U.S. Treasury To Invest $25bn in JPMorgan, Citi, BofA, $10bn in Goldman Sachs

It was revealed that the Treasury department announced plans to invest $25 billion each in JP Morgan, Citi, and Bank of America. Goldman Sachs is to receive $10 billion, while Bank of New York, State Street, and Wells Fargo have been set to receive undisclosed amounts at the moment.

Remember, Buffett has a stake in Wells Fargo.

Buffettology 001

I'm going to start by including snippets of what we can learn from Warren Buffett or what is currently swirling in his mind.

• It has been a month since B has emerged as a significant investor in both Goldman Sachs and GE - iconic names in the US business world.
• B's investment policy has always been to invest in specific businesses, not on the direction of the market.
• The deals that he has struck are on characteristically preferential terms (that say little about the prospects for other equity investors).
• He has a 10% coupon on a preference share, with an option to buy additional shares at a discount to the current share price (as long as his picks don't go bust).
• His unqualified success was Gillette and Salomon Brothers (1991).

In lobbying for the Paulson plan through Congress, B has made it clear that he regards the current crisis as America's "Financial Pearl Harbour", potentially the harbinger of the worst economic downturn since the 1930s.

His instinct is that the recession will be longer and deeper than most commentators think, and that meltdown in the financial system remains a real risk.

While a number of individual shares now look strikingly cheap and are likely to yield handsome returns over time, it is far from clear that the market has fully discounted the damage to corporate earnings to come.

Jonathan Davis - Independent Investor.

Stocks to Watch

I will be posting up information about stocks that I am looking at and monitoring and possibly buy for long term.

I understand the volatility in the market is enormous and personally, I think the bail out will not work. No doubt it has been put in place to cushion the impact it has made on the financial markets but still, the problem is bigger and is not contained.

Warren Buffett has made a few buys over this period and some of them include:
Goldman Sachs
Wells Fargo & Co.
American Express
Washington Post Co.

These will be interesting stocks to watch out for. I do not think we have seen a bottom as the Asian markets were crimson red on the Monday opening even though the Vote was a Yes over the weekend. I do not think we have reached the bottom yet and I see more pressure to push stocks down for a while.

I will quote W.B for today,
"If you don't know jewelry, know the jeweler."