Warren Buffetts Investment in Goldman Sachs

Warren Buffett, CEO of Berkshire Hathaway, continues to use his firms enormous cash reserves to make purchases into some of the most valued, but down trodden, American companies.Buffett declared another deal this week, the first week of October, 2008: Hes purchasing 5 billion worth of perpetual preferred stock in Goldman Sachs NYSE:GS, plus an option to buy at a greatly discounted rate for the next 5 years..Buffett will get a 10 dividend and the stock is callable after three years at a 10 premium.

As arguably the worlds greatest living investor, Buffetts investment moves are always watched by the public and news media.When Buffett invests in a firm, like Goldman Sachs, its a very valuable endorsement.This time its an endorsement of not only this company but the free market system.

To determine why Buffett found this a good investment, I looked at many criteria as found in the book Buffettology, written by Buffetts former daughter-in-law, Mary Buffett and the website validea.Given Buffetts new investment in Goldman Sachs, I thought it would be worthwhile to look in detail at the common stock.

GS earns high marks based on my Buffett strategy, earning a score of 79 out of 100.Lets look at what the Buffett strategy likes about Goldman Sachs to shed some insight into one way Buffett may have looked at this investment.First off, Goldman Sachs is a large global bank holding company that engages in investment banking, securities and investment management.Goldman Sachs was founded in 1868, and is headquartered in the Lower Manhattan area of New York City at 85 Broad Street.1 Goldman Sachs has offices in most major world financial centers.

The firm acts as a financial advisor and money manager for corporations, governments, and wealthy families around the world.Goldman offers its clients mergers & acquisitions advice, underwriting services, asset management, and engages in proprietary trading, and private equity deals.It is a primary dealer in the U.S.Treasury securities market.In short, it has a "big moat", a Buffett criteria.

Thats the qualitative side of it.Now lets look at the quantitative side, which is where my Buffett model comes into play.GS has the steady, reliable earnings history that Buffett likes to see.Buffett likes companies to have solid, stable earnings that are continually expanding.This allows him to accurately predict future earnings.Annual earnings per share from earliest to most recent were 5.67, 5.57, 6.00, 4.26, 4.03, 5.87, 8.92, 11.21, 19.69, 24.73.Buffett would consider GSs earnings predictable, although earnings have declined 3 times in the past seven years, with the most recent decline 6 years ago.The dips have totaled 36.2.GSs long term historical EPS growth rate is 14.4, based on the 10 year average EPS growth rate.

Consistent profitability is not enough.In addition, Buffett likes to see a high return on equity ROE.Over the past 10 years, GS has an average annual ROE of 19.3.Thats plenty good for meeting this models 15 minimum requirement.The ROE for the last 10 years, from earliest to latest, is 37.7, 24.3, 17.5, 11.1, 10.0, 12.8, 17.1, 17.5, 22.7, 22.6, and the average ROE over the last 3 years is 20.9, thus passing this criterion.GSs management has proved it can earn shareholders 21.4 return on the earnings they kept.This return is more than acceptable to Buffett.Essentially, management is doing a great job putting the retained earnings to work.

Share buybacks are also important and GSs total shares outstanding have fallen over the last five years, although the half-billion share secondary offering on Thursday will no doubt alter that trend.

So, for the most part, the firm gets high scores on a fundamental basis, but there are two measures where it falls short.One is the Capital expenditures and another is return on assets.Both are likely to improve and Buffett has required key management to hold their shares during the time Buffett remains invested.

After the business analysis is done, he then moves onto the question, "Is the price right" Consider this: GSs stock is currently at 128, down from a high of 225 a year ago.We know that Buffett wants to invest when others are most "fearful" and at a price that gives him a reasonably good chance at making a profit over the long run.

Buffett gets a great deal with these preferred shares, but I think long-term investors may be presented with a wonderful buying opportunity here in the common shares as well.While this is a favorable piece on GS, it is more about providing you with insight into how to evaluate stocks for your own investment success.
About the Author

Dr Barry Lycka is founder of

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Choosing the Correct Debt Management Service For You

When going about choosing a debt managment service, there are probably several different questions that might be running through your mind as you endeavour to get on top of your finances. If youre able to see past the fear of being in debt, then the questions you should be asking yourself are, which companies are not scams How much are the fees Are there hidden costs How do I check out the authenticity of a debt management company Can I cancel at any time and what will my payments be What if I cant pay

Here are a few tips on how you can help keep yourself from being scammed and paying too much.

First and foremost, you should look to find any charities or government organsisations that offer debt advice for free. For example in the UK, The Citizens Advice Bureau CAB would be a good port of call. The CAB offers a phone, online and a drop-in service. The CAB is manned with helpful staff who will do what they can to advise you on your best course of action.

You can find details of the CAB in your local telephone book as well as other companies that can help you with your debt. Put together a list of potential companies that you might do business with. From here, use the internet. Type the name of the company in and look at the results. You should also look into the FCC and the BBB to see if the companies are legitimate, non-profit and complaints that have been filed against them. If you do not have the internet, the public library usually has internet connections available to the public. You may have to join the library though or take some ID with you. Check some of the consumer websites in your country and find out what others are saying about local or national debt management companies.

Debt management is not binding as is filing a bankruptcy notice. At any time you can discontinue the agreement and begin to work on your debt without any assistance. However, when you do agree begin working with a debt management company, they will begin by doing a few things for you. First, they will call your creditors and notify them of your financial hardship. From here, they will make arrangements to pay a smaller amount of money. Usually, he or she will ask for a smaller interest rate or even remove the interest rate altogether. It should be noted that the debt management company will most likely only deal with your non-priority debts. Also, most debt management companies do not give benefits advice or financial advice so you may lose out on important information about your finances. If youre fortunate enough to have a family member or a close friend who is a financial adviser then seek their advice as soon as possible.

In most situations the creditors prefer to work with the debt management companies, simply because they are more apt to make the payments on time every month. They are also more willing to lower your payments when you are working with a debt management company.

After the debt management company has completed the negotiations with your creditors, they will then give you a new monthly amount to pay. This will be a lower single payment each month. This payment goes directly to the debt management company. Usually, they require a certified check or to have an automatic withdrawal out of your bank account.
About the Author

Alexander West holds the Financial Planning Certificate. One of his passions is learning and teaching people about finances. You can read the rest of this article, and join others and join others getting on top of their finances at

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eBay Sellers: Why You Should Have an About Me, Page

Are you an eBay seller If you are looking for ways to make money from home, there is a good chance that you may be. When it comes to working from home or making money from home, one of the first places that people turn to is eBay. The only problem is that to make money on eBay, you must be a successful seller. There are a number of steps that you can take to become a successful eBay seller. One of those steps entails building an Regarding Me, page.

If you are comparatively new to merchandising on eBay, you may not comprehend anything an Around Me, page is. An About Me, page is a web content that allows you to keep in touch what that you inquired just about you, the objects that you market it, or brand of services that you provide. Due to the possibility of human being scammed on eBay, a bulky figure of eBay emptors asked to do problem along furthermore somebody that they imagine they can believe. One of the suitable, yet most well-fixed ways, to go almost developing consider is by establishing an Near to Me, page. Though it may seem simple to you, it in reality instrument a lot in the eyes of a number of eBay purchasers. And, to be a thriving eBay seller, municipal perception is the whole lot.

As it was before now referred to, if you are involved in establishing an Regarding Me, page, there is a section where you can keep in touch at all you solicited to keep in touch. If you solicit to be a prosperous eBay seller, you will requested to contribute information that you think may well be constructive to you. For case in point, if you are trading on eBay since you are a stay at dwelling house mom or dad, you may want to write that, but in a expert issue. Explaining your ambition for being an eBay seller is a excessive way to get an eBay purchaser to see you as a person, simply such as them.

If you believe yourself to be a fulltime eBay seller or if you specialize in a sure brand of variety, equivalent to teens outfit, you may desire to point out that in your personalized Regarding Me, section. In addition to the samples outlined on top of, you will similarly want to add in whatsoever in addition that you may search out helpful or something that you wonder will clutch the mind or consider of probable purchasers. Anytime evoking your own personalized Almost Me, page section, it is prime that you use your advantageous assumption. Look at it like the situation of an eBay purchaser; what on earth could you cherish to see on your own page

In addition to your own personalized section, there are a few sections that eBay routinely includes on a sellers About Me, page. One of those substance is a abstract of brand new objects obtainable for trading. For example, if you pass through a aggregate of auctions lately going, those auctions will be summarized on your Almost Me, page, for each person to see. All guests are provided along furthermore a link to the auction register, the fresh highest bidding price, as at any rate as a shortest description of what is currently close by for sale. In a way, inducing an Close to Me, page may in addition add to your coincidences of achieving a sale, because a caller to your page may see something that catches their eye.

eBay Almost about Me, pages further customarily comprises concentration on advice. If you are an spotted eBay seller, especially one that has a appropriate reaction rating, this may textbook out to your benefit, as sightseer will be able to see that you are honorable eBay seller. If you know-how a measure of advice ratings, without difficulty a sure amount, certain commonly the fresh ones, will be shown. This includes beneficial, negative, and neutral response ratings loves your past eBay commerce.

Effecting an Regarding Me, eBay page is enormously voluntary, but, as outlined above, there are a quantity of benefits to stimulating one. Also an eBay Near to Me, page simply capturing a few minutes to type, you are notified to at least add it a try. After all, you may be surprised and the results.


Just about the Discoverer

Uchenna Ani-Okoye is an internet advertisement advisor and co founder of

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