It is amazing to see Buffett goes to shopping again at the time most of market players are crying. Warren Buffett was said its company would invest $5 billion in the financial conglomerate, the Bank of American. Berkshire agreed to purchase 50,000 shares of cumulative preferred stock with a liquidation value of $100,000 a share in a private offering. The preferred stock carries an annual dividend yield of 6% and is redeemable by the company at any time at a 5% premium. "I am impressed with the profit-generating abilities of this franchise, and that they are acting aggressively to put their challenges behind them," Buffett said in a statement. *** Why does he buy the preferred stock? What 6% of yield means to him? It is not a very impressive yield but quite safe and much higher than the cash account. Why dos he shopping now? He is a great asset allocator. I could not understand the asset allocation in details. He likes to shopping in worst time. Does he sense the market has been at its bottom and doesn't think we could be in GFC II very soon but he prepares for it carefully? Everyone wants to protect their overall portfolio from bad times. Here, high - quality fixed income assets are the investment class of choice. Preferred stock definitely is not the best choice for growth but be powerful to protect the downturn in a safe ship. It seems Buffett wants a safe ship for his cash reserve in bad time! Generally saying, as long as the fixed income investments are creditworthy and can pay their bills, high - grade bonds, cash investments, and even inflation - indexed securities with their predictable income payments and guaranteed principal should help us weather dangerous economic environments. At moment I could not act to use fixed income investment to protect my asset but some day later I may need it.