Since I have been a shareholder of Berkshire Hathaway (NYSE: BRK.A), I have enjoyed reading with great interest the musings of company chairman Warren Buffett as he gives almost a play-by-play review of the year in his letter to shareholders. He writes in a tone I would compare to Will Rogers, the writer, actor, comedian, cowboy and former mayor of Beverly Hills.

"My pal Warren" highlights both the triumphs and disasters of the year and his own perspective of the State of the Union and the economy like only he can. I strongly recommend investors take the time to read his letter(s).

One of the most often referred to items in Buffett's letters is regarding the quality of the management at each of the companies that Berkshire owns, or has major stock holdings in. There are many shrewd investors who will make a convincing argument that the quality of management is the highest priority.

He glowingly speaks of the wisdom, integrity and hard work of his management partners. He openly states that one reason that most of Berkshire acquisitions tend to work so well is the mutual appreciation of these character traits they all share. Unlike many companies that look to make money by shaking up the management structure, Buffett bases his investment strategy on keeping the strong management that built the enterprise in place.

MAJOR PAPERS:

• A newly published report by Standard & Poor's said that the performance of organizations such as Federal National Mortgage Association (NYSE: FNM), or Fannie Mae, and Federal Home Loan Mortgage Corporation (NYSE: FRE), or Freddie Mac, could directly affect the U.S. economy and the country's credit rating, especially if they have to be rescued by the government, according to the Wall Street Journal's "Credit Markets" column.
• Seagate Technology LLC (NYSE: STX), a hard drive maker, filed a patent infringement suit in San Francisco against STEC Inc (NASDAQ: STEC) over four patents related to technology used to store data on computer chips, the Wall Street Journal reported.
• The Financial Times reported that Citigroup Incorporated (NYSE: C) is allowing private equity groups such as Apollo, The Blackstone Group LP (NYSE: BX) and TPG that are bidding for up to $12B of its leveraged loans to 'cherry-pick' from a wide range of assets with different credit ratings and prices.

WEB SITES:

• According to analysts, Reuters reported that technology industry leaders that include International Business Machines Corporation (NYSE: IBM), Oracle Corporation (NASDAQ: ORCL), Cisco Systems Inc (NASDAQ: CSCO) and Hewlett-Packard Company (NYSE: HPQ) are among the companies with large cash reserves that could be used to fund acquisitions.

MAJOR PAPERS:

• In an effort to increase sales in the Middle East, the Wall Street Journal reported that Dell Inc (NASDAQ: DELL) is in talks with a government-owned vehicle in Dubai called Tecom about establishing a joint venture.
• The Wall Street Journal also reported that Washington Mutual Incorporated (NYSE: WM), which obtained a $7B capital infusion from TPG and other investors, had reportedly been working on the TPG deal while negotiating with JP Morgan Chase & Co (NYSE: JPM), which made a preliminary takeover bid of about $7B, people familiar with the deal said.
• Citigroup Incorporated (NYSE: C) is close to reaching a deal to sell $12B in leveraged loans at a discount to a group of leading private equity firms, the Financial Times reported. Although details of the deal were still being worked out, inside sources said Apollo Management, The Blackstone Group LP (NYSE: BX) and TPG would buy the loan portfolio at a discount that could come in at about 90 cents on the dollar.

OTHER PAPERS:

• The UK Times reported that The Boeing Company (NYSE: BA) is today expected to announce that its 787 Dreamliner has been delayed by 18 months, a setback which will affect all airlines that have ordered the 787, including British Airways Plc (OTC: BAIRY) and Virgin Atlantic.

MAJOR PAPERS:

• Treasury Secretary Henry Paulson will today outline a new plan to better organize the overall bureaucracy that oversees financial markets, the Wall Street Journal reported. Paulson's new proposals include merging or eliminating all together institutions such as the SEC.
• According to people familiar with the matter, the Wall Street Journal also reported that Alphonso Jackson, the Housing and Urban Development secretary, is expected to today announce his resignation, a move which could deal a blow to the Bush administration's efforts to combat the crisis in the housing markets.
• The Financial Times reported that Bank of America Corporation (NYSE: BAC) may take its equity prime brokerage business off the market after receiving weak interest from potential bidders. People close to the situation emphasized that no final decision has been made on the unit.

WEB SITES:

• Bloomberg reported that Citigroup Incorporated (NYSE: C) will set up an independent credit card unit, according to sources. The rest of the consumer division, mainly bank branches and non-bank lending, will be divided into five regional groups, according to the inside sources.

For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

"In a perverse twist of irony, more adventurous investors could choose Citigroup (NYSE: C), which is my speculative favorite for 2008," says Keith Fitz-Gerald, editor of Money Morning.

"I recognize that you might be thinking that I've completely lost my mind. But I believe this is an opportunity to buy into one of the world's fastest growing and best run financial companies at a bargain basement price.

"First, what's causing Citi's current angst is related to a breakdown of risk management -- not the deterioration of operations. The company remains globally diversified, and many portions of its business still reflect double-digit growth rates, particularly when it comes to China and Eastern Europe.

"In my view, Citi is now trading for a pittance. In fact, it's just barely seven times earnings and eight times 2008 earnings. Yet if you add up the growth prospects and current valuations, the company reflects a value that could be as high as $60 or more a share.

TheStreet.com's Jim Cramer explains why "purchased HELOC" is the next phrase to fear.

Purchased HELOC.

Get that term into your head. Home equity loans that were purchased from other originators are the scourge of the system. Any piece of paper backed by these second liens that were issued by pure mortgage originators is just a goner.

This is the paper that was generated by Fremont General (NYSE: FMT) (Cramer's Take) and NovaStar (NYSE: NFI) (Cramer's Take) and New Century Financial and American Home Mortgage and so many of the other bankrupt and walking-dead companies. It was mostly no-documentation loans paper and served as another way to tap money that was meant to be paid back when you flipped a home. It was predicated on the continued increase in value of your home.

TheStreet.com's Jim Cramer says if any of your holdings in this sector have too much of any one kind of credit, use current market strength to sell.

Getting our arms around the problem. That's the real way we get closure on this credit problem. That's why the market was able to rally Tuesday, even though no one says the problem is getting better.

At last we're just trying to figure out how bad it can be because we know it is worse than the $42 billion that has already been charged off in subprime. By the way, even that figure, which seems staggeringly high, is only a fraction of the $250 billion minimum number I am using.

What's so maddening is that there isn't one kind of debt problem. There are three kinds of debt, with a subset for the worst kind. You have to run the gauntlet of all three kinds if you are going to be blessed by the market. And so far, only Goldman (NYSE: GS) (Cramer's Take) has done that.

TheStreet.com's Jim Cramer says that at last, we're seeing signs that there's a game plan for dealing with the mess.

We are getting there. A few of us have been predicting that before we are through with this subprime ugliness, we will have seen $500 billion lost, and that the $40 billion so far is a pittance. That number has been so outside the realm that I think it gets dismissed for being too large. If it weren't for Mike Farrell at Annaly (NYSE: NLY) (Cramer's Take), I think that I wouldn't even bother to put my number out. He's doing the same math I am doing, though, looking at the number of homes bought in 2005-2007 -- 14 million -- and recognizing that 50% of them used "affordable" mortgages, meaning mortgages they couldn't afford.

Today, Mike Mayo, a mainstream analyst from Deutsche, uses a $400 billion figure. We need a mainstreamer to come out with that number, if only because that way we wont have a "I can't believe how big it is" reaction every time some bank discloses its losses. Mike's good at being a bear when a bear is called for, and he's playing his role perfectly. He helps us solve the puzzle that is how much Citigroup (NYSE: C) (Cramer's Take) and Wachovia (NYSE: WB) (Cramer's Take) and HSBC (NYSE: HBC) (Cramer's Take) and Washington Mutual (NYSE: WM) (Cramer's Take) and JPMorgan (NYSE: JPM) (Cramer's Take) and Merrill Lynch (NYSE: MER) (Cramer's Take) and Bear (NYSE: BSC) (Cramer's Take) and Lehman (NYSE: LEH) (Cramer's Take) and UBS (NYSE: UBS) (Cramer's Take) and Credit Suisse (NYSE: CS) (Cramer's Take) and Countrywide (NYSE: CFC) (Cramer's Take) and Fannie Mae (NYSE: FNM) (Cramer's Take) and Freddie Mac (NYSE: FRE) (Cramer's Take) are really on the hook for.

Citigroup Inc. (NYSE: C) should appeal to value and income investors, according to says Nathan Slaughter. Indeed, he notes, for those who are attracted to the safety and stability of large companies, they don't come much bigger than Citigroup, a "behemoth in the banking industry." Here's his review.

Slaughter, the editor of Half-Priced Stocks, a newsletter focused on value-oriented situations, points out that Citigroup, with 200 million customers, generated more than $140 billion in revenues last year and boasts assets in excess of $1 trillion.

In fact, he notes, last year's profit of $21 billion is greater than the entire GDP of more than 100 different nations.

However, he states, "Don't make the mistake of thinking this is a lumbering giant with no growth drivers. Citi has built a vast network throughout the world's emerging markets, which helped the company increase its deposit base by an impressive +20% last year."

Further, he adds, "The company's expansive reach should fuel growth for years to come, and analysts are targeting healthy earnings growth of +10% annually over the next five years."