In November of 2009 Warren Buffett staked $34 billion on a "bet" he described as "an all-in wager on the economic future of the United States." And by the looks of it so far, the cards are in Buffett's favor.
At the time of the investment, many had begun to question what the future of the United States would look like as the economy continued to plummet in the midst of the Great Recession.
Yet Buffett was undeterred, and his company, Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B), made the largest acquisition in its history when it acquired railroad Burlington Northern Santa Fe (BNSF). But Buffett has said such a move, despite its massive size, "was not a complicated decision."
After all, since 2011, it has brought more than $10 billion to the bottom line of Berkshire Hathaway, and what it earned in 2013 was nearly 30% higher than where it stood in 2011. And not only is has it grown its bottom line profits, but its topline revenue has risen by nearly $2.5 billion -- or 13% -- in just two years' time.
Although it has been successful, how did Buffett make such a massive move with such peace of mind and ease?
As he tells us in the video below, railroads have undergone significant change since they first piqued his interest 60 years ago, and as a result they're remarkably efficient. Because of this change, they are far more competitive relative to trucks than they once were, and it was easy to see demand for their services would only continue to increase in the coming decades as the American economy expands.
In this, we can see when we look for companies to hold for the long-term, taking a step back -- as Buffett did -- to look at the broader business dynamics and future of an industry is always a critical component.
Thanks to this ability, Buffett said, "I can't think of a surer bet than that," when looking at his $34 billion railroad bet.