Dinner With Warren Buffett (BRK, BNI, BAC, MS, GS)

Ben Stein had an opportunity to dine with Warren Buffett, the legendary Chairman of Berkshire Hathaway Inc. (NYSE: BRK). Here is an account of his conversation with Buffett.

In November 2009, Berkshire announced that it would be buying Burlington Northern Santa Fe Corporation (NYSE: BNI) for $34 billion. Buffett justified the acquisition by saying Berkshire had become so large and only a medium successful purchase like Burlington would have an effect on earnings.

Buffett noted that the economy had really been in bad shape last fall and he believes Ken Lewis, beleaguered head of Bank of America Corporation (NYSE: BAC) saved the Wall Street by buying Merrill Lynch. He added that if Merrill had failed, it would have been followed by Morgan Stanley (NYSE: MS) and Goldman Sachs (NYSE: GS). He feels Lewis essentially saved the nation from financial collapse by wildly overpaying for Merrill.

Buffett said he did not see signs of recovery in his companies. Companies involved in home and construction projects were still slow, sales of jewelry and furniture were disappointing and freight car loadings were weak. However, Buffet feels this was not a reason to doubt the stock market’s 2009 comeback.

Buffett was positive on Goldman Sachs, due to the firm's huge income and believes it will achieve bigger spreads due to so few banks available to make sizable trades. He believes Goldman is extremely good and careful about hedging.

Buffett does not see a good labor market for some time to come and thinks that for the ordinary, non-professional investor, a broad index fund still makes sense. For the professional, he advises value play.