Berkshire Hathaway's $26 billion purchase of the Burlington Northern Santa Fe railroad company was no bargain but will pay off in the long run, says Berkshire Chairman and CEO Warren Buffett.
The purchase will bear healthy returns even beyond the next 100 years, Buffett says.
“It’s a good asset for Berkshire to own over the next century,” Buffett told PBS.
“You don’t get bargains on things like that. It’s not cheap.”
As a long-term investment, the railroad will especially succeed when the U.S. economy goes through healthy times.
“It was an opportunity to buy a business that’s going to be around for 100 or 200 years that’s interwoven with the American economy in a way that, if the American economy prospers, the business will prosper,” Buffett said.
While railroads may do well when the economy is healthy, they might also be good investments for other reasons: they're more eco-friendly than other modes of transportation.
The American Trucking Association says trucks transport about 70 percent of all U.S. freight every year, but analysts say those trucks burn three times as much energy as trains per ton carried, according to Reuters.
And railroads are more than happy to point out they are a green alternative.
“As we expect a tremendous increase in freight volume in the coming years, we believe there are significant economic, environment and efficiency benefits in moving as much of it as possible on rail,” says Robert Sullivan, a spokesman at CSX, a U.S. railroad, Reuters reported.
© 2013 Newsmax. All rights reserved.