Sage of Sugar Land

Buffett's Biography: Is Goldman Sachs the New Salomon Brothers?

Sorry about the typos--obviously, I meant 2016 where I typed 1916.


On Dec 28 09:58 AM Sage of Sugar Land wrote:

> Some interesting thoughts, but overall the author seems to be out
> of touch on many key points.
>
> Examples: The similarities between Salomon and GS--Warren never
> will, and will never need to, take on a role at GS that is similar
> to the one he did at Salomon. The only way Buffett will lose with
> the GS deal is if the company goes under--not impossible, but extremely
> unlikely. In the meantime he is collecting 10% interest, is assured
> return of capital (except if GS goes under), an is assured a 10%
> fee if the debt is repaid early. The warrants, if he gets to exercise
> it for a profit, is icing on the cake.
>
> Another example: his 1999 call of a sideways market until 1916 was
> brilliant indeed. But remember the SP500 was in the 1300 to 1400
> range then. In Nov 2008, with the SP500 around 750, the 1999 call
> if proven right, means a 1350 or so SP 500 in 1916--or an approximately
> 80% gain in 8 years. This is a annualized return of about 7 or 8%,
> plus a dividend of over 3% --for a cumulative return of around 10%
> for the next 8 years. Perhaps Mr. Cooper considers this inadequate.
> REMEMBER: Graham defined Investment as "an operation which, upon
> thorough analysis promises safety of capital and an adequate return"