NEW YORK POST: What is behind Buffett's Burlington buy

Last Updated: 12:48 AM, November 8, 2009

Posted: 12:48 AM, November 8, 2009

If anyone's reputation sur vived the financial meltdown of the past two years, it has been Warren Buffett's.<p> </p><br /> So it's no surprise that this week when Buffett's Berkshire Hathaway made its biggest investment ever -- a $34 billion purchase of Burlington Northern, the giant railroad -- the knee-jerk reaction was to conclude that the stock-market sage was putting his chips on a bright and shiny economic outlook.<p> </p><br /> Unfortunately, that faith in a roaring recovery is probably not the real reason why Buffett is putting so much of his fortune to work on the railroad. Quite the opposite.<p> </p><br /> Although the nation's second richest man called the deal "an all-in wager on the economic future of the United States" with classic Buffett bravado, his subsequent remarks about the deal cut to the heart of the matter. As Buffett later admitted, "I'd be more worried holding cash." Translation: Buffett's railroad play is really the mother of all inflation hedges, and a way to protect his billions from the plunging US dollar.<p> </p><br /> Buffett's "wager on America" is a bet that we'll be importing more and more goods from China and delivering them via his railroad. A weaker dollar will only speed up the process.<p> </p><br /> Buffett, of course, doesn't want to come right out and say his bet is against the greenback -- especially with his image all wrapped up in Omaha, apple pie, and Dairy Queen. But actions speak louder than words. Buffett has bet the house on Burlington and it will define his Berkshire Hathaway long after he is gone. It's the Oracle's biggest deal ever. So it's worth trying to divine what his new train set is really all about.<p> </p><br /> terrykeenan@email.com<p> </p><br />

Terry Keenan

If anyone's reputation sur vived the financial meltdown of the past two years, it has been Warren Buffett's.

So it's no surprise that this week when Buffett's Berkshire Hathaway made its biggest investment ever -- a $34 billion purchase of Burlington Northern, the giant railroad -- the knee-jerk reaction was to conclude that the stock-market sage was putting his chips on a bright and shiny economic outlook.

Unfortunately, that faith in a roaring recovery is probably not the real reason why Buffett is putting so much of his fortune to work on the railroad. Quite the opposite.

Although the nation's second richest man called the deal "an all-in wager on the economic future of the United States" with classic Buffett bravado, his subsequent remarks about the deal cut to the heart of the matter. As Buffett later admitted, "I'd be more worried holding cash." Translation: Buffett's railroad play is really the mother of all inflation hedges, and a way to protect his billions from the plunging US dollar.

Buffett's "wager on America" is a bet that we'll be importing more and more goods from China and delivering them via his railroad. A weaker dollar will only speed up the process.

Buffett, of course, doesn't want to come right out and say his bet is against the greenback -- especially with his image all wrapped up in Omaha, apple pie, and Dairy Queen. But actions speak louder than words. Buffett has bet the house on Burlington and it will define his Berkshire Hathaway long after he is gone. It's the Oracle's biggest deal ever. So it's worth trying to divine what his new train set is really all about.

Read more: http://www.nypost.com/p/news/business/what_is_behind_buffett_burlington_tQMWEr4oSWr0kF5g4mEnlK#ixzz0WG4VEPPh

Related Links

Share Investor Blog - Stockmarket & Business commentary
Share Investor New Zealand Business News- Get more business news
Discuss this topic @ Share Investor Forum
Share Investor's Daily Forex Updates

Recommended Amazon Reading

	The Essays of Warren Buffett: Lessons for Corporate America, Second Edition by Warren E. Buffett Buy new: $26.31 / Used from: $35.00 Usually ships in 24 hours
	The Snowball: Warren Buffett and the Business of Life by Alice Schroeder Buy new: $14.00 / Used from: $8.87 Usually ships in 24 hours

Kindle 2/Kindle DX: Amazon's New Wireless Reading Devices (Latest Generation)