Republicans won two governorships against democrats in yesterday’s election, which may indicate a push back on Obama’s policies. It appears a clear shot across the bow, now let us see if the democratic leadership responds in self preservation and moves toward the political and economic center. Business is the business of America, if that gets undermined at the expense of anything else, politician beware. Even same sex marriage got rejected in Maine, which is not even an economic issue, may indicate that the American public is in conservative state of mind that spills over to social issues. For stocks, the rejection of collectivism is bullish as that is the antithesis of capitalism.
On a different topic, the railroad business appears quite simple to understand as a business, and moreover it appears very sustainable. It is very unlikely to be displaced by new technology, or lower competing transport costs. There are no competing rail tracks being built parallel to existing ones, hence they have pricing power. Rail transport costs are dramatically cheaper than trucking transport costs, and substantially less polluting, hence they even have a positive green impact. The simplicity and sustainability and competitive position of the railroad business meets the “sure thing” criterion for a Buffett investment, and this time he went “all in”. At this point in his life, he is in an “all in” type of guy, and that makes a lot of sense. An equivalent railroad to Buffett’s BNSF, is Union Pacific with similar ROI and P/E and sales growth numbers.
Joseph Dirnfeld
Audax Investments
audaxinvestments.wordpress.com/
917 838 3093
305 861 8670
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