How Warren Buffet Saved Goldman Sachs in 2008 Crises?

Investment Overview

In 2008, during the global financial crisis or great recession, the world witnessed a sharp decline in the economy, where unemployment reached 10% which was a terrible situation. The crisis had a significant impact on the banking sector including Goldman Sachs even that were also struggling even some big banks became bankrupt. It is said that during such times, strong relationships and reputations play a crucial role. In its struggling era, Goldman Sachs found a willing investor in the world was Warren Buffett. Company did not receive funding but also received honor of best business.

Warren Buffett saw a big investment opportunity and, after negotiations, invested $5 billion in the company. Warren made a sweet deal instead of normal share he bought preference share of the company with 10% annual dividend. Preference share is bit different from normal share it gives certain advantage to the shareholder like good annual dividend and these shares has a higher claim rather than normal share if company goes bankrupt.Buffett also made an agreement which allowing him to convert his preferred shares into normal shares in the future.

Warren Buffett's classic investment secured a profit of roughly $3.1 billion when it was eventually sold. Overall, Warren Buffett's 2008 investment is a classic example of his investment strategy.