Warren Buffett invests $5 billions in Goldman Sachs

Warren Buffett, the ultimate "value investor", has stepped in the financial sector of the stock market big time. Indeed, Buffett's Berkshire Hathaway bought $5 billions of Goldman Sachs perpetual preferred stock and has 5-year warrants to buy $5 billions of common stock at $115 per share.

Considering that Buffett only invests in "what he knows" (see my last blog for more on that), this news is a big vote of confidence for Goldman. In a way it indicates that the selloff might have been overdone and value has emerged. That can be associated with the panic and overeaction that I have talked about in the past.

Buffett is not a market timer so this doesn't necesseraly signal the bottom but it certainly is an encouraging sign. I suggest readers of this Stock Market Investment Partner blog imitate Warren Buffett: stay calm, analyze and invest in what you know once you discover value.