The Omaha Principle: The time to buy is now!
Today's Financial News - Posted September 29, 2008
When panicked investors ran for the hills and cashed out of money market funds, Warren Buffett did the only reasonable thing: He spent billions buying distressed companies at fire-sale prices. The “Omaha Principle” works for TFN readers, too…
by J. Christoph Amberger
Baltimore — (TFN):
On September 18, the Dow Jones plunged almost 450 points. Global markets were in free fall. The price of gold broke its record for the highest increase in a one-day period.
“It really does look as if the foundations of US capitalism have shattered,” declared the German news magazine Der Spiegel.
But almost unnoticed amid the chaos, good, old-fashioned capitalism was alive and kicking. In fact, it was just getting warmed up: Warren Buffett-owned subsidiary MidAmerican Energy Holdings Co. offered $4.7 billion (or $26.50 per share) for troubled power utility Constellation Energy (NYSE: CEG).
Not a bad deal for a company that was trading at almost $60 a week before.
When the bottom seemed to have fallen out of the market, Warren Buffett’s people did what capitalism is all about. They bought low.
A week later, they struck again. Buffett’s Berkshire is buying $5 billion of perpetual preferred shares of punch-drunk investment banker Goldman Sachs.
Berkshire will receive preferred stock with a 10 percent dividend that can be called at any time at a 10 percent premium. Berkshire will also receive warrants to purchase $5 billion of common stock with a strike price of $115 per share, exercisable at any time in five years.
For Buffett and a few select few with strong stomachs and even stronger nerves, the recent crash was the buying opportunity of a lifetime.
Everyone’s running scared. In some cases, with very good reason… But that doesn’t mean there aren’t some screaming bargains out there right now, including three I could name for you right now that could easily nearly double your money by the end of this year… triple every dollar invested by the end of 2009… and put as much as 1,000% gains in your account by 2011.
Building wealth is about latching on to the engines of economic growth… as an entrepreneur or investor. Like Buffett, we recommend looking for companies with excellent medium- or long-term potential.
But the approach even works in the short term. Like last week, when TFN guru Andrew Snyder recommended three lightning profit plays on beaten-down Russian stocks, netting 40.5% on Rostelcom, 33.9% on Vimpelcom, and 16.1% on Mechel… within two trading days.
And it looks like last week’s Hot Stock Confidential pick is living up to my projected 25-30% profit projection in no time flat. HSC subscribers were able to buy Web Inc. (NASDAQ:WWWW) at $5.07… and saw gains over 20% in less than a week as the stock crossed $6.20.
Related Articles:
Michael Masterson- Michael Masterson’s Real Estate Secrets for the Bear Market
Laura Cadden- Healthcare Stocks: This company is set to reclaim its share price
Andrew Snyder: Steel Industry Profits: Watch U.S. Steel (X) and Nucor (NUE)
Seth Godin- Seth Godin: “If I wasn’t already running my own business, today is the day I’d start one.”
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Next Article: Options profits: Take 35% gains on JPMorgan (JPM)
Posted by J. Christoph Amberger · Filed Under Featured Video, Podcast, US Stocks and Markets, Videos
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