Cleanin' Up

Under cover of the bailout, there are huge transfers of wealth going on right now. Anyone sitting flush on a pile of cash is buying up distressed properties at enormously-discounted prices. Or should be--maybe they're holding out for opportunities coming in Phase IV of the Creative Destruction.

Basically, I go to the "Wall-E" metaphor: there are humongous mounds of valuable rubble out there just waiting to be processed and recycled. Our government, bless their minuscule little heart, is taking a foremost role among those opening their giant intake maws to gobble up this raw material. We little, mobile individual-types also have our opportunity to flit about, searching for tasty morsels which meet the criteria of our simple machine-programmed compatibility DNA.

Now, Warren Buffett is threatening to gobble up my father's contribution to his grandchildren's educational funds. Normally, the news that Warren-Gets-In is great for a company's shareholders: he tends to be a patient investor, and his stamp of approval is usually good for a couple bil in market cap right off the bat. In the case of the GE investment, though, I think not: Berkshire Hathaway is getting special rights and a guaranteed 10% dividend for his trouble. The shares which have been held since Jack Welch applied the Neutron Bomb to my father's plant back in the '80's are suddenly hurtling southward toward their cost basis.

The logical move would be to anticipate the flow of money from GE to Berkshire Hathaway: sell the GE stock, take the capital gains (who cares? I'm still carrying losses from the dot-com bust!) and buy some fraction of a share of Berkshire with the proceeds. Maybe I separate the two steps, if there's an optimal time to have both, or neither.