The Eighties Summary and Analysis

Buffett got wind of a potential takeover of Time Magazine and offered to become a major stockholder, never to sell. J. Richard Munro, the CEO, was unable to get approval of his board of directors, and, as an alternative, Time merged with Warner Communications, destroying its financial health. This 1985 merger was only one example of an entire new trend on Wall Street, to include mergers, acquisitions, and junk bonds being used to finance leveraged buyouts. Spurring all of this were pension and mutual fund managers who bought and sold stock daily, taking the high bid and running. Stockholders were no longer long-term investors but, rather, short-term daily traders and raiders who paid inflated prices for companies, paying for them through the sale of junk bonds.

Buffett decried the activity of Wall Street but still hoped for additional investment opportunities...