msft

The clock is ticking away the time before the year ends and I have only begun to sort out the possibilities. In Part 1 of this series, I discussed breaking up my potential picks into three categories: contender, on the fence, and out of the running until the 10 stocks have been identified.

Four contenders have been considered so far: American Eagle Outfitters (AEO), Anadarko Petroleum (APC), Anglo American ADR (AAUKY) and Diageo plc (DEO).

Six more are included in today's review: EZCorp Inc. (EZPW), General Electric Company (GE), Wells Fargo & Company (WFC), Annaly Capital Management ( NLY), Intuitive Surgical Inc (ISRG) plus Berkshire Hathaway (BRK.B). These include the remaining five from 2009 and one more familiar to most investors.

Warrent Buffett, investor extraordinaire, just bought something. The Burlington Northern Santa Fe Railroad Company (BNI). It cost $26 billion. He already owned part of the railroad, but he wanted it all. Figured it was a great investment. So why should you care?

First, because it's Warren Buffett. While he's made one or two bad investments (see Eastern Airlines (who?) as an example), most of what Mr. Buffett buys increases in value. He's not the second richest man in America because he's lucky. When he buys into an industry, it may be one that most investors should consider.

Warren Buffett's (NYSE: BRK.A) decision to buy the 77.4% shares of Burlington Northern Santa Fe (NYSE: BNI) that he did not already own, for $100 each in cash and stock, is like an early holiday present for BNI shareholders.

And first recommended on April 30, 2009 at a price of $67.81, that means BNI shareholders will earn a cool 47% for their April-bought shares. Not bad for a six-month investment. I would say BNI probably was worth 10-15% more, but BNI shareholders will take the immediate pay-off, just the same.

Buffett's move also reflects his stance toward U.S. railroads, a sector I like, too.

Yesterday it was announced very loudly that "my pal Warren" was going to acquire the 77.4% of the Burlington Northern Santa Fe (NYSE: BNI) railroad, that Berkshire Hathaway (BRK.A) does not already own, for $100 per share, offering about a $24 premium to Mondays closing price.

Talk about putting your money where your mouth is -- yikes! Buffett has gone all in, betting the economy is healing, and silencing anyone that questioned his integrity or motives for cautious optimism saying it was all talk!

Analyst upgrades:

• Oppenheimer upgraded Viacom (NYSE: VIA, VIA.B) to Outperform from Perform following the better-than-expected Q3 results to reflect an improving outlook for all the company's segments. The firm raised its target on shares to $36.
• Deutsche Bank upgraded C.R. Bard (NYSE: BCR) to Buy from Hold on expectations the company's underlying growth trends will improve. The firm raised its target on shares to $88 from $78.
• Wells Fargo upgraded Cognizant (NASDAQ: CTSH) to Outperform from Market Perform. The firm upgraded the stock after Cognizant reported better-than-expected Q3 results.
• Plug Power (NASDAQ: PLUG) was upgraded to Sector Perform from Underperform at RBC Capital.
• Digital River (NASDAQ: DRIV) was upgraded to Buy from Hold at Collins Stewart and to Overweight from Neutral at Piper Jaffray.
• Steris (NYSE: STE) was upgraded to Overweight from Equal Weight at Stephens.

U.S. stock futures climbed on Wednesday morning, ahead of the decision by the Federal Reserve on interest-rate and monetary policy. This afternoon, the Fed will give its outlook on the economy and the corresponding policy it's taking. It is widely believed the Fed will not raise rates. Meanwhile, more earnings and economic data are on tap.

Unlike this morning, traders appeared more cautious Tuesday, as the Fed began its two-day policy meeting. Stocks ended mixed and fairly unchanged following news that Warren Buffett's Berkshire Hathaway (NYSE: BRK.B) has decided to buy Burlington Northern Santa Fe (NYSE: BNI) in a deal worth $44 billion and as Johnson & Johnson (NYSE: JNJ) announced a 6-7% workforce reduction.

A major acquisition is coming to light this morning, as Berkshire Hathaway (NYSE: BRK.A, BRK.B) has announced that it is acquiring Burlington Northern Santa Fe (NYSE: BNI). The deal calls for BRK to dish out $100 per share in cash and stock for the 77.4% of BNI shares that BRK doesn't already own. The deal will cost BRK $44 billion.

The acquisition gives us a glimpse into the mind of the Oracle of Omaha, BRK's CEO Warren Buffett. He feels that the "country's future prosperity depends on it having an efficient and well-maintained rail system." Buffett is betting that railroads are going to do well, which would stem from prosperity in the American economy.

Berkshire Hathaway (NYSE: BRK.A) announced the acquisition of Burlington Northern (NYSE: BNI) for $100 per share in cash and stock for a deal worth $34 billion. BRK.A is purchasing the remaining 77.4% of outstanding BNI stock its does not own. BNI November option implied volatility is flat at 36, December is at 35; verses its 26-week average of 37 according to Track Data, suggesting non-directional price fluctuations.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

The housing bubble and subsequent "Great Recession" have tarnished the stars of a good many of the world's financial wizards, such as the former heads at Lehman Bros. and Merrill Lynch. But one respected image remains -- perhaps unsurprisingly -- on top: Warren Buffett, chairman and CEO at Berkshire Hathaway Inc. (NYSE: BRK.A).

That's according to a recent quarterly poll of investors, traders, and analysts who subscribe to Bloomberg terminals, those somewhat cryptic news and data computers that are ubiquitous on Wall Street. Buffett, who received favorable nods from 25% of those participating in the poll, walked away with a plurality of the vote, Bloomberg News reported.

No high-priced stock list would be complete without the best known high-priced stock out there -- Warren Buffett's Berkshire Hathaway A Shares (NYSE: BRK.A).

At over $100,000 per share, this is, by far, the most-expensive, most well-known stock on our list. With an investment in Berkshire Hathaway, you are putting your money on the success of one of the greatest investment minds the world has ever known.

Sure, a hundred grand is a lot for one share of stock, but if you want to get your money alongside one of the best track records in modern investment history, that's what you have to pay.

As many shoppers have realized in this recession, just because something is cheap doesn't mean it's a bargain.

This is especially true in the stock market, where you definitely get what you pay for.

There have been plenty of low-priced deals on stocks lately, as plenty of good companies watched their shares take a beating in our economic crisis. But that doesn't mean all cheap stocks are worth buying. Unless that bargain goes up in value, it's not a bargain.

So, you think you had a rough year? Check out what happened to Warren Buffett, who is ranked the second-richest man in America despite a drop of $10 billion in his personal wealth during the past year. The culprit for Buffet's loss is the 20% decline in Berkshire Hathaway (NYSE: BRK.A) stock during the past 12 months.

As noted, the Oracle of Omaha maintained his second-place ranking on the list of the richest Americans. The first-place finisher is Bill Gates, who the article notes is "Buffett's friend and bridge partner." What a game of bridge that must be (I am not familiar with the game, but if there is betting involved I don't want to be sitting at that table). Gates maintained his top spot although he lost $7 billion.

If you are not reading the commentary we receive then you are missing some gems. One of our regulars reminded me of something "my pal Warren" said: "... find companies which can be run by idiots because sooner or later an idiot will be running it."

In Buffett's case he can actually call them up and talk to them. In many cases, he could probably get them to resign. For most of us, all we know is basic things like how's the stock price or has the idiot been indicted?

In early May, I wrote about why I thought Williams Companies Inc. (NYSE: WMB) would outperform four other, more popular stocks. I compared it to Apple Inc. (NASDAQ: AAPL), Google Inc. (NASDAQ: GOOG), Microsoft Corp. (NASDAQ: MSFT) and Berkshire Hathaway Inc. (NYSE: BRK.B).

It was May 11 that I last followed-up on my series of posts, and since then, for about half that period WMB indeed outperformed all four stocks. Since then, however, it has fallen back to second place, behind AAPL.

He was two years early and now he might be two years late. His facts were right. His timing was off, and I think if you wait for the illustrious NYU professor Nouriel Roubini to give the "all clear sign" you will miss even more of the market upside than you have missed already.

On February 18 of this year I wrote Buffett says buy, then sells, Roubini says wait -- what's an investor to do? -- and it will make interesting reading today. After all it was about three weeks before the market really hit bottom, and I called that, too, posting on March 9: Nostradamus was a punk! Have we reached bottom? -- a lucky call for sure. However, the number of folks thinking the world was coming to an end seemed like the ultimate capitulation.