Buffett making his market

As in a supermarket, Warren Buffett is doing shopping with his liquidity and assets. One of the richest man of the world has a lot of cash and he want to make more money. His theory is quite simple, he invest in what he understands, so in what people needs like food, basic products... Every broker in Wall Street should do the same, shouldn't they ?

He started to buy Constellation just before the French firm EDF which focused on its operation in Great Britain. Constellation is an energy company based in the USA. Warren Buffett known for his clever investments has taken Constelletion at a bargain price before the French energy champion. Buffett asked at a lower price than EDF but still get the bargain because the board of directors had seen the stock price collapsed in the past few days and wanted to give confidence to the investors as soon as possible. The successful investor was that white knight who could be trusted by the market not EDF. That's interesting because a company prefered a lower price just for the image of the investor whereas it could have be more profitable if they had chosen EDF.

Then, Warren Buffett who has a lot of liquidity with his firm Berkshire Hathaway invested 5 billion dollars in Goldman Sachs which is one of the most successful bank in the world. He had obtained a deal in which he is already making money at the time I am writing. This investment is even more interesting than the first one. Goldman Sachs has risen 10 billion dollars of fresh capital. Warren Buffett has obtained for those 5 billion dollars prefered shares. Goldman can call these in at any time but the bank has to pay 10% to Buffett.

However, this deal between Buffett and Goldman Sachs is a sign of emergency on the market. The Wall Street invesment bank has raised funds to confort her position on the market and to be stronger against competition. But we can ask ourselves if this sudden raise of capital is not a way to obtain liquidity which are missing ? Why pay such a price to Mr Buffett for 5 billion dollars when you are one of the most successful bank in Wall Street. I think that we do not know everything about this raise of capital but I can also be wrong.

10 billion of fresh cash!!! I hope that investments will follow this operation on the market. If not, we can predict that the crisis will make more damages in the bank sector. Because if Goldman Sachs is hurt and bites the dust, the investors will not trust the financial market for a long time.