Buffett bets on Goldman Sachs

Warren Buffett, through his firm Berkshire Hathaway, has decided to invest up to $10 billion in Goldman Sachs.

Mr. Buffett, who has said before that his favorite holding period is “forever,” is sticking to this motto by purchasing $5 billion in GS’s perpetual preferred stock.  The perpetual feature just means the shares have no redemption date, so they could be held theoretically forever.  By going with preferred stock (which is generally less risky than common stock), Mr. Buffett will receive fixed dividends.

The news gave the stock a 3 -4 percent bounce, as Mr. Buffett’s vote of confidence is taken very seriously- and it should be since his bargain hunting track record boasts big results. 

I agree GS is a good long term play, but I’m doing some bargain hunting of my own and I’m not so sure we have reached the bottom just yet ;)