Buffett Buys Burlington – Intuitive Investment?

Columbia, MO – Who would of thunk it. Buffett is working on the railroad. Not Jimmy – Warren. OK, Buffett bought the railroad, the Burlington Northern, for some $26 billion and he’ll pay others to do the work. I met Buffett once… Not Warren, Jimmy.

I use to supervise the building railroad cars, covered hoppers, in West Virginia for ACF Industries, headquartered in St. Charles, Missouri. Wow! The man, who is worth more money than God and I, a poor working stuff trying to make ends meet, have something in common.

I wonder if Mr. Buffett can sing. “I’ve been working on the railroad…”

How about the Kingston Trio’s “Man on the MTA?” “Will he ever return? No he’ll never return and his fate is still unlearned…” Maybe not. That’s about Boston’s mass transit. Unless Buffett plans to buy Amtrak… 

In September 2005, PBS ran a special with Buffett and his good friend Bill Gates holding a town hall meeting with faculty and students at the University of Nebraska, Lincoln. One student asked Buffett why Berkshire Hathaway did not invest in high technology like, say, Microsoft. Buffett, the wise entrepreneur and business sage answered, without hesitation, “I do not invest in things I do not understand.” Gates laughted.

He then added something interesting. Buffett understands computers enough to use them – like me. Buffett has said that he can turn the computer on and make it work. His son could make the computer dance. His grandson had a computer growing out of his right hand.

If you take the case off a desktop computer, you will notice that 90% of what is in there is air. I believe that computers do work on magic. Sometimes the magic works. Sometimes it does not. Moreover, there is nobody out there understands or knows the how to fix the magic when things are screwed up. Something to which Buffett would be right behind me in the line of “confused.”

So what does this mean for the rural farmer of the middle of Middle America? Or the cave dwellers in the concrete canyons of Metropolis? Immediately, not much.

Do you really need to know how a computer really works? No. Nevertheless, there is a lesson to be learned here.

Berkshire Hathaway took a hit along with everyone else in the great decline of 2008. But not as big of a hit. Why?

Buffett does not look for the quick buck. He invests long-term, in stable businesses he understands. Things you can touch, smell, hear and taste. Trust me, riding in a GE Diesel-Electric locomotive while running at 60 miles-per-hour with 100-plus freight cars attached, you see, smell, hear, taste and touch things you never imagined.

Is low tech the “new black?” Maybe. Our rail system, as antiquated as it is, carries the products and energy American needs. Railroads bring the coal to power the generators to power our magic computers. Railroads make a profit and may be the first true “green” industry, transporting larger loads on less fuel.

A new high-speed passenger rail service will start to bring the U.S. up to par with Europe and Japan in terms of moving people and goods economically. Maybe Buffett is on to something here.

 I think Buffett did good. Not like old Casey Jones, “…commin’ down the mountain, doin’ 90 mile-an-hour, when his whistle broke out in a scream. They found him dead with his hand on the throttle; he was scolded to death by the steam.”

I do not hear Warren screaming. Laughing, yes, screaming, no. Buffett knows the concept of moderation and rarely is scolded by his investments.

Others, including myself, were burnt by a failed and mostly unregulated market, along with the unscrupulous purveyors of the Ponzi scheme. We were caught making investments on things we did not understand, that we could not touch, see, taste, hear or smell. We wanted quick cash from businesses you and I just did not understand. We lost our air brakes.

I miss the smell of diesel in the morning. I wonder if Warren has an extra 20 miles of track, eight straights and six curves, a GE DASH-9 DC locomotive and five or six old passenger  and freight cars to spare. How about an ACF covered hopper? You know, that would make the greatest Lionel train set ever!

About David Rosman

David Rosman is an award winning editor, writer, professional speaker and college instructor in Communications, Ethics, Business and Politics. You can read more of David’s commentaries at ColumbiaMissourian.com, InkandVoice.com and NYJournalofBooks.com.
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One Response to Buffett Buys Burlington – Intuitive Investment?

  1. Dan C says:

    I didn’t get burnt in the market. Perhaps in some retirement funds that were out of my hands, but I also advised my friends to pull out of the markets in 2006. The Ponzi scheme of the System of systems was obvious to anyone who actually looked for it, but nobody did.
    I DO understand the ‘magic’ inside of computers, down to the last mosfet and OR gate. It’s not all that complicated if you take the time to learn about it. If it was, Apple wouldn’t exist.
    Buffet was simply being nice to Gates. The reason he doesn’t invest in Microsoft is not because he doesn’t understand it, but because he knows Microsoft is another Ponzi scheme. They perform poorly as a production company, with products that are always fault-ridden and clunky, yet they have billions of dollars coming in. It is because the power of Microsoft is in marketing, not technology. Buffet understands how this is dependent on a world of cheap oil and cheap labor. Both are destined to go away soon.

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