Warren Buffett, the world’s most successful investor and its second-richest man, is revered for his commonsense approach to investing. He is also known for making big, bold moves.

Yesterday he did not disappoint: he spent $34 billion on a railway. “It’s an all-in wager on the economic future of the US,” he said. “I love these bets.”

By buying full control of Burlington Northern, America’s second-largest railway, he is planting the Buffett flag firmly on an industry that he believes will grow as the economy gets back on its feet and “mom-and-pop” demand for everyday items picks up.

The deal delighted Wall Street and the American public, both of which hang on the Sage of Omaha’s every homespun word. Experts described the purchase as “classic Buffett”.

Having started buying railway stocks in 2007 Mr Buffett increased his stake in Burlington Northern to more than 20 per cent earlier this year. Assessing that the economy had reached rock bottom, he pounced on the rest of the company. Small matter whether he timed his bid exactly at the bottom of the economic cycle, it is long-term growth he is after, not short-term gain.

Tony Hatch, a rail expert at ABH Consulting, said: “Mr Buffett is a shrewd long-term investor and this is a shrewd long-term investment. Rail volumes are down by around 15 per cent on the year, but the industry is in good shape.”

The rail industry is investing heavily in new technology so that it can carry heavier loads and, amid fears of oil price rises, it should become a cheaper and more efficient way to move freight, Mr Hatch added.

The acquisition is also a bet on coal and grain, Burlington Northern’s two biggest franchises. It also has some romance about it: for more than 150 years Burlington Northern has been quietly delivering clothing, games, vehicles; virtually anything found in a home or business.

Commodities, though, are at the company’s core. Last year it transported 39 million bushels of wheat, sufficient to bake 17 to 20 billion loaves of bread. And about 10 per cent of the power generated in the country comes from coal hauled on Burlington Northern trains (Mr Buffett also owns a number of power plants).

Mr Buffett’s Berkshire Hathaway company occupies a uniquely privileged place in American public affection. Although his investment shrank by about $25 billion in last year’s financial panic, his pockets remain deep — he reckons he will still have $20 billion cash after paying for the railway.

In September last year, in the midst of the stock market meltdown, Mr Buffett made another bold bet: investing $5 billion in Goldman Sachs — a move that paid off handsomely.

His latest bet seems equally canny. Mr Buffett has said he loves to buy companies with “durable competitive advantages”. As Burlington Northern owns 32,000 miles of railway track, it is unlikely to find many challengers.

Transports of delight

Roman Abramovich (Russian oligarch) has spent an estimated $500 million on what, at 170m, will be the world’s largest yacht when it is completed next year

Jerry Seinfeld (comedian) has amassed a collection of 46 Porsches

Paul Allen (co-founder of Microsoft) has collected more than 20 Second World War aircraft

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