel tariffs big time.
- The dollar tanking and losing it's status

Rail just may be the saviour transportation mode to get goods across the US when all else fails. We know this works..just read your history books on how rail changed the US.

[sterlinggirl]

Buffet did the same thing the Chinese have been doing. He traded in a huge pile of promissory notes for a productive resource. The 23 billion dollar question is whether he bought it to make a profit or to protect himself from devaluation of the dollar.

[Century25]

This may be his oyster: Lazaro Cardenas-NAFTA Corridor-Dynamics-Laredo-NAFTA-Development, Investment and Retail Property-Homes-Lots

As for high speed 'rail' - it won't be rail that is used for rapid ground travel. Try maglev. It would be utterly stupid to begin building a 19th century type 'rail' system now. Maglev can potentially travel faster than our overcrowded & iffy airline system. The best deal would be a system of tubes with the cars floating along in a vacuum. Speeds could reach 1 mile/sec on long hauls.

[floridasandy]

Originally Posted by treasurekidd

Stop making stuff up. Warren Buffett and Charlie Munger are smarter, and just as importantly, more patient and disciplined, than everyone posting here in this thread, combined. I personally believe I'll be better off betting with him than betting against him. Long term, I KNOW I will be. Read this, posted today:

Berkshire Hathaway says 3Q profit triples to $3.2B - Yahoo! Finance=

"OMAHA, Neb. (AP) -- Warren Buffett's company says its third-quarter profit tripled as the improving economy and stock market boosted the value of Berkshire Hathaway Inc.'s derivative contracts.

Berkshire said Friday it generated $3.2 billion, or $2,087 per share, in net income. That's up significantly from last year's $1.1 billion, or $682 per share.

Most of the swing in earnings is related to unrealized gains in the value of Berkshire's derivatives, some of which are tied to credit defaults and some of which are tied to equity markets."

not making anything up; QUOTE:

Rising stocks reduced the accumulated paper losses on Berkshire's stock derivatives contracts to $8.01 billion on Sept 30 from $8.23 billion three months earlier.
The contracts mature between 2018 and 2028, and Buffett has said he expects them to be profitable.

that is assuming that the stock market keeps rising. resume the buffett love fest

[Vic_Vega]

Originally Posted by Century25

This may be his oyster: Lazaro Cardenas-NAFTA Corridor-Dynamics-Laredo-NAFTA-Development, Investment and Retail Property-Homes-Lots

Not really. When you open that up, you see a map of the Kansas City Southern Railway (KCS).

[treasurekidd]

The contracts mature between 2018 and 2028, and Buffett has said he expects them to be profitable.

Blah blah blah. What they may or may not be worth now is meaningless, and you know that. Similarly, many of the individual stocks in Berkshires portfolio may be worth less than when they purchased them (see AIB and COP), but he knows that they will be profitable in the future. That's why they bought them. Stop comparing the current price to the underlying long term value of the asset. It's called buy low and sell high - that's how succesful investing works you know.

[StoneOne]

Having done a lot of communications consulting work for rail companies - freight and passenger - overseas, as well as having ridden Europe's wonderful trains, I'm very happy to see some investment going into ours. Event if its several more generations before passenger rail takes off in America, the more freight we can get back on rail, the better we'll be - safer highways, less costly and less frequent road repairs, fuel saved, etc.

As for Warren Buffet's reasoning, I believe he was quoted after the purchase as saying something like the following: "I believe we'll make a good return. Not a great return, but a good return."

[floridasandy]

Originally Posted by treasurekidd

Blah blah blah. What they may or may not be worth now is meaningless, and you know that. Similarly, many of the individual stocks in Berkshires portfolio may be worth less than when they purchased them (see AIB and COP), but he knows that they will be profitable in the future. That's why they bought them. Stop comparing the current price to the underlying long term value of the asset. It's called buy low and sell high - that's how succesful investing works you know.

either that, or have government connections to bail you out when you make bad decisions.