Why you cannot bet as Warren Buffett

I'm sure you got the news that Warren Buffett has invested billions of dollars in Goldman Sachs and GE. Have you followed his good example and bought some shares in GS and GE?

Though many critics and analysts have commented how fantastic such investments are after Warren Buffett has announced them, I have not yet taken any action. Why? Because poor guys like me simply cannot act like him. Here are the main reasons:

The terms of Buffett's investments are highly favorable. He invests in preferred shares that guarantee him 10% return each year.

In addition, he has warrants to buy shares at the current low price level within the next 3-5 years!

You can't get such terms in the market. They are almost 'principal or no-loss guaranteed'!

I am a fan of Warren Buffett but regarding the investments in GS and GE, I won't follow his buy:

As Warren Buffett has said, his investment in GS is a bet on the Bailout Plan being approved by Congress. Well, I don't like such bet and I clearly do not wish Congress to approve the bailout.

As for GE, I agree it is a great business and I had been holding some shares of GE until the turn of the stock market last year. But for guys who know GE, the share price performance of GE has been bad or very bad. Despite its profitable results in the last few years, its share price has been falling or has under-performed the index! You may be aware that Goldman Sachs was one of the analysts that had downgraded GE and given its shares a low price target.

True, GE is trading with a low PE of 12 but if you look around the market, many good stocks are trading at or below such PE! We have many other choices.

I may be wrong but I suspect that Berkshire's investments in GS and GE under the present financial crisis may be prompted by a desire to rescue the stock market. I need not tell you that after announcing his investments, the dear friends of Wall Street are very eager to call on the name Warren Buffett to lend support to their propaganda for promoting the evil Bailout Plan to swallow the toxic debts and dirts of Wall Street.

Warren Buffett may be making the investments purely based on valuation and the favorable terms offered. But clearly people at the other side are taking back lots of benefits too including the advantages for promoting the evil Bailout Plan! See Buffett does not get his favorable purchases without paying a good price! With his name behind the stocks, who is not charmed?

Now you should understand why I say poor guys like me cannot bet as Warren Buffett. There is one and only one Warren Buffett.