It's a simple riddle and the answer is simple also. You'll probably kick yourself if you didn't think of it.
Riddle: Why would Warren Buffett want to play with trains?
Answer: Because he sees money in them.
Burlington Northern & Santa Fe (NYSE: BNI), Union Pacific Railroad (NYSE: UNP)
I'll keep this short and sweet because I just got off a twelve-hour shift and I have about six hours to sleep before I get back up and start all over again. Don't pity me, those are just the facts. If I don't average 50 hours a week, the credit union will come and swipe the Chevy truck off of my driveway!
Here are some of the things that I think Warren Buffett likes about the trains:
1.) Railroads are currently in a mildly depressed state business wise yet they are presenting very strong projections for the mid to long term.
2.) I believe that the American Railroad Association and members of the current Congress have a mutually held belief that railroads may expect to be well treated by government through the next presidential administration.
3.) Continuing upward pressure of fuel costs make rail transport increasingly more competitive with the trucking fleet and shall prompt more wholesale purchasing within our own continent.
4.) The rail industry has recently reported its safest year in history and it may expect reduced liability costs both within its own workforce and involving contact with the public sector.
I like trains also. As proof of that you may check out my past blog posts regarding them. While it is true that I didn't come right out and tell you to invest in the railroads, I did hope that you'd look into them.
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Reader Comments (Page 1 of 1)
4-10-2007 @ 1:18PM
Steve Schechter said...
Given the fact that Mr. Buffet has an entire floor of Lionel trains in his home should give some insights into his love of trains. Why this country doesn't have an effective train system is beyond me when Europe has such an effective continent-wide train system that works.
4-10-2007 @ 12:34PM
Michael Schneider said...
You make some good points about the rails that aren't generally being talked about- except for the energy angle which many people consider to be Warren Buffett's main reason for buying. There was a cool item in today's Tribune (and available free in the Warren Buffett section at http://www.Barrelomoney.com) by James Miller who wrote that the railroad buys are "out-of-character" for Warren Buffett since he usually buys out-of-favor stocks. Analyst Frank Holmes said in comments yesterday (also available free in the Warren Buffett section at http://www.Barrelomoney.com) that he thinks Warren Buffett is making a energy play and an emerging markets (China, India) play and a raw materials play with the investment. It's interesting how so much can be read into some moves by the Oracle of Omaha.
4-24-2007 @ 8:50PM
al evans said...
Rails are the only answer to our unsolvable freight
service. Congress including Gore has subsidized the most expensive, pollutig, deadly, taxing, freight system that one could have thought of. My letter to the local paper run today 4-18-07. If you read this please foreward as email for the good of this country so what if Warren Buffet makes money he is helping to get attention at least outside of washington.
Lobbyists can get what they want:
Lobbies power:
Truck, oil, tire, road construction & etc. control congress. Trains from Guthrie Ky. to Hopkinsville Ky. run frequently all day having to wait alternate directions. This is a very expensive & time consuming situation which probably is occurring every where. Along this US 41 you can see a truck with a large diesel motor emitting pollution with 18 tires gradually littering the roadside going about the same speed beside a train carrying maybe 20+ truck trailers plus 50 to 60 other loaded box cars emitting comparatively little pollution & causing no road damage or deaths.
It seems everyone but Washington knows that railroads are the best solution for a virtually unsolvable freight problem. Warren Buffet just bought a big interest in Rail stocks. A bridge replacement on I-75 in Ky. will cost $3b which is just a tip of the problem caused by subsidized trucks. Every one knows cars did not ruin the $3b bridge. All the congressmen in office since the Interstate was created all are at fault for subsidizing trucks.
Benefits:
1 The 5200 per year truck related deaths of men, women, & children reduced & less massive crippling.
2 The projected billions of dollar road repairs reduced:
3 Insurance costs reduced:
4 Billions barrels of oil saved:
5 Pollution from fuel emission and tire disposal reduced:
6 Global warming might be reduced.
7 Passenger services could be on time with two rail systems:
8 Dependence on oil reduced.
9 Lower freight cost with 2 way rail shipping system:
10 Auto traffic flow much better, with less detours & road repairs delays.
The elimination of lobbies & or no tax deduction for lobbies?
Al Evans 128 Sequoia Dr Clarksville, TN 37043