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Friday Notes September 26, 2008

Posted by shaferfinancial in Uncategorized.
Tags: , , , , ,

Another week, another bank goes down.  This time it’s a big one; Washington Mutual.  Details are just coming out now but it looks like JP Morgan/Chase gets the assets/deposits so the Government doesn’t have to deplete its FDIC fund, including the bad loans.  The miniscule purchase price effectively wipes out investors and most bondholders.  JP Morgan gets a sweetheart deal on this one, picking up assets worth in the hundreds of billions, liabilities of less than 60 Billion (bad loans) for less than 2 Billion!

Warren Buffett/Berkshire Hathaway made three major moves of late using $11 Billion of its $43 Billion cash reserves!  Want to bet against him coming out of this period of time smelling like a rose?  Interesting to see if he is done yet?  Best Buffett quote, “be fearful when others are greedy and greedy when others are fearful.”

My area of Florida now has 4 months of stable real estate prices.  Will the media recognize this as a good thing?  Foreclosures still working there way through the system will keep pricing from moving upward anytime soon, but homeowners must be breathing a little sigh of relief!

From Buffett’s mentor Ben Graham, “you are neither right nor wrong because people agree with you.  Your right because your facts and reasoning are right.”  Get your facts right and practice thinking independently so you can shore up your reasoning!

Finally, whether the politicians agree on a bailout plan or not, should not change your investment strategy nor your wealth creation strategy (that is if you have one!), so don’t worry about things you have no control over!



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