Interesting to see that Warren Buffett’s take on Goldman Sachs is essentially the same as mine. Goldman is being investigated on charges that it did not disclose to investors that hedge-fund manager John Paulson helped put together an investment vehicle that he then bet against.
Buffett’s view, writes Andrew Ross Sorkin in the New York Times, is that such information is irrelevant as long as investors knew what they were buying. Buffett put it this way:
For the life of me, I don’t see whether it makes any difference whether it was John Paulson on the other side of the deal, or whether it was Goldman Sachs on the other side of the deal, or whether it was Berkshire Hathaway on the other side of the deal….
It’s very strange to say, at the end of the transaction, that if the other guy is smarter than you, that you have been defrauded. It seems to me that that’s what they are saying.
The scandal that nearly brought down the entire financial system wasn’t what was illegal — it was what was legal.
Now if only I shared Buffett’s investing acumen.