Thursday, September 25, 2008

Buffett and Goldmans

The FT magazine is doing a serialisation about the life of Warren Buffett and last Saturday described how the young Buffett in 1940, aged 10, was taken to Wall Street by his father and introduced to a partner of Goldman Sachs, Sidney Weinberg. Buffett's father was a local stockbroker in Omaha and in those days the stockmarket was open for a couple of hours on Saturday mornings and Buffett junior used to go into the office with his uncles and look at the share prices. When Sidney Weinberg was showing the father and son out of the Goldman offices, he leant over to Buffett Junior and asked him what was his favourite stock. Buffett was deeply impressed by this interest in his ideas and never forgot that moment. How amazing that 68 years later Warren Buffett is bailing out Goldman Sachs. Let's wait and see if this proves to be one of the best deals of his career. It was described thus by a senior Golman executive, "Warren Buffett is the gold standard. You are telling the market you are cashed up with the guy who is considered the smartest in the world. The message is you are here to stay. It is a form of cheap insurance."


Blogger kinglear said...

Yup he's bought $1 for 50 cts again in my view - he's already sitting on a profit of very nearly $500,000,000 if he takes up his rights. And, as I've argued elsewhere, he is the best smeller of a change in the market there is.
Do you know what stock he fancied when he was 10??

10:51 am  
Anonymous Anonymous said...

Interesting that this deal, which is flagging up how desperate Goldman Sachs are, that they are giving WB 10% on his preference shares, and an option to buy the same amount again in ordinary shares, on which he is ALREADY 'in the money' is STILL a good deal for GS.

In addition to WB's five billion they have immediately taken another five billion dollars from other investors as a result.

Guess it also shows the importance of being nice to people - can you imagine if Sidney Weinberg didn't like children ? Warren Buffett might never have forgotten !!

8:55 pm  
Blogger Winchester whisperer said...

Hi KL - it may have been Cities Service preferred shares which he bought for himself and his sister when he was 11. She was furious because the price dropped from $38 to $27.

Yes, Anon!

8:32 am  

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