Buffett's Move Marks the Beginning of the End

Phoenix Capital Research's picture

However, the big story for me today is Warren Buffett’s decision to buy BAC.


For starters, Buffett didn’t even spend 24 hours studying BAC before buying it. And I can tell you point blank that no one, certainly not Buffett, has a clue about BAC’s real balance sheet risk. The mere notion of due diligence or sound investing analysis here is absurd.


Moreover, the fact Buffett plowed $3-5 billion (depending on how the deal was structured) with so little research tells you what this was: a political move, and nothing more.


Truly you can’t even really consider this an “investment” since the deal Buffett got (which no one else on the planet would get) was so rigged in his favor that he can’t help but make some money off of it (at least until BAC collapses and is nationalized… of course Buffett’s stake would be made whole in that scenario too).


But regardless of his reasoning and fiscal prudence, the mere idea that Buffett’s purchase was a positive for stocks is absurd. Buffett bought Goldman Sachs in September 2008. How’d that work out?



I know Buffett is supposedly a long-term investor. Well, here we are three years later, and anyone who followed him into GS has yet to make ANY capital gains on their purchase. In fact, nearly three years later, they’ve LOST money.


So anyone who thinks Buffett’s decision to buy BAC is a positive for the market needs to get their heads checked. Buffett bought GS right before the entire financial world imploded!!! You think he somehow timed this purchase well?


No, this was a political move. The powers that be called on THE financial figurehead for the uber-bull crowd just as they did in September 2008 and October 2008 (the time of Buffett’s “Buy America” op-ed in the New York Times).


To be sure, the whole thing smells of desperation. The fact Buffett didn’t even buy BAC on the market but got a sweetheart deal only tells you how twisted the whole thing is (if he really thought BAC was a great deal why didn’t he buy in the open market like the rest of us “high tax payers.”).


As I’ve noted before, this whole situation is beginning to mirror 2008 in an eery way. We’re seeing the same idiocy playing out happening in the US and Europe (Buffett saves the day, banning the shorting of financial stocks, etc) as we did in 2008. The only difference is this time around the Fed will be powerless to stop the collapse.


Remember, the only thing that kept the markets afloat in 2008 was the belief that the Fed could backstop the financial system. This time around, it will be clear the Fed DIDN’T save the world. And the Fed will have no bullets left, except possibly a massive QE 3 move, but given the political environment in the US (see my earlier piece on Bernanke stepping down), it’s not even clear the Fed will be able to do that.


In plain terms, I fully believe we have entered the Second Round of the Great Crisis: the Sovereign Default Round. The First Round (2008) was just a warm-up. This time around, we’re going to see entire countries go bankrupt along with stock crashes, civil unrest, food shortages, bank holidays and more.


Many people will lose everything in this mess. Yes, everything. However, you don’t have to be one of them. Indeed, my Surviving a Crisis Four Times Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor.


Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).


Best of all, this report is 100% FREE. To pick up your copy today simply go to: http://www.gainspainscapital.com and click on the OUR FREE REPORTS tab.


Good Investing!


Graham Summers


PS. We also feature four other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s my proprietary Crash Indicator which has caught every crash in the last 25 years or the best most profitable strategy for individual investors looking to profit from the upcoming US Debt Default, my reports covers it.


And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com.












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chinawholesaler's picture

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MrBoompi's picture

For what it's worth, I don't think they would ever nationalize BoA or any other TBTP.  This would be admitting something too horrible to the world.

No..what they would do is promise JPM that they would provide a few trillion interest-free so that they could "acquire" BoA, then quietly let them unload their toxic shit onto the taxpayer through Freddie/Fannie or some other goddamn method.  Of course the prefereed shareholders would ALWAYS be made whole, with Buffet now the first one in line.

Bicycle Repairman's picture

Just when you think Buffet's credibilty couldn't get lower.

AldousHuxley's picture

Buffett branding is just a first line of defense in the rescue plan.


Goldman Sachs Case Study

9/15/2008   | GS=$131 | Lehman Bros files for Ch. 11

9/16/2008 | GS=$129 | AIG bailed out

9/23/2008 | GS=$121 | Buffett buys $5B of GS @ $115/share (under market)

10/3/2008 | GS=$124 | TARP made into law 

10/28/2008  | GS=$91 | US Treasury buys $10B of GS @ $122.9/share (over market)

11/21/2008 | GS=$47.41 | low

11/24/2008 | GS=$65 | QE 1 begins; Fed buys MBS


For Banksters of America, we can expect same order of bailouts about a month apart with BAC falling 20-30% each interval:

8/25/2011 Buffett (private deal)

9/23/2011 US Treasury (federal)

10/28/2011 QE 3 (international overlord)

Smiddywesson's picture

Graham's stuff is always quick and straight to the point.  I like it.

Savyindallas's picture

Who cares? Maybe ZH gets paid by Phoenix. So what? It's really annoying to keep reading comments about  Phoenix's stock advertisement about the newsletter. I ignore the newsletter pitch. I really get annoyed at the constant waste from people commenting and complaining about it.

IQ 145's picture

Fuck the newsletter, he's a vacuous idiot; he has nothing to say.

Ruffcut's picture

Fuck, it has been the beginning of end since 2006.

Buffy is just being pumper buffy.

falak pema's picture

angry are those who are in the eye of the cyclone. 

plocequ1's picture

Fuck that. I have an angry woman breathing down my neck. Her name is Irene. Life and family won out on this one. Try again Biochezzzzzzz

dcb's picture

between this post,a dn the last one ,with the constant fear tactics, I announce you looser of the week. always the same mantra on your posts, and this headline is just as stupid

IQ 145's picture

Hi, Tyler; can't you lose this hoser? He's BAD for the tone and value of the whole blog. He's a nitwit.

Rasna's picture

I don't understand this...

Why does Phoenix Capital get so much play and page time?  It's about hyperbole, fear and buy/subscribe to my newsletter if you want to survive.  He needs a picture of Arnold with leather jacket and sun glasses, hand out stretched somewhere in the post saying "Come Vit Me If You Want to Live".

Tyler, comon man!  These posts just diminish the credibility of ZH... If PC is a sponser that's one thing, but, really these are just spam.

Smiddywesson's picture

Why does Phoenix Capital get so much play and page time?

Obviously you haven't watched the movie very closely.  Why did Norton get so much face time with Brad Pitt? 

ToNYC's picture


Content is king, mate. Go out and make some of your own...all done with the whining.

SilverDOG's picture

I'm sooo AFRAID! I read the article! MOMMY!?

Are you kidding's picture

You don't think Buffett is a shill for the government?  Really?

ToNYC's picture


What's one TBTF (BAC) to another (BRK.A) when the Fed is their friend. Only the zeros move.

The fox gets the cream, the chickens get non-fat scratch.