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  • muellerfund muellerfund May 21, 2003 8:35 PM Flag

    Buffet NOTadvocating buying AMZN stock

    Berkshire also invested profitably in the 10-percent senior notes that online retail giant Inc. (NasdaqNM:AMZN - News) is redeeming this month.
    "Well, I try to stick with things I understand. Just take Amazon. I mean, I can understand a company that has made it in the consumer field," Buffett said. "I don't understand it well enough to evaluate it, but the bonds were extraordinarily cheap a year, a year-and-a-half-ago, and it was very clear to me that they would not only survive, but thrive."
    "So, in all cases, I have not felt confident enough about understanding the business to place a valuation on the equity. But I have felt confident enough to buy the bonds,"
    NOTICE: He bought 10% Senior Notes. Thus they were cheap, and their risk was mitigated in that they were senior notes. Many trenches would have had to be crossed before B's investment would have been at risk. Furthermore, now they are being redeemed, so his risk will completely evaporate! He's getting out, while suckers think what he has done means the stock is a good investment. (also of interest is that B used the singular when referring to the co.--"it,", then switched to the plural for "bonds," and maintained the plural when he said "they" would survive and thrive.)

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