Warren Buffett lifts the lid on his secrets

[Sunday Times]

From The Sunday Times
September 28, 2008

Warren Buffett lifts the lid on his secrets

The world’s richest man has revealed all to his biographer.

Report by Dominic Rushe

Warren Buffett always had spectacular timing. As Wall Street burns, the billionaire investor is the hero of the hour after predicting the financial meltdown and riding to the rescue — $5 billion (£2.7 billion) in hand — of Goldman Sachs.

Tomorrow marks the release of The Snowball, the first and only, Buffett says, biography to be written with his co-operation. The book’s author is Alice Schroeder, a former analyst who spent “literally thousands” of hours with Buffett and his family.

“Invaluable” hardly describes Schroeder’s access to the world’s richest man when you consider that lunch with Buffett recently fetched $2.1m in a charity auction.

Such is Buffett’s reputation that last week, when he snapped up his stake in Goldman, the bank’s shares rose $8 as investors who had wondered if it would survive the credit crunch reacted positively.

Schroeder said: “Around the time Bear Stearns was being taken over, he talked about the domino effect to me. He said to me first Bear, then Lehman, then Merrill. He saw this coming and he talked about a crisis of a magnitude that we had not seen before.”

Where others saw chaos, Buffett saw opportunity. It has been a busy two weeks for him. The week before, one of his firms, Mid American Energy, made a $4.7 billion offer for Constellation, a rival pushed to the brink of bankruptcy by the credit crisis.

Buffett likes big brand names for his Berkshire Hathaway investment vehicle. And he likes to pay low prices for them.

The purchase of the Goldman stake was classic Buffett, waiting for a top-rated firm to fall to rock-bottom prices. It seems to be a fall he had been predicting for some time.
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http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4837164.ece

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