Buffet gets richer by 8 billion despite the meltdown

Warren Buffet adds $8 billion to his net worth

Forbes has released its list of the richest Americans and Warren Buffet has toppled Bill Gates to the top. But that’s not what is really interesting about this list.

It appears that he is the only one  in the list, in the top 18 billionaires, who has not lost money. The biggest loser is casino Mogul Sheldon Adelson whose casino stocks lost him more than $4 billion.

Berkshire Hathaway – Warren Buffet’s company, in fact gained 17% in the last month! The month in which the survey was conducted by Forbes.

If you look at a two month period between Aug 11 2008 and Oct 10 2008, then Berkshire Hathaway has lost 2.29% of its value.

This is about the same as most investors have lost in two and a half minutes on any trading day in the last couple of months! The Dow has been down by 28% in the same period.

Berkshire and Dow Jones

Berkshire as a safe haven

Since the stock prices do not reflect anything but buyer demand and supply for a period of time as short as a month or two, this behavior shows a couple of things beautifully.

Supply: I do not know of another stock which quotes at over a $100,000 and because of such a high price, this stock is not really as liquid as some of the other stocks. That prevents people from dumping it on the market as freely as other stocks. Although I have never heard Buffet speak about not splitting the stock as a means to protect it against a massive hammering, it seems that because of the high price not many are willing to sell the stock and it is not faring as badly as the rest of the market.

Demand: On the demand side, it appears that people who still wish to be invested in the stock market may be moving towards Berkshire as a safe haven. I would certainly think that most people view Warren Buffet as the safest bet in this market and are therefore buying his stock.

In Conclusion

If you think about it, investing lessons can be found in the darkest news and the best favor that you can do yourself is to have an open mind, even if all you have is an empty wallet.

Manshu Verma

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