Warren Buffett prepares to weigh in on the controversy surrounding Goldman Sachs:
I like Warren Buffett partly for his realism. His visit to GS as a ten-year old was probably the first of many impressions he got of Wall Street's amorality, avarice, and ruthlessness. That's why he's always shied away from working there himself, and why he could only stomach a short stint as Salomon's interim chairman. The finance sector is just another industry to him, to be analyzed for opportunities on its own terms. Investment bankers and traders serve a useful social function but attract personalities who range from unpleasant to uncontrollable. The end state of analysis is to determine whether this natural state of affairs leads to profitable outcomes.
This is why we must put Warren Buffett's $5B GS investment in context. His life's work is to find good investments that maximize value for his shareholders. Here's what I'd say if I were in his place at Berkshire's annual meeting.
"Fellow shareholders, I'm sticking with my bet on GS. I realize they're a vampire squid sucking the life out of our economy and all that, but that's what the financial sector has become. Of course they've bought off Washington and forestalled any meaningful regulatory reform. That's just a smart business move to protect one's franchise. They've successfully penetrated government offices at all levels with former employees who still have deferred compensation arrangements through GS. This gives them the ability to defend their competitive advantage as the world's leading investment firm."
Go for it Warren. I won't hold it against you. It's just business.
Full disclosure: No position in GS or Berkshire Hathaway at this time.
Warren Buffett, who called Goldman Sachs Group Inc. an “exceptional institution” when he invested $5 billion in the firm, will have his biggest platform to discuss the bank after it was sued for fraud by regulators and pilloried in Congress.
I like Warren Buffett partly for his realism. His visit to GS as a ten-year old was probably the first of many impressions he got of Wall Street's amorality, avarice, and ruthlessness. That's why he's always shied away from working there himself, and why he could only stomach a short stint as Salomon's interim chairman. The finance sector is just another industry to him, to be analyzed for opportunities on its own terms. Investment bankers and traders serve a useful social function but attract personalities who range from unpleasant to uncontrollable. The end state of analysis is to determine whether this natural state of affairs leads to profitable outcomes.
This is why we must put Warren Buffett's $5B GS investment in context. His life's work is to find good investments that maximize value for his shareholders. Here's what I'd say if I were in his place at Berkshire's annual meeting.
"Fellow shareholders, I'm sticking with my bet on GS. I realize they're a vampire squid sucking the life out of our economy and all that, but that's what the financial sector has become. Of course they've bought off Washington and forestalled any meaningful regulatory reform. That's just a smart business move to protect one's franchise. They've successfully penetrated government offices at all levels with former employees who still have deferred compensation arrangements through GS. This gives them the ability to defend their competitive advantage as the world's leading investment firm."
Go for it Warren. I won't hold it against you. It's just business.
Full disclosure: No position in GS or Berkshire Hathaway at this time.
