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According to billionaire investor Warren Buffett, he recently chose Howard Buffett, his son, to take over as chairman of Berkshire Hathaway when he finally retires.

You might wonder why Mr. Buffett picked his son to take over as the chairman of the company. Was it preferential treatment? Was it laziness? It was neither those things. As a matter of fact, Buffett had a great reason to make this decision.

His son Howard is a philanthropist, a farmer and he’s also served on Berkshire Hathaway’s Board of Directors for the past 20 years. So, for the last two decades, he’s sat in on all of the meetings relating to the company. He was part of all of the biggest decisions. And when he takes over as chairman, he will be able to make sure the Berkshire Hathaway culture stays the same once his father is finally gone.

When something works, you should stick to it.

By putting Howard Buffett in charge, his father is showing the world that Berkshire Hathaway’s way of doing things is not going to change after he gone. Who would know how Berkshire Hathaway operates better than Warren Buffett’s own son? He’ll be able to preserve the culture of the company while helping the Berkshire Hathaway conglomerate grow. That would be very difficult for an outsider to handle.

Howard Buffett received the greatest apprenticeship you could ever ask for. He was able to sit in on everything happening at Berkshire Hathaway, and he observed it all. Howard was part of the most monumental decisions regarding Berkshire Hathaway, and he made them along with his father and the Board of Directors. Some of the decisions they made were: buying Burlington Northern Santa Fe Railroad, the recent acquisition of Heinz and having the foresight to invest in Goldman Sachs while the financial market was in the toilet.

How Can You Give Your Own Family an Advantage Similar to the One Buffett Provided His Son?

If you plan to achieve success, you’ll do so by putting forth a compounding effort over a period of time. That’s why it’s ideal for your children to leverage their effort and time as efficiently as possible. They need to stay focused on a specific area if they plan to become an expert in that field.

Your children will benefit tremendously, and have a serious advantage, if they learn something and know it better than everyone else. It’s important that they stay focused in one specific area where they will have a tremendous advantage over all of the others.

Think about Howard Buffett for a moment…

He’s accumulated a tremendous amount of knowledge over the last 20 years while he watched his father choose investment opportunities. It’s a major advantage to learn something better than everyone else.

It takes a long time to develop the right contacts. It may even take longer to develop trust in the marketplace. Plus, it takes time to learn through experience how to hone your instincts and hunches that will provide real world value in your real life. It will also take time to learn how to work with people. Lastly, it takes time to learn how to use all of the acquired knowledge, insights and hunches and turn them into an opportunity that your experience will provide.

This is more than just a nice way of doing things.

It’s extremely important to your family’s wealth and well-being. If you have a family business, a motivated member will be a great asset. They will bring the right relationships and continuity to the family business.

If your children understand how to run the family business better than anyone else, then they would naturally be the greatest choice to take over the leadership positions within the company.

They have been already established as an expert in the company. They know how to leverage the family business and they are already a part of a trusted team.

It makes sense that family members are in the best position to make use of the advantages because they grew up around the business. They know all of the people involved. They’ll have an easier time learning the business secrets because they are proactively being taught to them.

What If Money Were No Object?

In order for this to work, your children (and their children) need to have an affinity for the family business. If they don’t love it as much as you do, or they don’t have an aptitude for it, they may want to focus their time and talent elsewhere.

Your children should focus on the things they love, as if money were no object. Because here’s what normally happens…

If you pursue a skill to the point of mastery, the money will typically tend to follow. Your kids will be motivated to work longer, spend more time in the field and really stick it out because they are passionate about it.

Having family money is a great way for children to find their passion. But you have to use the money to help them instead of hurt them. There are a lot of options available when you have family money, and it could also lead to lots of distractions. It’s important that the family members are using the money correctly; instead of using this money to harm themselves when it should help them. You wouldn’t want to see your children become spoiled brats. There’s potential to use this money to distract themselves by only choosing hobbies instead of working hard, and this could lead to feelings of sadness, bitterness and uselessness.

You never want your children to feel like they could’ve had their own success if money didn’t get in the way. When Warren Buffett’s son Howard began farming, his father purchased land for him in Tekamah, Nebraska, but he didn’t give him the land outright. He made him pay rent. Warren Buffett did not give his son a free ride. This was a good thing, because Howard is now ready to take over as chairman of one of the richest companies in the world.

If you have children working outside of the family, it’s good to have them provide progress reports in regards to their success. This is especially true if they are using family money. It’s only natural that they would keep everyone abreast of how things are going. Find out what goals they are trying to achieve. Learn about the steps they are taking in order to achieve them. Asking simple questions will keep your children on track and heading in the right direction.

It’s important that your children focus once they figure out what it is they want to do. They must do the work in order to become experts in their chosen field. It’s a great way to become confident, successful, as well as independent. It’s important that any family money being offered will help them achieve this. Don’t allow family money to turn your children away from success.

In the fall of 2013, investment bank Goldman Sachs will soon have a brand-new top 10 shareholder.

As of the time of this writing, Warren Buffett is currently on pace to hold nearly 2% of Goldman Sachs stock all thanks to the incredible value of the warrants he holds in the investment bank.

Berkshire Hathaway and Goldman Sachs are currently in the process of amending the agreement that they have from the investment Warren Buffett made when the financial crisis was at its worst. Buffett’s warrants are currently sitting in an excellent position, and they are worth around $1.4 billion to him today if he decided to cash them in to own shares of Goldman Sachs.

Under the new agreement, Berkshire Hathaway is not going to get the difference in dollars, but they will receive the difference in stock and this is going to put them in line to earn 9.3 million shares if they made the deal based off of Monday’s closing price. If the deal were done at that point, Goldman Sachs would have given up 1.9% of their shares as part of this agreement.

Having nearly 2% of Goldman Sachs would put Warren Buffett in the number nine shareholder position of Goldman Sachs, we learned according the FactSet.

At the time of this writing, the Goldman shares were even rallying in premarket trading, and this puts Buffett and Berkshire in an even better position.

When the deal was originally made, these warrants gave Buffett the ability to buy 43.5 million shares of the company at $115 per share. Goldman rose to $125 per share in September of 2008, but then the stock tumbled to below $50 per share during the fall.

Since that time, Goldman Sachs shares are currently worth $147.80 and they’re up 1.2% in premarket trading. That would tack on another $73 million to Warren Buffett’s already substantial investment.

Under the new agreement, this change is going to take place on October 1, which is the date that the original pact was set to expire.

Also, Berkshire Hathaway and Warren Buffett are no longer going to hold any warrants, but they are instead going to get equity without the need to put up any more funds in order to get shares.

Warren Buffett and Berkshire Hathaway released their annual letter to shareholders last Friday. There were plenty of useful comments on a wide variety of topics revolving around investing, and this document will be a major part of the conversation of investors over the following weeks ahead.

Warren Buffett touched upon one area in his letter to shareholders revolving around the type of investment that very few investors have in their portfolio: stock options. Buffett has used options to boost the profits of Berkshire Hathaway, and in his shareholder letter, he talks about his belief that options can produce profits of a greater magnitude later on in the future. By making this claim, Warren Buffett calls into question if the entire open market for this type of investment is potentially mispriced – and it creates other opportunities for intelligent long-term investors.

Let’s now take a look into Buffett’s argument a little bit further, and overturn some stones by discussing ways to take advantage of this untapped opportunity.

The Big Bull Market Bet

During the years 2004 until 2008, Warren Buffett and Berkshire Hathaway took massive exposure upon themselves within the options market. They were selling put options on the major stock market benchmarks covering Europe, Japan, the UK and the US. By doing so, Berkshire Hathaway was extending its traditional insurance business to provide protection that is stock market related for its counterparties. Berkshire Hathaway brought in $4.2 billion by selling these put options, and just like the other premiums Berkshire receives from its insurance businesses, they turned around and invested these billions of dollars in sales into its stock holdings and operating companies.

When the market melted down in 2008 and throughout the early part of 2009, the put options looked like a really bad move. At the time, Berkshire Hathaway was sitting on what appeared to be a potential $10 billion loss, with the possibility that the losses would be even greater if the market stayed low past the options expiration dates, which range from the years 2018 through 2026. But at the time of this writing, the current intrinsic value of the options are now below the premiums Berkshire Hathaway received, thanks to the large bull market that’s happened over the last four years. Overall, Buffett expects the final amount due under the options to be a lot less than the current figure of $3.9 billion.

Is There a Flaw in Long-Term Option Pricing?

Brendan Conway of Barron’s posted a fantastic blog post last Friday afternoon, which reminded investors of Berkshire Hathaway of the history behind these Buffett puts. As commonly noted, Buffett has gone to tremendous lengths in one of his previous shareholder letters to describe the inefficiencies and pricing of the options market and how Buffett planned to exploit it.

The root of the options problem lies specifically in the volatility assumptions made in the very commonly used Black-Scholes formula. From year to year or day-to-day, stocks can move rather abruptly, and the assumptions of volatility often are baked into the price of options. But when you look at them over longer periods of time, stock market returns are much smoother, and Black-Scholes will value options more highly than it is actually appropriate – which makes them much better to sell instead of buy, and this is especially true when you have puts expecting the market to continue to trend upward.

Warren Buffett’s behavior points to a much different view toward trading options for the long term on the buy side. When Buffett has previously provided financing to large corporations like General Electric and Goldman Sachs, he used warrants that are options like, and they provide a long-term equity kicker to Berkshire Hathaway with this investment. By being willing to hold onto these warrants strongly points to Buffett’s belief that volatility on the downside is overestimated, then the upside volatility is also underestimated, which will make long-term call options the better buy for investors.

Can Anyone Take Advantage of This?

The short answer is no. The deals put together by Warren Buffett are not typically available to your average investor. The long-term options available to the public will normally only run just a few years into the future, but that is not a long enough time for an entire bull – bear cycle to run its course for reversion to the mean to take place.

The one place where long-term options are available at this time is in financial stocks. This is thanks to the TARP bailouts, so five to six year warrants are currently available from several major banks and other financial institutions. For Capital One and Hartford Financial, these warrants are already in the money – which means that the current price of the shares already exceeds the exercise price of the warrant. This will limit the impact of volatility estimate errors on the warrant price.

But on the other hand, Bank of America and Citigroup still have warrants where the strike prices are well above the share value at the current market price. With the bulk of the value coming from the time value and the estimates of volatility that are generated, the warrants for these shares are very susceptible to the type of mispricing that Warren Buffett is discussing.

Take a Look for Yourself

Remember that options and warrants are a very specialized type of investment and they present a substantial risk. But regardless, the questions revolved around proper pricing for the long term bring up the possibility that you can use this type of option to your advantage, which means you might want to take a closer look.

The long-term track record of Warren Buffett’s success has made him the best investor of our time, but currently Berkshire Hathaway shares are trading at their all-time high. Is it the right time to buy Berkshire right now? You decide.

Very recently, 3G Capital and Warren Buffett have teamed up to purchase H.J. Heinz. And yes, 3G is a private equity firm.

Warren Buffett isn’t really a big fan of private equity, and in the past he has said that these firms are short-term financial engineers who “don’t love” the companies that they purchase. He has even bragged that he’s never previously purchased a company from one of these private equity firms.

So what is the public supposed to think of the idea that Warren Buffett has now teamed up with 3G Capital Partners, a private equity firm? They are jointly purchasing H.J. Heinz Co. in the total amount of $28 billion.

When you really think about it, this move is kind of hypocritical.

In the press, 3G Capital has been labeled a hedge fund manager as well as a private equity firm. Both of these statements are correct from a factual standpoint. The company oversees several private equity funds. The most recent fund had a gross asset value as of last October in the amount of $1.12 billion. Here’s the way 3G describes their family of funds in the company brochure:

The 3G Special Situations Funds’ objectives are to achieve superior long-term capital appreciation by making either controlling or non-controlling (but, in such cases, typically influential) investments in a small number of companies operating fundamentally good businesses with easy to understand business models that are being undermanaged or to which the Adviser believes it can add meaningful value. The 3G Special Situations Funds focus on leveraged acquisitions, recapitalizations, and acquisitions of controlling or influential stakes of businesses in industries where the Adviser has either operating experience or a strong network of contacts within the industry.

It currently appears that 3G charges 20% carried interest for all of these funds, and the management fee is around 1 to 2%. About one quarter of company capital comes from firm principals, and the rest of it comes from a minute group of high net worth Brazilian investors (and there’s even a smaller group of institutional investors).

3G Capital manages a few different small hedge funds through diversified strategies. Some of their funds hold stakes in companies such as SandRidge Energy, Goldman Sachs and Google.

That’s why it might be smarter to describe this company as an alternative investment platform, that also features varying strategies. Basically the way you may categorize Kohlberg Kravis Roberts & Co. and The Blackstone Group.

Those people familiar with 3G aren’t often comfortable with these comparisons. However, the company certainly does have a much grander investment horizon than your average and ordinary private equity firm. So in a sense, 3G resembles Berkshire Hathaway more than KKR or even Blackstone.

It hasn’t been possible to determine the investment lifecycle of a private equity fund from 3G, as a way to compare it to the industry-standard of 10 years. As a matter of fact, one source tells us that there might not even be one. If that is the truth, then you’re looking at one major distinction between Berkshire Hathaway and 3G.

If that statement isn’t true, then the only major difference between the 3G and Berkshire is that they raise their money by tapping into rich Brazilian friends instead of university endowments and public pension funds in the United States.

3G certainly doesn’t own any publicly traded securities the way Berkshire Hathaway does (which tells us that there has to be some viable path to investor liquidity).

Looking at the private equity track record of the firm doesn’t seem to remove the label either. As an example, 3G purchased Burger King in 2010 mainly by leveraging bank debt, then returned the money back to the public two years later through a reverse merger (instead of the usual IPO). 3G still has a major stake in Burger King, but there’s nothing novel in regards to a private equity firm remaining in control of our portfolio company three or four years down the line of the initial purchase.

When talking about bank debt, even the deal with H.J. Heinz is technically a leveraged buyout. There’s no question that it includes more equity than a typical mega-LBO with Berkshire Hathaway putting up as much as $12 billion and $13 billion (as well as 3Gs smaller equity slug), but the move will still keep billions of dollars worth of new debt of the books of Heinz.

Maybe Warren Buffett was only being hyperbolic when he speaks of his private equity contempt. Think about this for a second… if he truly believed the things he said, then he would have found another partner with whom he would purchase Heinz.

Warren Buffett says that US banks are “in the best shape in recent memory,” as he mentions this to Bloomberg News recently. He also believes that they will not cause the next big financial meltdown.

As the CEO and chairman of Berkshire Hathaway Inc., based out of Omaha, Nebraska, Warren Buffett has earned billions of dollars over the past four years when he started investing in Wells Fargo and Company, Goldman Sachs, U.S. Bancorp and Bank of America. Let’s not forget about General Electric as well. They are all companies that operate in the finance industry, and they each fall under the banking category.

And if he wanted to, Warren Buffett could earn another $3 billion right now by cashing in discount stock purchase warrants from Bank of America. He chose to wait instead, and here’s why:

“We’re in no hurry,” said Buffett to Bloomberg. “Nine years from now I would think that Bank of America as well as Wells Fargo and probably the other major banks will be worth considerably more money than they are now.”

Mister Buffett says that the banks are so much more healthy right now since the financial crash during 2008 because they have cleared out the bad loans on their books, rebuilt their capital, lowered their risk, cut their expenses and repaid the taxpayer bailouts throughout a very fragile real estate market.

There are many experts that still worry the biggest banks in the US are too big, and they can easily repeat the same problems that triggered the recession that we went through recently. Buffett doesn’t believe this.

“The banks will not get this country in trouble, I guarantee it… We do not have an unusually concentrated banking system compared to the rest of the world, and there are certain advantages in the largest capital market in the world to having banks that are somewhat consistent with the size of those markets.”

Warren Buffett is a billionaire investor who has taken out stakes in some of the largest United States banks, who tells us that the lenders have rebuilt their capital to the levels where they aren’t a possible threat to the economy any longer.

“The banks will not get this country in trouble, I guarantee it,” said Buffett – the CEO and chairman of Berkshire Hathaway, based out of Omaha, Nebraska – in an interview that he gave over the phone last week. “The capital ratios are huge, the excesses on the asset side have been largely cleared out.”

Major lenders including Citigroup Inc. and Bank of America Corp. have sold off their assets, bolstered their balance sheets and cut many jobs after they repaid the 2008 taxpayer bailouts, when these companies were truly overwhelmed by losses on housing market related securities. All of those actions helped raise the value of Berkshire Hathaway’s holdings, and increase financial stocks at the same time.

Berkshire Hathaway has invested in at least four of the seven biggest lenders in the United States of America by assets, and has also taken out more than a $14 billion stake in Wells Fargo and Co., based out of San Francisco. They have a $5 billion stake in Bank of America, and they have $5 billion worth of warrants to purchase shares of Goldman Sachs Group Inc. Berkshire Hathaway has a stake in U.S. Bancorp as well.

“Our banking system is in the best shape in recent memory,” said Buffett.

Past bank regulators and executives tell us that the biggest lenders still pose some risk to the United States economy even four years after the bailout, plus 2 1/2 years since legislators passed the largest major reforms to regulation on Wall Street since the Great Depression.

Trading Loss

Last year, J.P. Morgan Chase and Co. took a trading loss of $6.2 billion, which reminded America of our concerns for the banking industry. Sandy Weill, former CEO of Citigroup, mentions that lending money and taking deposits should be split off from investment banking as a way to prevent another major financial crisis.

Other investors have also spoke about their doubts and the accounting of banks. Even after the stock rally last year, J.P. Morgan, Bank of America, Goldman Sachs and Citigroup are all trading at less their book value, which is a calculation of how much a company’s assets should be worth if you subtract their liabilities.

There were mergers taking place during the financial crisis that brought about criticism, saying that too big to fail banking companies are getting even larger. Buffett mentions that this shouldn’t worry investors at all. Canadian banks managed to get through this crisis a lot better than other banks in many nations, as the biggest firms in Canada took hold of more market share than their counterparts in the United States did.

U.S. Advantages

“We do not have an unusually concentrated banking system compared to the rest of the world, and there are certain advantages in the largest capital market in the world to have banks that are somewhat consistent with the size of those markets,” said Buffett.

The biggest United States banks are going to face another round of Federal Reserve stress tests to figure out whether or not they have enough capital to raise dividends and buy back shares of their stock. Brian T. Moynihan, CEO of Bank of America, tells us that he’s confident BOA is going to pass even though they failed in 2011, when he did not receive the approval to increase the dividend.

Buffett also lent Bank of America credibility by providing the bank capital during 2011, after the company saw a 45% decline in share price during an eighth month period. This trade also followed moves during 2008 that Warren Buffett made by helping out General Electric Company and Goldman Sachs during the financial crisis. Both of the companies bought back the preferred shares that they sold to Warren Buffett. He also expects that Bank of America may potentially do the same.

Improved Condition

“Their condition has improved so significantly, and interest rates are so low, that they have the chance to do a number of things in that respect,” said Buffett. “I may like to keep it, but if it makes sense for them to call it, they’re going to call it.”

The preferred shares that Berkshire Hathaway owns of Bank of America pay an annual dividend of 6%, and they can redeem them at any time for the amount of $5.25 billion, according to the terms of the deal that was made. The deal also gives Warren Buffett 10 year warrants to buy 700 million shares of common stock from Bank of America at $7.14 apiece. Bank of America recently closed at $11.43 per share. If Warren Buffett were to exercise that option at those prices, he would make about $3 billion.

Buffett mentions that Berkshire Hathaway is most likely going to wait toward the end of the contract before they exercise that option.

“We’re in no hurry,” said Buffett. “Nine years from now I would think that Bank of America as well as Wells Fargo and probably the other major banks will be worth considerably more than they are now.”

A spokesman for Bank of America named Larry DiRita chose not to comment on Warren Buffett’s Bank of America investment.

Their Tier 1 capital ratio has almost reached 9% as of September 30 based on the newest standards internationally, and it’s up from about 8% just three months earlier. Their long-term debt dropped to $286.5 billion by the end of the third quarter, and this is down from $399 billion just one year earlier.

As far back as I can remember, the main investment maxim that often promotes performance anxiety and adulation is “invest like Warren Buffett.”

How can regular people emulate such a master investor? The truth is, that most people will never even come close to “the Sage of Omaha.”

He’s done everything that an excellent investors should. He buys when everybody else is afraid, he finds excellent companies when the prices are very low, and then he holds onto them forever.

Since most people lack the mettle and verve of Warren Buffett, so most people will not be able to do this. But that doesn’t mean that average investors are doomed to fail.

The best thing for everyone is that the multibillion dollar CEO and chairman of Berkshire Hathaway has always been generous with the wisdom that he shares.

Recently, there were two books in November that compile and analyze the words of Warren Buffett. We have “Tap Dancing to Work” by Carol Loomis, a longtime writer of Fortune magazine and friend of Warren Buffett. And then there is “Think, Act and Invest like Warren Buffett” by Larry Swedroe, who is the director of research for Buckingham Asset Management.

Which key pieces of advice resonates most?

• Stick with index funds

Even though you probably won’t receive the same returns that Berkshire Hathaway achieves with index funds, you can get very close market returns without having to be a genius investor like Warren Buffett.

“If individuals aren’t going to be an active investor – and very few should try to do that – then they should just stay with index funds. Any low-cost index fund,” Loomis tells us that Warren Buffett advised. “And they should buy it over time. They’re not going to pick the right place and time.”

• Don’t play the Warren Buffett game

Even though Warren Buffett is usually able to time his purchases supremely superbly, the chances are that you won’t be able to do so. As a matter of fact, research tells us that most individual investors as far as success in timing go are dismal.

One of the most important things that Warren Buffett teaches us is to recognize that you aren’t going to be able to predict the market.

If you follow his advice about investing in index funds, and stick with the plan, “the only way an investor can get killed is by high fees or by trying to outsmart the market,” he told us in 2008.

This is really no big secret. When you discover a good stock, you should buy it at a low price and hold onto it. If you are buying individual stocks this way, this is called dollar cost averaging – we have fixed investments every month and you reinvest all the dividends. Most big companies provide reinvestment plans for dividends for this exact purpose.

Larry Swedroe reinforces the advice of Warren Buffett by sharing academic studies that actively managed mutual funds show “no evidence of the ability to persistently generate outperformance by what would be randomly expected.” So, for most investors, a passive strategy will certainly work.

Most investors also take a hit on trading costs and transaction fees.

If you want to own the majority of the stock and bond market the most inexpensively, then do so through two funds: the Vanguard Total Stock Market Index ETF and the Vanguard Total Bond Market Index Fund.

The company only charges you 0.06 PC and 0.22 PC per annum, to manage the funds.

• Think long-term

When you buy stocks, by shares of companies that will produce profits for many years to come, not short-term bets.

Warren Buffett typically buys into companies that have been around for a really long time, like Coca-Cola and Burlington Northern Santa Fe Railway. They obviously aren’t going anywhere, so you know they’ll be producing income for many years.

Warren Buffett likes to buy businesses where he trusts and likes the management, they are capable of generating cash, they earned good profits and provide many dividends for decades into the future.

• Keep your cool and be a contrarian

Stock market booms and busts do not even phase Warren Buffett at all, and he’ll hold onto all of his cash while other people are buying, and then he’ll begin buying things in droves when stock markets and other markets crash.

He doesn’t pay attention to the media or other people’s opinions – he doesn’t let emotions derail his investments or his line of thinking. He’s great at seizing opportunities when other investors are paralyzed by fear.

Goldman Sachs called upon Warren Buffett take a stake in their company during the financial meltdown during 2008. He received incredible terms on his $5 billion investment in the company. A 10 PC annual dividend and repayment that eventually made him $1.7 billion when Goldman Sachs paid it off earlier last year.

Do you know anybody that can receive a legitimate 10 PC dividend these days?

It’s a bit surprising, and possibly even offensive that Warren Buffett is trying to get the most wealthy people in the nation to pay much higher taxes in order to restore the nation’s finances to a much more stable situation.

During 2008, people are accusing Berkshire Hathaway and Warren Buffett of receiving bailout money in order to save their company during the financial meltdown. It is claimed that he made a really great deal that gave his company $95 billion worth of TARP money from the government.

But here’s the real truth. Berkshire Hathaway and many other shareholders of four really large financial institutions, including American Express, Bank of America, Goldman Sachs and Wells Fargo were claimed to all receive their own piece of government TARP funding to stay afloat during the biggest financial crisis that we’ve seen since the Great Depression.

When you add up all the different bailouts, it amounts to $95 billion. But here’s the real kicker. None of that money actually went to Warren Buffett or Berkshire Hathaway. Berkshire and Warren Buffett received absolutely nothing.

But, on the other hand, the employees and shareholders of American Express, Goldman Sachs, Bank of America and Wells Fargo all received benefits from the TARP funds during this very difficult time.

But it’s 100% false to try and blame Berkshire Hathaway and Warren Buffett for taking $95 billion that they didn’t need. And anyone thinking otherwise really isn’t paying attention all that much to the financial world. As a matter of fact, the majority of Americans are possibly illiterate to what is going on financially and economically. This intelligence gap and lack of understanding needs to be corrected some day if America will continue to thrive.

President Barack Obama is currently looking to replace Tim Geithner as Treasury Secretary. Everybody’s favorite billionaire investor Warren Buffett thinks that the best person to lead the Treasury Department during the financial crisis is none other than the CEO of J.P. Morgan Chase, Mr. Jamie Dimon.

It is believed that Dimon is not one of the potential candidates in the running for this fantastic position in the cabinet, but it’s also not the first time that this banker on Wall Street has been recommended for the job.

“If we run into problems in markets, I think he would actually be the best person you could have in the job,” said Buffett during an interview that he had with Charlie Rose that aired on PBS this past Monday night. “World leaders would have confidence in him.”

It is currently believed that Jack Lew is the leading candidate to replace Tim Geithner. He is the former director of the Office of Management and Budget, and the current White House Chief of Staff.

There are a few others that are possibly under consideration as well. Some of the names floating around are Larry Fink, CEO of BlackRock; Roger Altman, chairman of Evercore; and Gary Gensler, current chairman of the Commodities Futures Trading Commission and former partner at Goldman Sachs.

Dimon has the reputation of being a safe and savvy banker, although that reputation took a little bit of a hit this year during the entire London Whale trading debacle. So far, this error cost J.P. Morgan $6.2 billion.

“Obviously, you know, there was a failure of control,” said Buffett to PBS when discussing the trading losses. “If you run an army, if you run a church, if you run a government, any large institution, people will go off the reservation sometimes.”

There was a time when Dimon was looked upon as a friendly Wall Street executive to the administration. But he has recently criticized the Dodd-Frank financial overhaul championed by President Obama, and he’s also criticized some of the policies implemented by the Federal Reserve.

As of this time, Geithner is leading the negotiations in regards to the fiscal cliff. He is expected to leave his post once a potential deal is reached.

Warren Buffett’s railroad Burlington Northern Santa Fe, which was recently bought by Berkshire Hathaway in year 2010, just sold $1.25 billion worth of bonds for the purposes of general corporate needs.

The bonds that Burlington Northern issued were split up into different parts. The first set of bonds, which went for the amount of $600 million, were at 3.05%, and they were 10 year securities which yielded 125 basis points more than other ponds that are similar. The second type of bonds were for $650 million and they were 4.375%, 30 year bonds and the basis points were 150 more than current benchmarks. This was gathered according to data presented by Bloomberg. Moody’s Investors Service is going to rate these bonds as A3, which is the fourth lowest investment grade that they have. Standard & Poor’s is going to be rating these bonds BBB+ which is even one level lower than the Moody’s rating. This is also according to information that was gathered by Bloomberg.

Burlington Northern has not sold any bonds since February. At the current time, the $625 million bonds they have at 4.4% that are due in 2042 in the month of March, are trading at 101.3 cents on the dollar, and a yield 4.32% as of yesterday. This information is presented by the company name Trace, which is a reporting system for bond prices of the Financial Industry Regulatory Authority.

Goldman Sachs Group Inc., Citigroup Inc. and Bank of America Corp. are the companies that managed the sale for Burlington Northern Santa Fe, which is a company based out of Fort Worth, Texas. The basis point is 0.01 percentage point.