Why Buffet Never Mattered To Me, and What’s Your Time Frame?

I just want to talk some reality for a minute. If you’re one of those people that travels to Berkshire Hathaway headquarters in Omaha to hang on every word Warren speaks, you will not find value in the following. Hey, to take it a step further, if you’re a value buyer, you won’t find this useful.

I am far from an expert on Buffet, but I know when some one is bought and paid for. Today the Oracle pulled off another doozy of a deal for himself and Berkshire shareholders. He bought a ton of Bank America preferred shares with lucrative kickers and a nice interest rate. Warrants attached are always nice too. The Oracle said he got the idea while sitting in his bathtub the other night. Frankly, my visual has him with a rubber ducky while he sips his dinner through a crazy straw.

Hmm, is it fiduciarily responsible to decide to blow five billion while playing battleship in your bathtub? Buffet must have done a ton of due dilly,(he said he got the idea just the other day) as his rubber ducky invaded Normandy Beach while he made splashy sounds and bombing noises. Am I being a conspiracy theorist? Am I being a Geithner truther? Did Warren get “called for” like Pacino’s character in Donnie Brasco, by the Don in Washington again? Was it optically better for Warren to come to the rescue of $BAC  “on his own” after his bath tub epiphany, or for Timmy to have to act? Hey baby, we’ll never know now. Who says trading is boring? Grassy knolls were never my thing, but this one smells. But that’s just me.

If you topped ticked Bank of America today, I wish you well. Let’s not forget that when Buffet made the greatest deal in the history of” loan sharkery” in Sept of 2008, ( $GS) and you followed, well, look at the charts. The stock traded from $137 to about $47. Warren made a fortune. Did you?

Back in 1987, when the world at the time was coming to an end, Salomon Brothers had deep issues. Not only was the market in trouble , but Solly was fighting off an unfriendly takeover from Ron Perelman. Buffet invested $700 million, got paid a 9% coupon and was convertible at $38 after three years. The deal went through , but in 1991 Solomon was accused of breaking the Treasury bidding rules and the stock imploded. Long story short it took Buffet ten years to get his money out. His $700 million was worth about $1.7 billion, but it took a while and Solly almost went BK in the process. It ended up getting bought by Travelers which ended up getting bought by Citibank, $C . You would have lost a lot of money piggy backing Warren depending on your time frame. Again, Warren made money.

Whats my point? Everything in trading is about time frame. What is your time frame? A day, a month, a year or ten years? It’s important. Buffet will invariably make boatloads on BAC. The greatest fade of a market move I made all year was today, by shorting that rip in financials, my subscribers made about 7-9 points long FAZ, which is the ETF that shorts the financials. I posted on Twitter just after the open today the what is good for Buffet is not necessarily good for the financials as a sector. I was right and that makes me happy.

Buffet isn’t looking for a flip here, maybe you shouldn’t be either. It’s all about your time frame though.

P.S. Please don’t email about how Buffet is the greatest thing since the topsy turvy tomato grower. He may make you money, but he’s just not my style.

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