Warren Buffet has long been known as the “Oracle of Omaha” for his ability to invest in the stock market. Many would argue that he is the greatest stock market investor in history. He was criticized for being out of touch during the bull run in technology stocks, but his wisdom was evident following the bust. The stock market rebounded on the back of borrowed money leading to the financial collapse.

In the midst of that collapse one year ago, Warren Buffet served as a one man bailout program for Goldman Sachs and General Electric. On September 28, 2008, it was announced that Warren Buffet’s Berkshire Hathaway would invest $5 billion in Goldman Sachs in exchange for preferred shares that would pay a dividend of 10%. When Goldman wants to buy back those shares, they are required to pay a premium of 10% or another $500 million. He also received warrants to purchase $5 billion worth of common stock at a price of $115 per share. Now those warrants are worth $7.68 billion on paper. Plus he received $500 million in dividends over the past year.

His investment in General Electric had a similar structure and was announced on October 1, 2008.  He invested $3 billion this time.  The preferred shares again carried a dividend of 10% and could be repurchased for a 10% premium.  The additional $3 billion common stock warrants were for a price of $22.25 per share and were good for five years.  GE stock closed today at 16 so the warrants are currently worthless.

Following these two notable investments, Warren wrote an op-ed piece for the New York Times entitled, “Buy American. I Am.”  This piece appeared on October 16, 2008 in the midst of the fear of the financial crisis.  Obviously, Warren Buffet has made a career of being greedy when others are fearful and vice versa.  As we near the one year anniversary of these investments, we find the annual return to be 26.7%.  Clearly, Warren still has it!