I Love You, Warren Buffet

Sometime around 1980, can't remember exactly, there was a flight of money from many countries to Switzerland. The clock makers had so much money pouring in that the banks took interest rates to zero and even for a period of time were actually making you pay ?% interest to them to put your money in their banks. Yes, it actually happened because people believed their money was going to be safe there. It was.

Warren Buffett recently sold some convertible debentures - about $400 million. These are bonds that can be converted into shares of stock in the same company, namely Berkshire Hathaway (BRKA). Mr. B said the money was to be used for general purposes and possible acquisitions. Their statement indicates they have plenty of money now, but Warren is very good at buying companies that are in trouble.

What Warren has done has never been done to the American investor before or at least I haven't heard of it. The bond portion of the offering only pays 3% interest. Not much, but Berkshire Hathaway has an excellent history of making money so investors would rather have 3% for sure than 5% of maybe not getting their money with another company. But here is the kicker that sets Mr. B apart from anyone else. Along with the debenture come a warrant. A warrant in this instance is like an option to buy additional shares - nothing new here. If you want to keep the warrant active you must pay Berkshire Hathaway 3 ? % interest.

The warrant is convertible into the stock of Berkshire Hathaway at a price 15% higher than the price on May 21, 2002, about $78,000. The stock has to go up to $89,700 to break even. In other words you are giving Mr. Buffet say $100,000 for which he is paying you 3%, $3,000 annually, and in turn to keep the warrant you are then paying him 3 ?%, $3,750 annually. He is using your money until the year 2007. Wow! What a deal - for him. The reason Warren can get away with this is that he has a great reputation for making money. If, and that is a big "if" in this bear market, the stock of Berkshire does go up you will be able buy it at a real bargain. That is the reason you are paying the premium. Today's Price/Earnings ratio is 101 and the S&P Index is 41. What will the P/E and price of Berkshire be if the P/E of the S&P goes to 17?

Mr. Buffett himself has said we are going to have to be very astute to make 5% in the market over the next 7 or 8 years. Any stock in a bear market is like a ship that is in the water. When the tide goes out all the boats go down. This is a bet that investors believe Warren can beat the bear. He thinks we are in for a long-term bear from which he can't help but profit because he will not have to pay off the warrants.

It is hard to believe anyone who is an astute investor would buy this; however, the offering was oversubscribed. Warren Buffet you are a genius.

Al Thomas' best selling book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter to receive his market letter for 3 months at www.mutualfundmagic.com to discover why he's the man that Wall Street does not want you to know.

Comments to al@mutualfundmagic.com

Copyright Albert W. Thomas All rights reserved.

trusted cleaning company Bannockburn ..
In The News:

Apple's iOS 26.1 update delivers major security fixes, performance boosts and enhanced privacy controls for your iPhone. Discover why updating now protects your data.
Russian hackers use fake CAPTCHA tests to spread dangerous malware targeting governments and journalists. Learn how to protect yourself from these deceptive attacks.
Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.
Miami-Dade debuts America's first autonomous police SUV with AI cameras, drone deployment and real-time crime detection in groundbreaking law enforcement pilot.
Bank impostor scams cost Americans $2.9 billion as criminals use AI voices and caller ID spoofing to steal life savings. Learn nine essential fraud protection tips.
Foreign-owned apps secretly harvest personal data from seniors, making them prime targets for scams. Learn how to protect your privacy and stop data brokers today.
Sens. Josh Hawley and Richard Blumenthal introduce bipartisan GUARD Act to protect minors from AI chatbots through mandatory age verification and disclosure requirements.
Ghost-tapping scammers exploit wireless technology to drain accounts through small transactions, but RFID-blocking wallets and transaction alerts can protect you.
French pilot project demonstrates wireless charging roads that can deliver over 300 kilowatts of power to EVs while driving, potentially eliminating range anxiety.
YouTube's Ghost Network spreads information-stealing malware through thousands of fake videos offering cracked software, using compromised accounts and fake engagement.
Protect your privacy by disabling your smart TV microphone. Most TVs have hidden mics that listen even when voice commands are off. Learn quick steps to stop unwanted audio capture.
SessionReaper vulnerability hits Magento and Adobe Commerce stores, compromising 250+ sites in one day. Hackers steal data and hijack shopping sessions.
Master essential parental controls and digital safety tools to protect your kids online. Learn screen time limits, location settings and privacy controls every parent needs.
Cybersecurity expert shares six essential steps to protect against dark web threats, including data removal services, password managers and antivirus software.
NVIDIA GPU space mission could revolutionize cloud services by enabling orbital data centers that make apps, games and AI tools faster and more efficient.
Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.
Microsoft warns Windows 10 users face serious security risks as 90% of ransomware attacks target unsupported systems. Learn why upgrading to Windows 11 is crucial.
Nike unveils Project Amplify, revolutionary motorized shoes developed with Dephy that add powered assistance to every step for runners and walkers.
Cybersecurity experts warn about one of the largest credential compilations ever found, urging users to check "Have I Been Pwned" and change passwords immediately.
Quick iPhone and Android battery optimization techniques help your device stay powered all day by turning off hidden features that secretly drain power in the background.
Kodiak Driver autonomous truck achieves perfect 98 safety score, matching top human fleets in groundbreaking AI evaluation by Nauto's VERA system.
New 401k catch-up contribution rules in 2026 will change taxes for high earners over 50. Learn how scammers exploit these changes and protect your retirement savings.
Kurt Knutsson's guide covers social media privacy protection through location settings, account privacy controls and two-factor authentication to prevent scams and data breaches.
Revolutionary retinal implant restores central vision in 80% of patients with advanced macular degeneration, offering hope where treatments once only slowed blindness.
Learn how to use passkeys on Windows and Mac computers without cameras or fingerprint readers. Discover secure authentication methods that replace passwords.

Oil Stocks As A Long Term Investment

The demand for world oil is increasing while world reserves... Read More

Trapeze Artist - Swinging with the Stock Market

When we go to the circus we see a trapeze... Read More

Discipline

One of the great "secrets" of successful people is discipline... Read More

How To Make, And Keep, Money Trading Stocks

If you are serious about making and keeping money by... Read More

The Stock Market is a Roller Coaster: Prepare for the Ups and Downs

IT'S REMINISCENT OF THE OLD children's tale about an old... Read More

Advisory News Letters

Several times each month I am solicited by various market... Read More

Patterns

The Law of Chaos is the theory of random unpredictable... Read More

A Stock Market Investment Plan that Never Lets You Down

The bulls and bears of the stock market are both... Read More

Selection Vs Direction

As I have said many times before in this column... Read More

The Three Little Pigs Went to the Stock Market

Three little pigs went to the market to stock up... Read More

Hot Stock Trader: How to Pick Momentum Stocks with Ease and Simplicity

Most stock traders know that momentum trading can be a... Read More

Series 7 Exam

What is the Series 7 Exam? If you... Read More

Diversification

Wall Street's watchword has always been diversification, but what does... Read More

Mr. Market

I constantly hear the talking heads on CNBC-TV, the radio... Read More

Political Investing

We have two candidates for president that have really different... Read More

Why This Bear?

People are constantly asking me why is the stock market... Read More

Buying Mutual Funds

It looks like the market is ready to start up... Read More

Never Lose Money

Never lose money in the stock market again. Yeah, I... Read More

What the Hell is a Stock option?

A 'stock option' is a contract between two parties giving... Read More

Big Buildings Can Mean Big Economic Disaster

AS BUILDERS BEGIN WORK ON THE FREEDOM TOWER in New... Read More

Protectionism

First let's see what protectionism is. According to Mr. Webster... Read More

Choosing A Fund

For years I have been saying you must have a... Read More

The Secret to More Winning Trades is as Simple as Avoiding This Common Mistake

If you're a normal human being, your need to feel... Read More

Perfect Storm

Having lived aboard a sailboat for 2 years I was... Read More

Does Japan Matter?

For the last 12 years we have seen the Japanese... Read More

luxury cleaning services Lake Forest ..