Warren E. Buffett has two cardinal rules of investing. Rule No 1: Never lose money. Rule No 2: Never forget Rule No 1.
A lot of old rules got trashed when the financial crisis struck — even for the Oracle of Omaha.
At 79, Buffett is coming off the worst year of his long career. On paper, he personally lost an estimated $25 billion in the financial panic of 2008.
And yet few people have capitalised on this crisis as deftly as Buffett. After counselling Washington to rescue the nation’s financial industry and publicly urging Americans to buy stocks, in he swooped.
Buffett invested billions in Goldman Sachs and General Electric. Goldman, American Express, Bank of America, Wells Fargo and US Bancorp — all of them got public bailouts that ultimately benefited private shareholders like Buffett.
But now he seems to be pulling back. His conglomerate, Berkshire Hathaway, is buying fewer stocks while investing in corporate and government debt.
“We are not out of problems yet,” Buffett said last week. “We have got to get the sputtering economy back so it is functioning as it should be.”
Among stocks Buffett has been selling lately is Moody’s, the granddaddy of the much-maligned credit ratings industry.
And he has served up a Buffettism that any investor might heed: Asked if anything kept him awake at night, he said not. “If it’s going to keep me awake at night,” Buffett said, “I am not going to go there.”
The New York Times