Tuesday, December 31, 2013
8/8/2011: Bank of America stock plunges 20% (CNN)
8/8/2011: BofA plunges as AIG sues for $10 billion "fraud" (Reuters)
8/18/2011: BofA Says Some Debit Cards Compromised (Bloomberg)
8/22/2011: Bank of America's stock takes a beating ... again (CNN)
8/23/2011: Here's Why Bank Of America's Stock Is Collapsing Again (Business Insider)
8/23/2011: Wall Street's Rumor Of The Day: JPMorgan Taking Over Bank Of America (Forbes)
In fact, from August 1, 2011 to August 23,2011, Bank of America's stock fell an astonishing 36%, from $9.81 per share to $6.30 per share. The Business Insider story stated plainly that the reason for the dramatic collapse in the stock price was "fears that Bank of America will go bust, taking the whole economy down with it."
Warren Buffett steps in action
Buffett has been quoted saying "be fearful when others are greedy, and be greedy when others are fearful". This probably spurred him to invest $5 billion in Bank of America on August 25, 2011.
Fast forward to 2013, Berkshire Hathaway now collects a $300 million annual dividend from Bank of America as a result of its preferred shares. In addition, Berkshire Hathaway has the option at any time to buy up to $5 billion of Bank of America's stock at a cost of $7.14 per share. At today's prices, the warrants alone would net Berkshire a 120% return -- or $6 billion -- in just 28 months.
Monday, December 30, 2013
Buffett's Wind Turbines purchase is proof that wind power is getting more competitive compared with other types of energy sources(mainly compared with fossil fuels).
Buffett’s purchase, the largest ever in the land-based wind industry, will be spent on projects across Iowa, USA.
Thursday, December 26, 2013
Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.”
Only in Grover Norquist’s imagination does such a response exist.”
Tuesday, December 24, 2013
Told there was a 25-cents-per-word charge, she requested, 'Fred Brown died.'
She was then informed there was a seven-word minimum. 'OK,' the bereaved woman replied, 'make it 'Fred Brown died, golf clubs for sale'.
Monday, December 23, 2013
Thursday, December 19, 2013
Yes, of course we’d all like to know the secret of Warren Buffett’s incredible investment success at Berkshire Hathaway Berkshire Hathaway. For some it might be mere academic interest, for others a question of how to get some of that investment success. Fortunately, there’s a very good little academic paper that has just been published which explains what Buffett’s been doing. There isn’t anything magical, no trickery here. Nor is it, as some commentators would have it, simply that someone’s going to be the best investor and it’s just random chance that has led to Buffett being it. The real secret really is just that Buffett is a very good stock picker and that he’s been able to finance his investments at very low rates. Combine these two with a long period of time and that really is just about it.
Or, as we might say, Buffett has been doing exactly what he’s been telling everyone he’s been doing for the past 50 years.
The paper is here and the abstract is:
Berkshire Hathaway has realized a Sharpe ratio of 0.76, higher than any other stock or mutual fund with a history of more than 30 years, and Berkshire has a significant alpha to traditional risk factors. However, we find that the alpha becomes insignificant when controlling for exposures to Betting-Against-Beta and Quality-Minus-Junk factors. Further, we estimate that Buffett’s leverage is about 1.6-to-1 on average. Buffett’s returns appear to be neither luck nor magic, but, rather, reward for the use of leverage combined with a focus on cheap, safe, quality stocks. Decomposing Berkshires’ portfolio into ownership in publicly traded stocks versus wholly-owned private companies, we find that the former performs the best, suggesting that Buffett’s returns are more due to stock selection than to his effect on management. These results have broad implications for market efficiency and the implementability of academic factors.
If what makes Buffett and Berkshire Hathaway tick is one of the things that interest you then I recommend reading the whole paper. The particular part that interested me was the discussion of financing. I’ve been saying for some time now that part of Buffett’s success has been down to the fact that he is, at least in part, financing investments through the insurance float. And indeed he has been:
Finally, we consider whether Buffett’s skill is due to his ability to buy the right stocks versus his ability as a CEO. Said differently, is Buffett mainly an investor or a manager? To address this, we decompose Berkshire’s returns into a part due to investments in publicly traded stocks and another part due to private companies run within Berkshire. The idea is that the return of the public stocks is mainly driven by Buffett’s stock selection skill, whereas the private companies could also have a larger element of management. We find that both public and private companies contribute to Buffett’s performance, but the portfolio of public stocks performs the best, suggesting that Buffett’s skill is mostly in stock selection. Why then does Buffett rely heavily on private companies as well, including insurance and reinsurance businesses? One reason might be that this structure provides a steady source of financing, allowing him to leverage his stock selection ability. Indeed, we find that 36% of Buffett’s liabilities consist of insurance float with an average cost below the T-Bill rate.
Or in more detail from the paper:
Berkshire’s more anomalous cost of leverage, however, is due to its insurance float. Collecting insurance premia up front and later paying a diversified set of claims is like taking a “loan.” Table 3 shows that the estimated average annual cost of Berkshire’s insurance float is only 2.2%, more than 3 percentage points below the average T-bill rate. Hence, Buffett’s low-cost insurance and reinsurance business have given him a significant advantage in terms of unique access to cheap, term leverage. We estimate that 36% of Berkshire’s liabilities consist of insurance float on average.
This is a point that I have made before in a number of different pieces. With an insurance company there is always that float. That float is then invested into a variety of short and sometimes long term investments. So much so that in a truly competitive market for insurance we would expect an insurer to make a loss on the actual underwriting of the policies. The real profit from the business coming from the investment returns on that float.
This has a number of implications: for example, the ACA’s insistence that medical insurers pay out 80% of premiums in actual health care costs doesn’t really make much difference to anything. For there is that profit to be made from investing the float. We might also look at MF Global MF Global which, while not an insurance company had a similar cash flow position. The margins that speculators had to leave with the company on the futures and options the company handled for them were investable to the profit of the company. When short term interest rates plummeted as a result of the crisis and the subsequent QE the firm went looking for yield so as to enjoy that by now traditional income from investing the float. And it really was only the investment of the float that provided a profit, the basic ongoing business of clearing futures wasn’t going to feed everyone. As we know they took on too much risk in that search for yield and lost some part of that float and thus went bankrupt.
Reinsurance, the practice of writing insurance for insurance companies leaves the company with money for much longer periods of time. And yes, Berkshire Hathaway is heavy on reinsurance. And a company like MunichRe can best be viewed as a giant investment fund rather than an insurer at all. Certainly, it will be how well it invests the float which is the determinant of its profitability, not particularly the terms upon which it underwrites risk.
As the paper is at pains to point out, yes, Warren Buffett is indeed an excellent stock picker. But it is the combination of this, the leverage of being able to invest that insurance float and then the sheer length of time that he has been doing this which are the three things that add up to his total success.
Worth adding one more point that the paper doesn’t address. That Berkshire Hathaway is in large part an insurance company also explains the size of Buffett’s personal wealth. If, just as an example with numbers, $1 million were invested for 50 years at a 19% return annually then the end result would be some $6 billion. But if you were to use $1 million (I emphasise that this is just a made up number to use as an example) to purchase an insurance company which had a $10 million float upon which you then made that 19% return over 50 years then the personal fortune that would accrue would be $60 billion. And that is, in part, what Buffett has done. He’s been using his incredible stock picking and investment skills on the much larger amount of money within the company and thus providing significant leverage to his own initial investment.
It’s a very clever thing to have been doing all these years.
Wednesday, December 18, 2013
There are three types of investors: smart, dumb and dumber. Eugene Fama, best known for his Efficient Market Hypothesis, helped millions of "dumber" investors to switch to dumb investing, by having them use passive investing, where you invest in low-cost passive portfolios that mimic the performance of the S&P 500 index or some other broader index. Academic studies have shown that retail investors, on average, significantly underperform the market after accounting for transaction costs. Switching to passive investing is a big improvement for these investors. However, this doesn't change the fact that they are still leaving money on the table.
Smart investors don't imitate the S&P 500 index. There are better ways of investing. Warren Buffett has been claiming publicly for the past 30 years that he can outperform the market. Our research has shown that imitating Warren Buffett 's top-five large-cap stock picks outperformed the market by 30 basis points per month between 1999 and 2012. These stocks also outperformed the market by 37 basis points per month between 2008 and 2012.
Imitating Buffett's top-five large-cap picks in an IRA account has been a superior alternative to dumb investing. The list of Buffett's top-five large-cap picks didn't change dramatically from quarter to quarter, yet it managed to outperform the market by four percentage points per year over the past decade or so.
read more @ marketwatch
Tuesday, December 17, 2013
WARREN BUFFETT: During The Financial Crisis, George W. Bush Made The Greatest Economic Statement Of All Time
On his blog, University of Maryland business school professor David Kass has published notes from that meeting.
One student asked Buffett about his investment in Goldman Sachs that he made during the pit of the financial crisis.
In answering the question, Buffett vividly set the scene of the crisis, describing an economy that was truly teetering on the brink. And in setting that scene Buffett heaped gigantic praise on George W. Bush, which we've highlighted in red:
Money market funds held a lot of Lehman paper. It happened overnight, 30+ million Americans who believed money markets were safe, and then Lehman fails. This caused a major money market fund to “break the buck” and lose value. It became a great silent electronic run on money markets. There was $3 1/2 trillion in money market funds and $175 billion of funds flowed out in the first three days after Lehman failed. All money market funds held commercial paper. Companies like GE had a lot of commercial paper. After this, American industry literally stopped. George Bush said, “If money doesn’t loosen up, this sucker will go down” – I believe this was the greatest economic statement of all time. This is why he backed up Paulson and Bernanke. Companies were counting on the commercial paper market. In September 2008, we came right to the abyss. If Paulson and Bernanke had not intervened, in two more days it would have been all over. BRK always has $20 billion or more in cash. It sounds crazy, never need anything like it, but some day in the next 100 years when the world stops again, we will be ready. There will be some incident, it could be tomorrow. At that time, you need cash. Cash at that time is like oxygen.
Monday, December 16, 2013
Yesterday, The Wall Street Journal’s Spencer Jakab reminded me of a wager that I had forgotten: the performance of the S&P 500 against that of five hedge funds of funds, or HFOFs. The bet occurred in late 2007, with hedge fund manager Protege Partners selecting five HFOFs to compete against Warren Buffett's selection of Vanguard 500 Index (VFIAX) portfolio. On Dec. 31, 2018, the 10-year results will be tallied. The loser must pay $1 million to charity.
At the time, Buffett's decision appeared odd. Hedge funds were regarded as one of the ways that the rich became richer. Index funds, in contrast, were a sound way of investing in mutual funds--but they were only mutual funds. How good could they be if anybody could own them?
Indeed, hedge funds had thrashed the stock market over the previous 10 years. Hedge funds had profited nicely during the decade's seven feast years and had also finished in the black during the famine of 2000-02, when stocks were thrashed. Over that period, HFOFs had trailed hedge funds themselves because of the cost of their extra layer of fees, but they were still well ahead of the S&P 500. From 1998 through 2007, HFOFs had gained an average of 9% per year*, with the S&P 500 at 6%.
Sunday, December 15, 2013
Property and casualty insurance provider Hartford originally signed an agreement with Columbia Insurance in June this year, to divest its UK variable annuity business, as part of its strategy to streamline its operations.
HLIL's sole asset is its subsidiary, Hartford Life Limited (HLL), a Dublin-based company that sold variable annuities in the UK from 2005 to 2009. As of 30 November 2013, HLL had $1.7bn in assets under management.
Hartford executive vice president and chief financial officer Christopher Swift had said, "The Hartford has made significant progress reducing the size and risk of Talcott Resolution's legacy variable annuity blocks and the business unit is now self-sufficient from a capital perspective.
more @ http://lifeinsuranceandpensions.insurance-business-review.com/news/warren-buffetts-berkshire-hathaway-acquires-hartford-uk-variable-annuity-business-131213-4145298
Friday, December 13, 2013
Warren Buffett of Berkshire Hathaway (BRK.A_) has said that the government's conservatorship of Fannie Mae (FNMA_) and Freddie Mac (FMCC_) contained the terms he'd normally seek out when infusing capital into a struggling company. Now, five years after the U.S. Treasury's bailout of both government sponsored mortgage giants, one wonders whether the Oracle of Omaha might be enticed by Fannie and Freddie privatization bids.
Currently, Fairholme Capital Management is offering to infuse $52 billion in Fannie Mae and Freddie Mac, in an effort to bring private capital to both GSEs' traditional mortgage-backed securities insurance business. The deal would liquidate Fannie and Freddie at a profit to the U.S. Treasury, Fairholme said in a recent presentation, and put the private market behind new mortgages issued in 2014 and beyond.
Holders of Fannie and Freddie preferred stock would have their claims exchanged for new equity in the MBS insurance business and they would inject an additional $17.3 billion through a rights offering. Fairholme's proposal would also rely on the creation of two new state-regulated private insurers to recapitalize Fannie and Freddie and underwrite new business without a federal charter.
Thursday, December 12, 2013
Warren Buffett made big headlines in the energy space when Berkshire Hathaway publicly disclosed that it had accumulated a $3.4 billion position in ExxonMobil . This alone is a pretty significant bet on the future of oil and gas. When you look at some of Buffett's other energy holdings, though, it points to a very specific investment strategy: Canadian oil sands. Let's take a look at Buffett's energy holdings and what makes all of them work.
Cornering the market
In the Berkshire Hathaway holdings, there are three exploration and production companies: ExxonMobil, ConocoPhillips , and Suncor . The most obvious oil sands play among these three companies is Suncor, which is the largest oil sands producer and derives more than 66% of its 560,000 barrels per day of production from bitumen and upgraded oil sands. While Exxon and Conoco have extensive oil and gas operations across the globe, both are making large bets on Canadian oil sands as well.
ConocoPhillips, through multiple joint ventures, produced 107,000 barrels per day of bitumen from the Athabasca oil sands region. The company plans to expand that capacity to 314,000 barrels per day by 2017, which would represent about 15% of its total production target of 2 million barrels per day.
Between its ownership stake in the Syncrude project and its 70% stake in Imperial Oil , Exxon has more than 4 billion barrels of proven oil reserves in Canadian oil sands. This represents 37% of the company's total oil reserves on the books. Current production is slightly more than 200,000 barrels per day, but total production should ramp up to around half a million barrels per day as the Kearl oil sands facility reaches full production in 2020.
Wednesday, December 11, 2013
Buffett helped to finance half of the takeover of Heinz last spring, but people have widely agreed that the ketchup company wasn't the elephant Buffett was looking for. 3G Capital will run the company, and 3G is expected to make Heinz more profitable and then release it back into the wild.
Buffett has also fueled the elephant hunt rumors in his TV appearances, where he has tantalizingly revealed elephant near-misses -- that is, big potential acquisition deals this year that didn't get done.
Tuesday, December 10, 2013
Sunday, December 8, 2013
Tuesday, December 3, 2013
The Oracle of Omaha said Wednesday he'd be willing to invest in Detroit if he found a suitable company.
Warren Buffett was on hand at a Goldman Sachs Group Inc. event to announce a program that will provide up to $15 million in loans to small business to spur economic development. An additional $5 million will go toward providing education and training to entrepreneurs, Goldman Sachs said in a statement.
“The resources are here to have a great, great city,” Buffett told the news conference, the Detroit Free Press reported.
Detroit, which declared bankruptcy in July, is reeling from the loss of tax revenue as the city's population has shrunk over several decades. The city's population is 701,000, down from its peak of 1.8 million in 1950.
Monday, December 2, 2013
A poll from Goldman Sachs just listed the top 25 companies shorted by hedge funds, and two major energy stocks on that list -- Conocophillips (NYSE: COP) and Exxonmobil (NYSE: XOM) -- just happen to be some of Berkshire Hathatway's (NYSE: BRK-B) largest holdings.
What could lead to hedge funds and Warren Buffett seeing these two groups differently? Let's take a look at why someone would short Conocophillips and Exxonmobil, and why someone else would pick up these stocks.
Why short big oil?
Over the past several years, the members of big oil have been under-performing the broader S&P index on a total return basis (stock appreciation and dividend returns). A large reason this has happened is because of the amount of money that big oil players have had to spend on growing their oil and gas production. Even though there has been a boom in oil and gas in the U.S. recently, the larger players like Exxonmobil and Chevron (NYSE: CVX ) have mostly been left out of that movement. Instead, big oil players have been focusing on mega projects overseas.
A prime example of this was the Kashagan project in Kazakhstan. The Kashagan oilfield in the Kazakh portion of the Caspian Sea was the largest oil find of this millennium -- we have to go back all the way to the 1970's for a larger find. Both Exxon and Conocophillips were a major part of this project until recently, when Conoco sold its 5% stake in the field, and both of them spent billions of dollars over almost a decade to get this project flowing. Having that much money tied up in an asset that was not producing oil means lots of unproductive capital
Sunday, December 1, 2013
DETROIT — A down-on-its-luck Motor City has huge potential for a rebound and can bounce back as the auto industry did a few years ago, legendary investor Warren Buffett said Tuesday.
Buffett was here to help bring $20 million in loans, education and mentor programs to Michigan small businesses in a $500 million national Goldman Sachs initiative that aims to help entrepreneurs grow jobs and revenues.
The resources are here to have a great, great city," he said at a news conference to mark the inclusion of Detroit as the 11th city in Goldman's 10,000 Small Businesses program.
The 83-year-old chief executive of Berkshire Hathaway and co-chairman of the advisory board for the Goldman program called the city an underutilized resource, which creates a great growth possibilities. He's so enthusiastic that he said he's ready to invest his own money if he finds a suitable company.
Friday, November 29, 2013
Harvard turned him down
Warren Buffett is rightly characterized as a hometown guy from the Midwest who has a particular affinity for Cherry Coke, McDonald's, and See's Candy (all businesses he owns shares of, or has owned in the case of McDonald's) -- but he is also outrageously intelligent.
Buffett graduated high school at age 16 and promptly enrolled in Ivy League stalwart the University of Pennsylvania, but transferred closer to home to the University of Nebraska after two years. Upon graduating college in 1950, he applied to Harvard business school, and then went to Chicago to be interviewed by a Harvard alum. A 1988 Fortune magazine story chronicles the interview like this:
"What this representative of higher learning surveyed, Buffett says, was ''a scrawny 19-year-old who looked 16 and had the social poise of a 12-year-old.'' After ten minutes the interview was over, and so were Buffett's prospects of going to Harvard. The rejection stung."
Thursday, November 28, 2013
Warren Buffett : My dad was my greatest inspiration. He was my hero when I was six and he is still my hero now. He is an inspiration to me in every way. What I learned at an early age from him was to have the right habits early. Savings was an important lesson he taught. I had all kinds of small businesses when I was growing up. When I was six I started my first business. I bought a six pack of Coke for 25 cents and sold the cans for a nickel apiece. I also sold magazines and gum door to door.- Article from nbcnews
Wednesday, November 27, 2013
Warren Buffett : Most parents know how important it is to teach kids about money and managing it properly. There was a study many years ago questioning how to predict business success later in life. The answer to the study was the age you started your first business impacted how successful you were later in life. Teaching kids sound financial habits at an early age gives kids the opportunity to be successful when they are an adult. - in nbcnews
Tuesday, November 26, 2013
While many people know of Berkshire Hathaway's $19.1 billion position in Wells Fargo , some may be surprised to see that Buffett has been steadily adding to his holding of US Bancorp over the past year:
While the biggest gain in position came between the first and second quarter of this year -- it is interesting to note that Berkshire Hathaway has added small incremental gains with each passing quarter. Compare that to Wells Fargo, where Buffett added a sizable position between the first and second quarter of this year, but otherwise his position has remained relatively stable.
Monday, November 25, 2013
Warren Buffett : I think parents need to start teaching kids about the importance of managing money at an early age. Sometimes parents wait until their kids are in their teens before they start talking about managing money when they could be starting when their kids are in preschool.- in nbcnews
Thursday, November 21, 2013
Buffett, chairman and CEO of Berkshire Hathaway Inc., entertains business students from colleges across the nation several Fridays a year for the purpose of one-on-one discussions on how to succeed in the business world.
Twenty CCU business students will be traveling to Omaha on Nov. 14, along with Kenneth Small, assistant dean of students for the Wall College of Business, and Gina Cummings, director of CCU's Wall Fellows program.
CCU alumnus Alexander Klaus, a businessman based in Huntersville, N.C., was instrumental in arranging the invitation to meet with Buffett.
"Being chosen to visit with Warren Buffett is a rare opportunity offered only to a select group of business programs," says Barbara Ritter, interim dean of the Wall College of Business. "It is an honor that the Wall College has been selected as one of these programs. It's an indication of the growing reputation of our college and the increasing alumni presence of the Wall College around the nation."
Wednesday, November 20, 2013
Trains, for example. Much of the shale oil is coming from parts of the U.S. and Canada that don’t have the infrastructure to pipe it to refiners, so it’s going by rail. That’s good news for railroads, and it’s really good news for a sector of the American economy most people never think about: companies that make and lease tank cars.
Tank cars, those torpedo-shaped rail cars built to carry liquids, anything from milk to industrial chemicals, are increasingly being used to carry shale oil. “The traffic has grown significantly, from probably 50,000 carloads a year in 2010 to over 700,000 this year,” says Toby Kolstad, president of the consulting firm Rail Theory Forecasts. “It probably will rise above a million carloads a year in the next year or two.”
Monday, November 18, 2013
Although the investment represents just 0.9% of Houston-based Exxon’s shares, analysts said it reflects strong support by the second-richest American of one of the world’s largest and most profitable companies.
In June, Berkshire Hathaway announced it had taken a $500-million stake in Suncor Energy Inc., Canada’s largest integrated operator and major oil sands company. Exxon also has sizable exposure to Canada with a 70% stake in Imperial Oil Ltd., another major oil sands operator in Canada. The deal gives the Oracle of Omaha exposure to growing oil markets across a number of hot oil markets such as U.S. shale, the Canadian oil sands, Kurdistan and Russia, among others.
“When Warren Buffett gives his seal of approval to any company, that is never a bad thing,” said Pavel Molchanov, energy analyst at Raymond James & Associates, who rates Exxon shares a “strong buy.”
Sunday, November 17, 2013
One company Buffett bought was Pampered Chef, founded by Doris Christopher. She said "no" to runaway growth when the food products marketing company was starting to take off because Christopher felt the business needed a year of consolidation before taking on any more people or customers. That takes nerve.
But I wonder how many corporate executives display this kind of integrity. If you're asked to sell a product you think isn't quite good enough, do you dare to refuse? If you're asked to lead a project that is underfunded and understaffed, do you accept the challenge or point out that it's doomed?
Friday, November 15, 2013
The Oracle of Omaha doesn’t typically put Berkshire’s name on consumer-facing brands. Instead, the conglomerate owns brands like Geico, Dairy Queen and the BNSF railroad.
Thursday, November 14, 2013
In the case of Buffett and Berkshire Hathaway, they're not your typical technology investors. They follow a very strict set of rules when selecting investm
ents in this space, which, through our observations, boil down to finding tech companies that:
1) trade at very cheap multiples,
2) pay a dividend, and
3) have sustainable product offerings that will safeguard their survival over the next 15 to 20 years.
Wednesday, November 13, 2013
This isn’t Buffett in name only. Unlike the animated feature Yellow Submarine, in which the Beatles offered no creative input and actors voiced John, Paul, George and Ringo, Buffett has been hands-on in the series’ development, from supplying key financial and life lessons he felt it was important for children to learn to voicing himself and meeting with finalists in the series’ annual Grow Your Own Business Challenge. His name, too, was a useful calling card to attract such stellar guest stars as Jay-Z, Shaquille O'Neal and Bill Gates
Tuesday, November 12, 2013
Buffett (about Munger): He's given me a lot more advice than I've given him. He lives a very rational life. I've never heard him say a word that expressed envy of anyone. He doesn't waste time on senseless emotions.
Munger: There's an old saying, "What good is envy? It's the one sin you can't have any fun at." It's 100% destructive. Resentment is crazy. Revenge is crazy. Envy is crazy. If you get those things out of your life early, life works a lot better.
Buffett: It so clearly makes sense.
Munger: We've learned how to outsmart people who are clearly smarter [than we are.]
Buffett: Temperament is more important than IQ. You need reasonable intelligence, but you absolutely have to have the right temperament. Otherwise, something will snap you.
Munger: The other big secret is that we're good at lifelong learning. Warren is better in his 70s and 80s, in many ways, that he was when he was younger. If you keep learning all the time, you have a wonderful advantage.
Monday, November 11, 2013
After accounting for zero percent of his equity portfolio at the end of 2010, the tech sector now makes up one sixth of Buffett’s stock holdings.
Friday, November 8, 2013
He also is involved in a lawsuit that illustrates a split between the party's conservative and less-conservative wings, with Munger on the less-conservative side. His father, also a Republican, is vice chairman of Berkshire Hathaway Inc. of Omaha and lives in Southern California.
It's widely assumed that Warren Buffett doesn't invest in technology stocks, but in recent years, this belief has contrasted with reality. After accounting for 0% of his equity portfolio at the end of 2010, the tech sector now makes up one sixth of Buffett's stock holdings. At Insider Monkey, we believe that hedge funds and other prominent investors' best stock picks exhibit market-beating potential, so it's worth paying attention to these developments.
In the case of Buffett and Berkshire Hathaway, they're not your typical technology investors. They follow a very strict set of rules when selecting investm
ents in this space, which, through our observations, boil down to finding tech companies that:
1) trade at very cheap multiples,
2) pay a dividend, and
3) have sustainable product offerings that will safeguard their survival over the next 15 to 20 years.
Thursday, November 7, 2013
Just three years ago, billionaire Warren Buffett told stockholders at his Berkshire Hathaway Inc. annual meeting that newspapers were doomed to be money-losing propositions. “For most newspapers in the United States, we would not buy them at any price,” he said at the time.
But last November he paid $200 million to buy his hometown daily, the Omaha World-Herald. And on May 17, he announced he was buying 63 dailies and weeklies from Media General Inc. for $142 million in cash. The deal includes such notable titles as the Richmond Times-Dispatch and the Winston-Salem Journal, but not its biggest property, the Tampa Tribune. Media General said it was in discussions with other perspective buyers for the Tribune.
Wednesday, November 6, 2013
Berkshire Hathaway Inc. the multinational conglomerate holding company run by Warren Buffett, announced late last week that third-quarter profit had climbed 29 percent on investments and gains at non-insurance businesses including the railroad company Burlington Northern Santa Fe (BNSF), Bloomberg reports.
Berkshire’s subsidiaries — which include businesses that haul freight, insure cars, generate electricity, make building supplies, and sell various products — has positioned itself as one of the safest investments as the U.S. economy improves and consumer demand and the housing market continue to improve over time. Bill Smead, chief executive officer of Smead Capital Management, told Bloomberg that acquisitions and investments had positioned Berskhire as “an all-in bet on the U.S.,” with a “lot of earnings leverage.”
The raw numbers showed Berkshire’s net income rose $5.05 billion, or $3,074 per share, from $3.92 billion, or $2,373, year over year. Operating earnings, which exclude some investment results, ended up slightly lower than the estimates by three analysts surveyed by Bloomberg — estimated to hit a $2,403 average, the operating earnings were reported at $2,228 per share. Class B shares fell 0.2 percent to $114.99 in New York after the results were released.
Tuesday, November 5, 2013
Over a century ago, Mark Twain observed “Never pick a fight with people who buy ink by the barrel.” We are about to ignore Twain’s sage advice.
What follows is almost 4,000 words of fighting with people who buy ink by the barrel — in this case, with the editors of Scripps News. Their owners, The E.W. Scripps Company, publish more than a dozen U.S. newspapers, as well as newswire the Scripps Howard News Service.
What got Berkshire so riled up? A Scripps report on two of the holding company’s insurance businesses, which claimed, among other things, that the units “wrongfully delay or deny compensation to cancer victims and others to boost Berkshire’s profits.” The story is long and complicated and is best read rather than summarized — the entire piece is here. Berkshire says it contains “material inaccuracies and misleading statements,” which it outlines in its statement.
The merits of the story, and of Berkshire’s pushback, are best left for readers to judge. But what’s clear is the story irked the company enough to inspire such a lengthy response — a rarity for Berkshire.
“Although it is not our practice or preference to comment about matters in litigations where we defend our insureds or reinsureds, we will, where and when we deem appropriate, act to correct misinformation that may be inappropriately used against our subsidiaries, our insureds and reinsureds and our people in such matters,” the company said, “especially where the circumstances suggest the misinformation has been published for this purpose.”
Monday, November 4, 2013
Sunday, November 3, 2013
Warren Buffett, the billionaire investor with the Midas touch, has a message for Main Street stock investors: "Don't beat yourself."
"The nice thing about investing in stocks is that, over time, equities are going to do well," Buffett tells USA TODAY. "American business is going to do well. America is going to do well. So you have the tide with you. Building wealth in stocks is still the way to go, even though the ride can get bumpy from time to time."
Saturday, November 2, 2013
"Pricing is better in almost all markets by a reasonable percentage from a few years ago. Housing starts are up somewhat. They still are not where I would regard as an equilibrium point, where they match household formation."
A rebounding housing market has helped Berkshire's subsidiaries that make carpet, bricks, insulation and houses. Some of those businesses have expanded in recent years through acquisitions as the industry recovers from the worst slump in seven decades.
Buffett, 83, has been predicting a real estate revival for years and positioning his company to benefit from it. He said in early 2010 that the turnaround would probably begin "within a year or so". While that call proved wrong, he has since reiterated that the industry would rebound because of increasing population and limited supply.
Friday, November 1, 2013
There has been much debate recently about whether supermarkets are a good investment. The news that Warren Buffett has reduced his stake in Tesco (LSE:TSCO) (NASDAQOTH: TSCDY.US) has just added to this debate. In this article, I try to work out why he has sold shares in Tesco.
Buffett bought Tesco because he thought that supermarkets are gaining market share from corner shops and the high street, plus Tesco is expanding in the rapidly growing retail sectors of emerging markets.
A fragmenting retail market
But the reality has been a whole lot harsher. In the UK, the big supermarket chains (Tesco, Asda, Sainsburys, Morrisons) have not only been competing fiercely against each other, but against both high and low-end rivals such as Aldi, Lidl and Waitrose. Whereas a decade ago it seemed the grocery market was being gobbled up by fewer and bigger players, it has now begun to fragment again. Because of this, Tesco is no longer growing in the UK. What about emerging markets? Well, growth here has also been lacklustre. Profits in both Europe and Asia have fallen.
Thursday, October 31, 2013
Warren Buffet on Chelsea Clinton: "Very, very, very smart cookie. She's got a bit of mom and dad. I was very impressed with her. People say the first female president may be a Clinton, I think we've got the wrong one. I think it may be Chelsea."
Tuesday, October 29, 2013
On Obamacare and Kathleen SebeliusBuffett has in the past supported President Barack Obama. And it seems that this support extends to embattled U.S. Secretary of Health and Human Services Kathleen Sebelius. Buffett says give Sebelius some time to fix the Obamacare mess she is overseeing. "I am a friend of Kathleen's. And I'm a friend of her when she's in trouble. I like Kathleen. I feel sorry for her in the position she's in. Obviously, it's a huge screw up but it will get worked out, " Warren Buffet told Piers Morgan.
"The nice thing about investing in stocks is that, over time, equities are going to do well," Buffett tells USA TODAY. "American business is going to do well. America is going to do well. So you have the tide with you."
Building wealth in stocks is still the way to go, even though the ride can get bumpy from time to time, Buffett, 83, says.
But to really profit from stocks and build wealth over time, says Buffett, individual investors must avoid making costly mistakes that shrink their portfolio balances, just as a football team that wants to boost their odds of winning must avoid fumbling the ball away, throwing an interception or taking a penalty at a bad time.
"Don't beat yourself," the Oracle of Omaha says. "Beating yourself is half the problem."
USA TODAY asked Buffett to put on his personal finance hat and to tick off the three biggest mistakes amateur investors make. Here's Buffett's "Top 3 Mistakes to Avoid":
1. Trying to time the market. "People that think they can predict the short-term movement of the stock market — or listen to other people who talk about (timing the market) — they are making a big mistake," says Buffett.
2. Trying to mimic high-frequency traders. Buying stock in a good business and hanging on for the long term, he says, is a better strategy than flipping stocks like a short-order cook flips pancakes.
"If they are trading actively, they are making a big mistake," Buffett says.
3. Paying too much in fees and expenses. There's no reason to pay an expensive management fee to invest in a mutual fund when super-low-cost index funds that mimic large indexes like the Standard & Poor's 500-stock index are available, he says.
"If they are incurring large expenses in connection with their investing," says Buffett, "they are making a big mistake."
Buffett, of course, is famous for buying stocks when they are cheap, buying solid businesses that make a lot of money today and will make a lot of money tomorrow, and hanging on to his investments for a long time to better maximize profit potential.
TOP PICKS: Warren Buffett's 10 favorite stocks
The strategy works. You don't become the richest person in America during your career with a lousy investment game plan. (Buffett, with a net worth of $58.5 billion, is currently ranked No. 2 behind Microsoft founder Bill Gates, who's worth $72 billion, according to Forbes magazine.)
"Doing reasonably well investing in stocks," Buffett says, "is very, very easy."
Here's how he says investors should play the investing game:
"Buy an index fund, preferably over time, so you end up owing good businesses at a reasonable average price," says Buffett. "And that is all you have to do."
That's it? It's that simple? Buffett says yes.
"You don't need to look at the prices of the stocks you own from week-to-week, or month-to-month, or even year-to-year," says Buffett. "If you own a cross-section of American businesses, and you don't get excited (and buy) just at the very top, and if you buy in over time, you are going to do well."
Tuesday, October 15, 2013
I thought the whole showdown was the Republican anathema of the Affordable Care Act, better known as ObamaCare. But the President never mentioned the health bill today, and to me, appeared ready to accept default on the debt rather than agree to any change whatsoever in his prime domestic achievement, which even leading Democrats feel is faulty and requires some overhaul. And by the way, there is not enough time to negotiate changes in ObamaCare or or the costly entitlements before the deadline, either Oct 17 or November 1.
The only reasonably pragmatic item on the President’s laundry list today was a verbal promise to sit down and negotiate once the debt limit is raised, even if only for a limited period. I’d like to know why he didn’t press for this weeks ago. Both the White House and Congress are playing Russian Roulette with the American economy and the financial markets. You can tell Obama will never go down in history as The Great Compromiser as he insists that he has already reduced the trillion dollar budget deficit in half, glory be.
Monday, October 14, 2013
The answer is anybody, according to Warren Buffet.
“The time to buy is when there’s blood in the streets,” Baron Rothschild is often credited with saying. Turns out that is easier said than done, given that metaphorical (or sometimes literal) blood often comes when most people are short on money to invest.
But for those with money to spend, a good crisis can be a beautiful thing, and few can claim to have had a better crisis than Warren Buffett. As the WSJ’s Anupreeta Das reports today, he made a series of huge bets after the financial crisis kicked in:
Starting with Mars in April of 2008, when credit markets began to tighten in advance of the financial crisis, some big-name companies looked to Mr. Buffett—and Berkshire’s huge war chest—as a lender of last resort.
In addition to much-needed capital, the companies acquired something equally valuable: Mr. Buffett’s implicit endorsement of their long-term prospects. Shares of these companies generally went up after they revealed Berkshire’s involvement.
In six major deals, Berkshire invested a total of about $26 billion. Mr. Buffett used Berkshire’s gigantic cash hoard to move swiftly and exact lucrative terms that created a stream of payments from the borrowers.
Of that $26 billion, he’s now pulled back nearly 40% of it in pretax income from the investments:
And while few of us were in the position to loan Goldman Sachs a quick $5 billion, any of us could have made similar returns from a much more accessible gamble:
“In terms of simple profitability, an average investor could have done just as well investing in the stock market if they bought during the panic period,” Mr. Buffett said in an interview Saturday. He was referring to a monthslong stretch beginning in the fall of 2008 when the stocks of some of his favorite companies, including Wells Fargo and American Express fell to historic lows. “You make your best buys when people are overwhelmingly fearful.”
Sunday, October 13, 2013
The chairman and CEO of Berkshire Hathaway said the bailout was vital at the time in order to shore up the credibility of the banking system. "Belief creates its own reality," Buffett said. "If people think the banking system is unsound, it is unsound, because no bank can pay out all of its liabilities at the same time."
Buffett: Big banks are not too big WWarren Buffett, Berkshire Hathaway chairman and CEO, with former Treasury Secretary Hank Paulson discussing whether America's big banks are too big to manage. Paulson explains why he is focused on structural changes in the financial system.
"If [Republicans] can't get their way on another issue, they'll use the threat of, in effect, defaulting on the government's credit to get their way," Buffett said. "That won't work long-term."
We will go up to the point of 'extreme idiocy': Buffett Warren Buffett, Berkshire Hathaway chairman and CEO, and former Treasury Secretary Hank Paulson share their views on the government shutdown and the chances of default.
Tuesday, October 8, 2013
Warren Buffett, the billionaire chairman of Berkshire Hathaway, said Thursday morning in an interview on CNBC that he expects Congress to resolve a stalemate over the U.S. debt ceiling before the nation suffers serious harm.
"We will go right up to the point of extreme idiocy, but we won't cross it," he said in the CNBC interview, appearing somewhat exasperated as he spoke.
His comments come at a moment of unusual national political tension. Democrats and Republicans have not been able to resolve their differences on the budget or on the deficit. Those differences have left 800,000 federal employees on temporary furlough -- with no end in sight.
At the same time, there is no consensus on whether to raise the government's borrowing authority by the Oct. 17th deadline. Failure to do so, the administration has said, would result in the nation's first-ever default.
Monday, October 7, 2013
"It's not often a company has the opportunity to add such longevity and superior technical value to their service offering. I am very pleased to be bringing the wiring and harness assembly expertise of Ray-Q to the TTI teams in Europe and Asia -- and to the benefit of our customers worldwide," TTI Europe and Asia President Gene Conahan said in a TTI press release.
Founded in 1969 as a Raychem subsidiary based in Israel with offices in Turkey and India, Ray-Q specializes in electrical and fiber optic interconnects for military, aerospace, medical and other high-reliability product industries.
Since 2000 the company has been incorporated as a representative, consultant, and distributor of leading technologies and interconnect products of world class manufacturers in Israel, Turkey, Eastern and parts of Central Europe, and India.
Ray-Q employs approximately 70 associates and counts among their customers virtually every major defense contractor.
"On behalf of our associates and customers, I can confidently say that we are most pleased to be joining such venerable organizations as TTI and Berkshire Hathaway. We look forward to their support in the globalization of our vision to be a prime supplier of electrical and FO interconnect products and solutions to high reliability system manufacturers. Becoming part of TTI will greatly enhance our added value activities in the support of the design and implementation of interconnect systems for our customers," Ray-Q CEO Yigal Funt, said.
Funt will continue to lead the Ray-Q organization and business initiatives while reporting directly to the TTI president.
TTI Founder and CEO Paul Andrews welcomed the Ray-Q acquisition. "While Ray-Q's long track record of success speaks for itself, I am particularly gratified by the company's mission to be a supplier of choice -- always dealing ethically with our customers, our supplier partners and fellow employees. These are the values that have been core to TTI's success for over 40 years and ensure that this is an excellent cultural fit for both of our companies. My team and I welcome Ray-Q's associates and customers to the TTI and Berkshire Hathaway family."
Sunday, October 6, 2013
A week ago, billionaire investor Warren Buffett denied he wants to “scrap” Obamacare, calling such reports “totally false.” But that has done little to stop some Republicans from spreading the rumor.
A day after Buffett’s denial, Rep. Jim Jordan said, “All the momentum is in our direction. Warren Buffett said yesterday, ‘Scrap the bill.’”
More recently, Rep. Tom Graves said on ABC’s “This Week” on Sept. 22: “Warren Buffett says stop it now and start over.” A day later, former Rep. Joe Scarborough, on his MSNBC show “Morning Joe,” said: “Warren Buffett came out last week and said … Obamacare is not going to work. We need to start all over.”
What’s going on?
The confusion stems from a Sept. 17 blog item on a website called Money Morning that carried the headline “Buffett: Scrap Obamacare and Start All Over.” The Weekly Standard blogged about that article with a similar headline, “Warren Buffett: Scrap Obamacare and Start Over.”
Some Republicans tweeted about the Weekly Standard blog post and linked to it, helping to spread the misinformation. One such re-tweet — which was later deleted — came from Rep. Tim Griffin of Arkansas: “RT: #ar2 RT @weeklystandard: Warren Buffett: Scrap #Obamacare and Start Over http://t.co/4vstDPlpEk.”
But here’s the problem: The Weekly Standard did not disclose — until it updated the story later — that Buffett’s remarks were more than three years old. Even then, his words were taken out of context by the bloggers, as Buffett himself said in a Sept. 17 interview with the Omaha World-Herald. “This is outrageous,” Buffett told the World-Herald. “It’s 100 percent wrong … totally false.”
To trace the history of this false claim, let’s first go back to March 1, 2010, when Buffett gave an interview to CNBC. It came at a time when the Affordable Care Act was nearing final approval in Congress. Obama signed the bill into law 22 days later.
In the CNBC interview, Buffett talked about the high cost of health care in the United States — which he correctly said consumes about 17 percent of the nation’s gross domestic product. He compared health care costs to “a tapeworm eating, you know, at our economic body.” He then said the Senate bill would do little to address the cost of health care.
“Unfortunately, we came up with a bill that really doesn’t attack the cost situation that much. And we have to have a fundamental change,” Buffett said.
The host, Becky Quick, asked Buffett if he was “in favor of scrapping this and going back to start over.” He said: “I would be if I were President Obama.” But he also said that he wasn’t changing his mind on the bill and he preferred it to the status quo.
Quick, March 1, 2010: This is different than what you’ve said when we’ve talked to you in the past. I mean, even a couple months ago when I sat down and talked to you, you said that you would vote, I believe, for the bill if it were in front of you.
Buffett: I–if it’s a choice…
Quick: When did you change your mind?
Buffett: No, if it was a choice today between plan A, which is what we’ve got, or plan B, what is in front of–the Senate bill, I would vote for the Senate bill. But I would much rather see a plan C that really attacks costs. And I think that’s what the American public want to see. I mean, the American public is not behind this bill. And we need the American public behind the bill, because it’s going to have to do some tough things. But in–if it doesn’t bring down costs significantly–and you can say, well, you’re bringing down costs by raising a tax over here or cutting–improving Medicare, but you can do those things anyway. That’s got nothing to do with what’s being proposed in the bill. So I–if the only choice I had in the world was the present system or the present bill, I would take the bill. But I think it’d be far better to say cost is it. We’re going to go back and we’re not going to come back to the American people until we have something that is going to take this 16 or fraction and it’s going to bring it down somewhat toward what other countries are doing.
So, Buffett at the time supported the bill and would have voted for it, despite its flaws.
Since the Affordable Care Act became law, Buffett has reiterated his support for it. In an interview with Betty Liu of Bloomberg Television’s “In the Loop” last year, Buffett was asked if the U.S. Supreme Court made the right decision to uphold the constitutionality of the law. He said yes and called the law a “step in the right direction in many ways” while also once again expressing his concern about the high cost of health care.
Liu, July 13, 2012: A few weeks ago we heard from the Supreme Court, they upheld the health care reform act, the Affordable Care Act. Was that the right decision?
Buffett: Well I think it’s the right decision, but I think that the health care problem is the number-one problem of America and of American business. If we have 17 or 18 percent of our GDP going to health care and we’re competing with countries that have 10 percent. That’s seven or eight points. There’s only 100 points in the dollar. And to have a seven- or eight-point disadvantage is huge. And a lot of businessmen complain about corporate taxes.
Buffett: Corporate taxes are less than two percent of GDP. So if you eliminated all the corporate taxes you’ve got seven points against you on health care. It’s the tapeworm essentially of the American economy. And we have not dealt with that yet. Obamacare is a step in the right direction in many ways, but in terms of cost –
In their recent efforts to defund Obamacare, some Republicans have cast the president’s own allies as opponents of the law. They frequently cite a letter, for example, from three union leaders that asked Democratic congressional leaders to amend the law, warning that if implemented as written, the law “will shatter not only our hard-earned health benefits, but destroy the foundation of the 40-hour workweek that is the backbone of the American middle class.”
On ABC’s “This Week,” Graves, a two-term congressman from Georgia, cited union leaders and Buffett as examples of “widespread” opposition to Obamacare.
Graves, Sept. 22: Warren Buffett says stop it now and start over. You have the three top leaders of the unions in our country saying this is not what will work. It’s going to create a new underclass of workers that are under 30 hours. It’s not just Republicans, this is widespread …
But Buffett isn’t one of those critics. In his interview with the Omaha paper, which is owned by his company Berkshire Hathaway, Buffett called reports that he wants to scrap the bill and start over “100 percent wrong.”
Omaha World-Herald, Sept. 17: Buffett said the stories took his comments out of context and added the “scrapped” wording.
“I’ve never suggested nor thought Obamacare should be scrapped,” said Buffett, who has supported Obama’s political campaigns. “I support it. It relates to providing medical care for all Americans. That’s something I’ve thought should be done for a long, long time.”
Buffett himself goes too far in saying that he “never suggested nor thought Obamacare should be scrapped.” He did answer in the affirmative when asked that very question in March 2010. But his words were taken out of context, and he did not say the law should be scrapped now. He indicated his support for the bill in that interview as an improvement over the current health care system. And, after the bill became law, he reiterated that position last year and again this year.
Saturday, September 28, 2013
1.'It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.'
Source: 1989 Letter to shareholders
This is one of Buffett's more famous quotes, and it reflects one of the basic tenets of his investment strategy: He sticks with companies he can fully comprehend, and ones for which the intrinsic value is self-evident, regardless of the current state of their finances. It's a philosophy that has served him well; if he weren't prone to giving vast amounts of his money to charity, Buffett might be the single richest man in the world (and he was, in fact, in 2008, according to Forbes' annual list).
Buffett's interest in moneymaking began early. As a boy growing up in Omaha, Neb., he would sell chewing gum and magazines door to door, and he filed his first tax return at age 14 (marking deductions for his bicycle and watch, used on a paper route). In high school, Buffett and a friend bought a pinball machine and put in a local barber shop; they quickly expanded that enterprise to include several pinball machines around town.
Today, Buffett's personal net worth hovers right around $55 billion and his investment firm, Berkshire Hathaway, owns a number of notable American companies outright, including: GEICO, Dairy Queen, Fruit of the Loom, Helzberg Diamonds, and half of Heinz.
2.'Rule No. 1: never lose money; rule No. 2: don't forget rule No. 1'
Source: "The Tao of Warren Buffett" (2006)
3.'Our approach is very much profiting from lack of change rather than from change. With Wrigley chewing gum, it's the lack of change that appeals to me. I don't think it is going to be hurt by the Internet. That's the kind of business I like.'
Source: Businessweek (1999)
A look at Berkshire Hathaway's portfolio bears out this bit of advice: The firm invests primarily in companies that have been around a long time and can be explained in a brief sentence: Dairy Queen sells ice cream, GEICO sells insurance, and so on.
Buffett's relationship with GEICO dates back to 1952, when he discovered that one of his investment idols, Benjamin Graham, sat on the company's board. During an attempt to meet Mr. Graham, Buffett had a chance meeting with then-GEICO vice president Lorimer Davidson, and the two became lifelong friends.
4.'I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.'
Source: At a panel discussion after the premier of the documentary "I.O.U.S.A" (2008)
5.'The stock market is a no-called-strike game. You don't have to swing at everything – you can wait for your pitch. The problem when you're a money manager is that your fans keep yelling, "Swing, you bum!" '
Source: "The Tao of Warren Buffett" (2006)
6.'Price is what you pay; value is what you get. Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down.'
Source: 2008 Letter to shareholders
Buffett's annual letters to Berkshire Hathaway shareholders are highly anticipated; his writings are widely lauded for their effective storytelling and clear, simple language.
7.'Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.'
Source: "Buffett: The Making of an American Capitalist" (1995)
8.'If you understood a business perfectly and the future of the business, you would need very little in the way of a margin of safety.'
Source: 1997 Berkshire Hathaway annual meeting
So, the more vulnerable the business is, assuming you still want to invest in it, the larger margin of safety you'd need. If you're driving a truck across a bridge that says it holds 10,000 pounds and you've got a 9,800 pound vehicle, if the bridge is 6 inches above the crevice it covers, you may feel okay, but if it's over the Grand Canyon, you may feel you want a little larger margin of safety.'
Berkshire Hathaway's annual meetings, commonly referred to as "Buffett Woodstock," have become can't-miss events in the financial world. Last May, 35,000 people descended on Omaha, Neb. for the weekend-long convention celebrating all things Buffett. The Oracle himself fields questions from investors and journalists, hobnobs with luminaries ranging from Bill Gates to NFL players, and sometimes plays a game or two of ping pong.
9.'We've long felt that the only value of stock forecasters isto make fortune tellers look good. Even now, Charlie [Munger] and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.'
Source: 1992 letter to shareholders
Charlie Munger is Buffett's longtime business partner and the vice chairman of Berkshire Hathaway, He's a fellow Omaha, Neb. native who also serves as the director of wholesaler Costco. The two have their differences: Mr. Munger is a known Republican, while Buffett has become known in recent years for supporting Democrats and democratic ideas.
10.'We don't get paid for activity, just for being right. As tohow long we'll wait, we'll wait indefinitely.'
Source: 1998 Berkshire Hathaway annual meeting
Friday, September 27, 2013
Joey Prusak, 19, has been hailed as a Good Samaritan after he gave $20 out of his own wallet to a blind customer who dropped $20 and the money was taken by a woman who refused to return it.
"I was just doing what I thought was right," Prusak told the Associated Press. "I did it without even really thinking about it. ... Ninety-nine out of 100 people would've done the same thing as me."
The teen's good deed went viral after a customer who witnessed the incident wrote an email about it to Dairy Queen and the store printed it out and posted it. A customer took a photo of the email and it spread through Facebook and Reddit.
Since then, supporters have flooded the Dairy Queen where Prusak is a manager with visits and phone calls. People have offered him jobs and given him money for college.
He even got a very special phone call from billionaire Warren Buffett, whose company owns Dairy Queen, as well was Dairy Queen president and CEO John Gainor.
Buffett requested that Prusak attend the Berkshire Hathaway shareholders meeting in May 2014 in Omaha, Neb., so that he can meet him, Dairy Queen spokesman Dean Peters told ABCNews.com today. Buffett is chairman, president and CEO of the famed multinational holding company.
Prusak will be Gainor's special guest at the meeting.
"We're thrilled that Joey, one of our young managers in Hopkins, would do something like that, to go above and beyond to help out a customer like he did," Peters said. "We couldn't be more proud."
Peters said the company is "absolutely" working on a way to reward Prusak but aren't ready to make a public announcement yet.
"Here's somebody that did something good for someone else and no one asked him to do it," he said. "It strikes a chord in a lot of people."
Prusak was working at the Hopkins, Minn., Dairy Queen where he is a manager when he noticed a blind man drop a $20 bill on the ground and was unaware of it. An older woman in the line picked up the bill and put it in her purse instead of returning it to the man, Prusak said.
Prusak asked the woman to give the man his money back, but she said it was her money that she had dropped. He asked her again to return the money, but she refused. He then asked her to leave the store, as he would not serve someone so disrespectful.
"She got extremely angry and began to swear at your employee," the witnessing customer wrote in the email to Dairy Queen. "He stayed calm and never gave her any attitude."
The woman left the store and the customer who wrote the email told Prusak that he had done the right thing and then went and sat in the lobby near the blind man.
"What happened next I would have never expected," the email said.
Prusak approached the man, opened his own wallet and gave the man $20.
"I was in shock by the generosity that your employee had, taking his own money out of his own wallet to give to the customer because some other lady decided to steal something that wasn't hers," the email said.
Then Prusak went back to work.
Thursday, September 26, 2013
Warren Buffett, 83-year-old billionaire, met a roomful of twenty-something Georgetown University students Thursday,and gave them simple investment advice: You can get wealthy with just a few good investment choices.
Buffett was speaking at a question-and-answer session hosted by Bank of America CEO Brian Moynihan. The event was part of a partnership between Georgetown's Global Social Enterprise Initiative at the University's McDonough School of Business and Bank of America.
When one student asked for a stock tip, Buffett, widely considered the most successful investor of the 20th century, gave him a simple answer: Buy a copy of The Intelligent Investor, the investing bible written by Benjamin Graham, father of value investing. That and two wedding licenses, Buffett said, were his best investments.
But, the chairman and CEO of Berkshire-Hathaway said, you don't need to make hundreds of investments -- just a few, made at the right time. "Most stocks at some point sell at very silly prices," Buffett said.
One of the most recent times: Five years ago, during the financial meltdown. "Whatever you think about it [the meltdown], it was worse," Buffett said, saying Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and Timothy Geithner, then president of the New York Federal Reserve Bank deserved credit for saving the economy. He also gave special credit to President George W. Bush, although he didn't vote for him.
"Bush came out with the economic insight for all times, and in 10 words," Buffett, said. "He said, 'If money isn't loose enough, this sucker could go down.'"
Buffett also advised students to stick with companies and industries that they know. "The most important thing is deciding what industries you can be right about," he said. Bill Gates couldn't convince him about computers, he said, but he did understand that people would continue to chew gum and drink soft drinks. "I'll stick with chewing gum," he said. "It's a terrible mistake to think you have to have an opinion on everything."
Buffett's optimism was clear throughout. "If you look at the twentieth century, with two wars, the Spanish influenza, and the Great Depression, and the Dow went from 66 to 11,497. With all those terrible things happening, America works."
But, he said, income inequality is a growing problem and needs to be addressed by government. "The rich are doing extremely well, businesses are doing well, profit margins are terrific compared with historic levels, but the for the bottom 20%, 24 million people, the top income is $22,000. We haven't learned how to let everyone share the bounty that we have."
And Buffett reflected on his time in Washington as a student at Woodrow Wilson High School during World War II. His father, Howard Buffett, was a Congressman. "It was a window on an extraordinary time in American history," Buffett said. "We were more untied than any other time in my lifetime. People really did give up voluntarily a high percentage in terms of gas rationing, sugar and beef rationing -- we all bought savings bonds at school.
And, he said, as a paperboy, he delivered papers at the local hospital -- a favorite location because the patients tipped, in more ways than one. "The numbers racket was big in Washington," he said.
Wednesday, September 25, 2013
Conservative bloggers have turned up three-year-old quotes from Warren Buffett and cast them as fresh evidence that American support is dwindling for President Barack Obama's health care law.
But the quotes are not properly identified as three years old and do not reflect Buffett's full thinking on the health care law.
As our full report shows, the comments came from an interview that Buffett, the chairman and CEO of Berkshire Hathaway Inc., gave to CNBC on March 1, 2010 -- three and a half years ago, before the bill was signed. Buffett's office told PolitiFact that the blog reports do not reflect his views. We rated the claim Pants on Fire.
Tuesday, September 24, 2013
Warren Buffet compares the Federal Reserve Bank to a hedge fund, calls it 'the ... - Daily Mail
One of the world’s richest men is comparing the Federal Reserve to a hedge fund, and heaping praise on a policy seen as misguided by some.
Warren Buffet, 82, made the comparison Thursday during an interview at Georgetown University, in Washington, D.C., while discussing the central bank’s quantitative easing policy – but another billionaire criticized the program, calling it a reverse-redistribution of wealth.
Quantitative easing saw the US government purchasing over $1.3trillion in securities at a clip of as much as $85billion per month. The policy was enacted at the height of the recession to save the financial markets from total collapse.
‘The Fed is the greatest hedge fund in history,’ said Mr Buffet.
The ‘Oracle of Omaha’ made the comparison only one day after the Fed made public plans to push back the long wind-down of the program, said the Telegraph.
The policy has stabilized financial markets to the point they are reaching highs never before seen, even setting closing records several times in recent months.
The billionaire also said he would reappoint current Fed chairman Ben Bernanke to a second term, if it were up to him, the Telegraph reported.
‘Since the panic of five years ago, he's done a terrific job,’ Buffet said, adding when asked if he would reappoint the former Princeton University professor ‘that’s what I would do.’Keep him!: Buffet also advocated for the reappointment of Fed chair Ben Bernanke at the end of his current term
Mr Buffet, head of Berkshire Hathaway, did warn that the government’s eventual exit from the securities business may not be as easy as its entry.
‘We are in an experiment which hasn't really been tried before,’ he said, according to the Telegraph, ‘buying securities is usually easier than selling securities.’
The Fed’s quantitative easing purchases have been a combination of Federal Treasury bonds and mortgage-backed securities.
Monday, September 23, 2013
For the 20th year in a row, Microsoft co-founder Bill Gates has been named the richest person in the United States, according to the Forbes annual list released on Monday.
Gates is worth $72 billion, with Microsoft accounting for only one-fifth of his overall wealth. It turns out most of his money comes from his other investments — notably his firm Cascade, which owns large shares in Deere & Co., the Canadian National Railway and Mexican Coke bottler Femsa.
While the US economy is still battling slow growth, Gates made an additional $9.8 billion in 2013 alone, according to Bloomberg's Billionaire Index.
Warren Buffett, whose net worth is $58.5 billion, ranked number two on the Forbes list.
The 83-year-old CEO of Berkshire Hathaway also made big gains this year, adding another $12.5 billion to his wealth.
More from GlobalPost: Bill Gates gets real in Reddit chat (VIDEO)
Other big winners include Facebook’s Mark Zuckerberg, whose stock holdings made him $9.6 billion in 2013 and helped him rejoin the top 20 list of richest Americans after getting cut last year.http://www.globalpost.com/dispatch/news/business/130916/bill-gates-warren-buffet-forbes-400-richest-americans
Monday, July 8, 2013
Chapters 8 and 20 have been the bedrock of my investing activities for more than 60 years. I suggest that all investors read those chapters and reread them every time the market has been especially strong or weak.
Tuesday, July 2, 2013
Wednesday, April 24, 2013
Q: If it were possible, what advice would Warren Buffett give to his 10-year-old self ?
A: The same advice we are giving through Secret Millionaires Club. Things like: “The best investment you can make is an investment in yourself; The more you learn, the more you’ll earn; Find something you like to do, and you’ll never work a day in your life; Great partnerships will make any job easier.
Monday, April 22, 2013
Suntech Power Holdings Co., Ltd. (ADR)(NYSE:STP) shares and volumes have seen a surge due to rumours going around that billionaire investor Warren Buffet has plans to buy the company.
Suntech declared bankruptcy after it was unable to pay $541 million in convertible debt on March 15. However with its factories still operating there is not much clarity on how the bankruptcy proceedings will go on. Suntech was the largest solar panel maker in the world with more than 10,000 employees, but the downturn in the industry has claimed it as one of its victims.
Meanwhile Suntech has received a notice from Nasdaq and will soon be delisted. This means that the stock will not be trading in the US markets for a long time.
Wednesday, April 17, 2013
Berkshire India also expects social media platforms like Facebook and Twitter to play an increasingly crucial role.
“As we progress towards becoming the one-stop shop for insurance, our aim is not just to sell insurance but to help the customer understand the nuances of insurance. It is here that social media plays a major role... We realise that the major attraction of the online mode for a customer is a relatively cheaper pricing,” Balakrishnan said.
Ajit Jain, Berkshire Hathaway’s global head of reinsurance business and often seen as a possible successor to Warren Buffett, also plays an active role in its Indian operations.
“Ajit Jain is a part of the Board of Berkshire India Limited and a regular participant in our discussions and formulations. Being actively involved and well versed with our operations, Jain is both aware and happy of our progress as a Company,” Balakrishnan said.
Asked about life insurance business plans, he said life insurance is a different ball game all together but with adequate research, it expects to introduce life products well-suited for the online medium.
“Products that are both a good value proposition for the customer and viable to sell online,” he said.
“As use of mobile Internet increases, our penetration to the rural and semi-urban areas will grow rapidly given that a large part of our web traffic today stems from mobile devices.
Our rural penetration is expected to closely toe that of the telecom sector,” Balakrishnan said.
Monday, April 15, 2013
With an aim to become a leading online insurance provider, the Indian venture of Warren Buffett-led Berkshire Group is betting big on the popularity of mobile phones and social media to boost its business. Berkshire India sells motor, travel and health insurance products online at on BerkshireInsurance.com and it will soon start selling life insurance products as a corporate agent of Bajaj Allianz Life Insurance.
Having started operations here in 2011 with just eight employees, Berkshire India — a majority owned non-direct subsidiary of US-based Berkshire Hathaway Inc — currently has more than 100 employees and headquartered at Gurgaon near here.
The company uses a unique mode for insurance sales through Internet and expects the growing popularity of Internet-enabled mobile devices, such as smartphones and tablets, to further aid to this cost-effective business model.
”...Over half of India’s total Internet user base will access Internet solely through mobile or tablet devices by 2015. Since our direct model of business employs telephone and Internet, we are positioned to enjoy a great advantage,” BerkshireInsurance.com CEO Arun Balakrishnan told PTI.
“We are confident of our business model and are continually developing it to make it even more efficient and cost effective,” he said.
India is estimated to have the world’s third-largest Internet user base of 120 million people.
Monday, April 1, 2013
Warren Buffet lives in a five-bedroom house brought in 1958.
So, does that mean that Warren Buffet is a miser? With over $50 billion in wealth, he still stays in a 55-year-old house that too with "just" five bedrooms. He surely must be bluffing about his wealth, because we know for sure he is not bluffing about the house. Or is he? Well not at all. His known public wealth is $53 billion and growing.
So why does the world's fourth richest man stay in such a small house?
No, Warren Buffet is not stingy or miserly by any means, not anyone who donates $30 billion to charity can be. Rather, he has mastered the art of creating wealth.
Wealth is not created just by investing, but also by avoiding unnecessary expenses. It does not make one stingy; rather, it makes one frugal. This frugality has helped him grow his wealth year on year.
His logic is simple: An extra 10 rooms in the house is not going to create any major difference to him. However, the same money, if invested rightly -- of which he is a master -- can be made to grow to probably 10 times the same amount.
Yes, it is not easy for all of us to be like him. Others might say that he can "afford" to be frugal because he already has so much wealth and does not need to worry about anything else. True, but he has stayed the same way even when he was poor.
If Warren Buffett can do it on such a large scale, we can at least do it on a smaller scale. The secret lies in falling in love with growing wealth. If you can fall in love with the happiness that one gets by seeing wealth grow, you will automatically start repelling the evil twin: spending.
Initially, it may be very difficult and you may not even be able to follow. But once you get accustomed to it, you realize that the pain of sacrificing current consumption is much smaller as compared to the thrill of creating long-term wealth. The Rs. 20,000 saved by going for a simple phone can in the coming years grow into Rs. 200,000 and give you the power to be a giver.
The fundamental is to make sure we give priority to the needs and minimize the wants. Happy frugality.
Wednesday, March 13, 2013
Sunday, March 10, 2013
Thursday, February 28, 2013
Wednesday, February 27, 2013
Friday, February 8, 2013
Last year, around the same time the same company bought a FirstSolar power plant for $2B and change.
Does this mean Solar Companies are a buy ? Possibly.
Thursday, February 7, 2013
Wednesday, February 6, 2013
Warren Buffett's Berkshire Hathaway Inc. said that is adding the Greensboro, N.C., News & Record to its growing newspaper division.
Berkshire bought the 122-year-old daily newspaper from Landmark Media Enterprises, based in Norfolk, Va.
Buffett has said he thinks newspapers will continue earning a decent return as long as they remain the primary source of information about their communities. Newspapers remain a relatively small part of Berkshire Hathaway, which owns an assortment of more than 80 subsidiaries and holds major stakes in companies like Coca-Cola Co., Wells Fargo and IBM.
Tuesday, February 5, 2013
The banks will not get this country in trouble, I guarantee it," Warren Buffet recently said. The capital ratios are huge, the excesses on the asset side have been largely cleared out... we own bank shares and I personally own stock in banks. I do not see problems in these things.
Currently Buffet owns Wells Fargo and US Bank, and possibly others.
Monday, February 4, 2013
The self-proclaimed “Chinese Warren Buffett” was sentenced Friday to six years in prison and ordered to pay a fine of $2.8 million.
Tang, lured 200 people into a $52 million Ponzi scheme by posing as an ultra-successful investor. But he’s now destitute, living on welfare and says he cannot compensate his victims.