Warren Buffett has a wonderful reputation as an investor. His accumulated stakes in Coca-Cola, Gillette, and the Washington Post are all good examples of "sticking to what you know" as an investment philosophy.
But his investment opportunities in the securities and funds industries are certainly not the ones about which he is the most convicted.
In 1987, the Sage of Omaha came in as a white knight to take a stake in Salomon Brothers, who had a hostile bid from corporate raider Ron Perelman on the table. Eleven years later, after a painful government bond scandal among other things, Sandy Weill took him out (of his misery???) with a tidy profit.
Then in 1998, he was asked to help stave off a global liquidity crisis by rescuing Long-Term Capital Management. Perhaps remembering his Solly experience (John Meriwether being a common denominator), he conveniently went on an Alaskan vacation with his new best friend and bungled the mechanics of his bid, which forced a consortium of banks (not including Bear Stearns) to come to the rescue.
Today, there are reports of Buffett taking a stake in Bear Stearns, perhaps to keep it independent as Wachovia and Bank of America are looking to expand their securities businesses through acquisition. Supposedly on vacation, just like in 1998 (what is it with these post-Labor Day retreats?), Buffett may change his tune on derivatives if the price is right.