Market Jittery/ Buffett Buying

Dear Diary,

The market dropped 800 points at one point yesterday, and it closed under 10,000 for the first time in four years, say the talking heads.

Mr. Buffett made a $3 billion infusion into General Electric (GE) in the $22 per share range. This stock is in my universe of stocks I follow, and it clear that Buffett is buying in relationship to Net Quick Assets (Working Capital less Inventories and Medium Term Holdings on a Balance Sheet). This calculation is very close to Working Capital per share, so I generally make no distinction. GE shows $27.08 in Working Capital and about $23 in Net Quick Assets.

There are 6 companies selling in relationship to Working Capital in my tracking universe of stocks.

My Cash on Sale Arbitrage holds 4 positions, presently. AHG was due to close on 9-30-08 and HUN was due to close on October 2, but neither has done so to date. Expectations are still for a close.

That "Kiplinger's" article was a writer attempting to extrapolate Buffett's mind onto CROX back when it was trading say at $75 per share. It was too highly priced with a growth rate that could not have kept pace with the price. Today, CROX trades at less than Working Capital, so I'm buying when I have cash available.

A friend bought me a copy of, "The Snowball," Mr. Buffett's biography. The main thing we learn for our purposes is that arbitrage is a big part of his investment life.

Gene