> Warren Buffett Blog

Monday, April 9, 2018

Warren Buffett praises Jack Bogle of Vanguard

"Jack Bogle has done probably more for the American investor than any man in the country. Jack Bogle many years ago, he wasn’t the only one talking about an index fund, but it wouldn’t have happened without him. I estimate that Jack, at a minimum, has saved, left in the pockets of investors without hurting them overall in terms of performance, gross performance, he’s put tens, and tens, and tens, of billions into their pockets. And those numbers are going to be hundreds and hundreds of billions over time." 

Thursday, March 22, 2018

Should the wealthy invest in Index Funds ?


In many aspects of life, indeed, wealth does command top-grade products or services. For that reason, the financial 'elites' ... have great trouble meekly signing up for a financial product or service that is available as well to people investing only a few thousand dollars. Both large and small investors should stick with low-cost index funds.

Tuesday, March 20, 2018

Warren Buffett salary is just $100,000

Berkshire Hathaway Inc.’s Warren Buffett is scoring particularly well on a new rule requiring companies to disclose the ratio of a chief executive officer’s pay to that of the median employee.

His annual compensation of $100,000 was just 1.87 times the median employee’s pay of $53,510, a figure calculated from a sample of about two-thirds of Berkshire’s total employees, according to a filing released Friday. He also gives back about $50,000 to the company “for minor items such as postage or phone calls that are personal,” meaning his take-home pay would be less than that median figure.

Wednesday, March 14, 2018

Stocks more attractive than bonds at the moment

If you buy a 30-year government bond, it has a whole bunch of coupons attached. In the old days it does, now it's all electronic. But it has a whole bunch of coupons. And the coupon pays 3%, or whatever it may say. And you know that's what you're going to get between now and 30 years from now. And then they're going to give you the money back. What is a stock? A stock is the same sort of thing. It has a bunch of coupons. It's just they haven't printed the numbers on them yet. And it's your job as an investor to print those numbers on it. If those numbers say 10% and most American businesses earn over 10% on tangible equity. If they say 10%, that bond is worth a hell of a lot more money than a bond that says 3% on it. But if that government bond goes to 10%, it changes the value of this equity bond that, in effect, you're buying.

When you buy an interest in General Motors or Berkshire Hathaway or anything, you are buying something that, over time, is going to return cash to you. Maybe a long time in terms of Berkshire, but it'll be bigger numbers. And those are the coupons. And your job as an investor to decide what you think those coupons will be because that's what you're buying. And you're buying the discounted value. And the higher the yardstick goes, and the yardstick is government bonds, the less attractive these other bonds look. That's just fundamental economics. 

So in 1982 or '83, when the long government bond got to 15%, a company that was earning 15% on equity was worth no more than book value under those circumstances because you could buy a 30-year strip of bonds and guarantee yourself for 15% a year. And a business that earned 12%, it was a sub-par business then. But a business that earns 12% when the government bond is 3% is one hell of a business now. And that's why they sell for very fancy prices.


Monday, March 12, 2018

Apple VS IBM | I was wrong on IBM

Well I was wrong on at least I felt I was wrong on IBM. Now, I may have been wrong when I sold it, too. But I certainly was wrong when I bought it. And I've felt that Apple has an extraordinary consumer franchise. 

Apple's a different kind of business than IBM. They're both tech, obviously, in a major way. And they even have a joint venture, you know, on some things. But I think I understand consumer behavior perhaps better than I do the tech business. It wouldn't take much to beat it. And I liked it, I like Tim Cook very much. I like their policies. I see how strong that ecosystem is. It's to an extraordinary degree. I mean, I look at my grandchildren, my great grandchildren and everybody in the office, I mean, their families. I talk to the people at the Furniture Mart when the ten hadn't arrived, nobody goes over to, you know, buy an Android. 

I mean, you are very, very, very locked in at least psychologically and mentally, to the product you're using. I mean, you got all kinds of stuff up on there. It's a very sticky product.