Warren Buffett's railroad bet

The tycoon's decision to spend $26 billion on Burlington Northern is an "all-in" gamble. Let's hope he wins


Andrew Leonard
November 3, 2009 8:17PM (UTC)

Explaining his decision to spend $26 billion to buy the 77 percent of railroad operator Burlington Northern that Berkshire-Hathaway doesn't already own, Warren Buffett said, "Most important of all, however, it's an all-in wager on the economic future of the United States. "I love those bets."

The Wall Street Journal opines:

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Mr. Buffett's move appears to be a bet that the freight industry is poised for recovery, though it hasn't shown much of a rebound yet. The best that most rail executives have said about freight volume is that it seems to have bottomed. Mr. Buffett has said that he uses weekly railroad carload data as a proxy for the economy's health.

HTWW will henceforth add "weekly railroad carload data" to the list of economic indicators it follows. If it's good enough for Warren Buffett, it's good enough for me. But I'm a little leery of the "all-in" poker metaphor. When you decide to go "all-in" in a hand of poker, you push every last chip in your stash into the center of the table. If you win, great, you are a high roller.

But if you lose, you are done, out of the game, finished, over. Since Mr. Buffett is wagering on the "economic future of the United States," I, for one, sure hope he's not bluffing.


Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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