> Warren Buffett Blog: March 2014

Monday, March 31, 2014

Start investing young

Warren’s interest in money and markets started at an early age. 

At the young age of 11, Buffett purchased three shares of Cities Service at $38 a share for himself and his older sister. The shares fell as low as $27 and then bounced to $40 where he sold it. Eventually those shares were worth as much as $200. The experience taught him one of the basic lessons of investing: patience is a virtue.

Friday, March 28, 2014

Berkshire almost eliminates catastrophe insurance sales

Warren Buffett explains why Berkshire has almost eliminated sales of catastrophe insurance.

"The rates came down dramatically, and we do not regard the exposure as 
having come down dramatically."

Thursday, March 27, 2014

Form your own investing opinions and not rely on others

Forming macro opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important. 

(When I hear TV commentators glibly opine on what the market will do next, I am reminded of Mickey Mantle's scathing comment: "You don't know how easy this game is until you get into that broadcasting booth.")

Wednesday, March 26, 2014

No winners in NCAA Bracket Challenge

Quicken Loans offered $1 billion for the perfect March Madness bracket. Unfortunately for those who participated, no one won.

The contest backed by Warren Buffet, said that 99 percent of brackets were eliminated after Dayton beat Ohio State and Mercer beat Duke in the college basketball tournament.

Tuesday, March 25, 2014

Berkshire did well last year 2013

On the operating front, just about everything turned out well for us last year - in some cases very well. Through full cycles in future years, we expect to do that again. If we fail to do so, we will not have earned our pay. After all, you could always own an index fund and be assured of S&P results.

Monday, March 24, 2014

Berkshire shares dont pay dividend

Warren Buffett prizes having a margin safety when selecting investments for Berkshire Hathaway's investors. But when it comes investors buying Berkshire Hathaway's stock, the company doesn't offer its investors the comfort of a dividend.

Investors are often surprised Berkshire Hathaway doesn't pay a dividend. Even giant tech companies like Microsoft, Apple and Oracle, who skipped paying dividends for years so they could invest in their future growth, are all paying them now.

Dividends certainly offer investors some degree of safety. Investors like them not just for the income, but for the financial discipline they enforce. Buffett probably knows this just as well as any, since he's long favored many stocks with large dividends. Many of Berkshire's "Big Four" investments are also notable payers of dividends. American Express, Coca-Cola, IBM and Wells Fargo pay 1%, 3.2%, 2% and 2.5% dividend yields, respectively.

Investors don't need to avoid Berkshire Hathaway just because it doesn't pay a dividend. Its price appreciation has been strong enough reward long term. But as the company gets larger, it's increasingly becoming just a benchmark of the broad market. And by investing in an index fund that tracks the market, investors can get the same diversification, and a dividend yield of nearly 2%.

Friday, March 21, 2014

Warren Buffett: Humans behave crazy

Warren Buffett on stock market buy and sells:

Humans will behave in crazy ways, both on the upside and the downside in the next 50 years. It's very unlikely they do it in the next few years because after something like 2008, once they get out of the emergency room, they're a little more careful for awhile.

Thursday, March 20, 2014

Warren Buffett disses Bitcoin

On an interview on CNBC Buffett on Bitcoin said, "Stay away from it...It’s a mirage, basically. It’s a very fast money order, anonymously.”

“It’s a method of transmitting money. It’s a very effective way of transmitting money, and you can do it anonymously and all that. A check is a way of transmitting money, too. Are checks worth a whole lot of money just because they can transmit money? “

Wednesday, March 19, 2014

Invest like Warren Buffett by investing in Index funds

Warren Buffett wants trustees to invest his money in Index funds once he is 
'gone'.


From his annual Feb 2014 letter to shareholders:

"My advice to the trustee couldn't be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S & P 500 index fund. (I suggest Vanguard's.) I believe the trust's long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions or individuals — who employ high-fee managers."

"Both individuals and institutions will constantly be urged to be active by those who profit from giving advice or effecting transactions. The resulting frictional costs can be huge and, for investors in aggregate, devoid of benefit. So ignore the chatter, keep your costs minimal, and invest in stocks as you would in a farm."

Tuesday, March 18, 2014

Warren Buffett beats Carlos Slim to second richest man

Warren Buffett has passed Carlos Slim to become the world’s second-richest person. 

The 83-year-old Berkshire Hathaway Inc. chairman has an estimated net worth of US$63.4 billion.

Berkshire said March 1 that its annual profit climbed to a record US$19.5 billion on gains at its operating businesses, including railroad Burlington Northern Santa Fe, which Buffett bought in 2010. 

Slim’s fortune has fallen US$10.9 billion since the start of 2014 — the most of any billionaire on the Bloomberg ranking — as Mexico City-based America Movil SAB, the largest mobile-phone operator in the Americas, has plummeted 14%. He has a US$62.9 billion net worth.

Monday, March 17, 2014

Warren Buffett buys his first TV Station

Warren Buffett's Berkshire Hathaway has agreed to acquire Miami's WPLG from Graham Holdings as a part of a $1.1 billion swap with the company formerly known was the Washington Post Co. WPLG is one of South Florida's top-rated TV stations. The deal requires approval by the Federal Communications Commission.

Under terms of the deal, Berkshire will hand 1.6 million shares of Graham Holdings back to the company. 

Thursday, March 13, 2014

Buffett owns 2.1 percent of Goldman Sachs

When Berkshire Hathaway reported its holdings, it showed that Berkshire now owns 2.1% of Goldman Sachs. This shows Buffett's belief and confidence in Goldman.

This transaction dates back a few years though to the height of the 2008 financial crisis when GS asked the Oracle of Omaha to invest $5 billion. GS needed money to shore up its books after Lehman failed 


Wednesday, March 12, 2014

Berkshire on RSA Insurance

According to market talks, Warren Buffett is considering taking a stake in embattled insurer RSA. 

Mr Buffett says invest in what you know and understand, but he might understand the UK. After all, it was revealed last week that he slashed his bet on Tesco’s turnaround by a third as its turnaround plan stalled.

Tuesday, March 11, 2014

Dont be afraid to say NO

Warren Buffett quote on importance of saying rejecting requests when you cant help

"The difference between successful people and very successful people is that very successful people say ‘no’ to almost everything."

Monday, March 10, 2014

Warren Buffett $800 million expensive loss

Most of you have never heard of Energy Future Holdings. Consider yourselves lucky; I certainly wish I hadn’t. The company was formed in 2007 to effect a giant leveraged buyout of electric utility assets in Texas. The equity owners put up $8 billion and borrowed a massive amount in addition. 

About $2 billion of the debt was purchased by Berkshire, pursuant to a decision I made without consulting with Charlie. That was a big mistake. 

Unless natural gas prices soar, EFH will almost certainly file for bankruptcy in 2014. Last year, we sold our holdings for $259 million. While owning the bonds, we received $837 million in cash interest. Overall, therefore, we suffered a pre-tax loss of $873 million. Next time I’ll call Charlie.

Friday, March 7, 2014

Nobody has won by betting against USA

I have always considered a ‘bet’ on ever-rising U.S. prosperity to be very close to a sure thing. Indeed, who has ever benefited during the past 237 years by betting against America?

Thursday, March 6, 2014

Warren Buffett 6 wisdom for winning investments

- You don’t need to be an expert in order to achieve satisfactory investment returns.

- Focus on the future productivity of the asset you are considering.

- If you instead focus on the prospective price change of a contemplated purchase, you are speculating.

- Games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard.

- Forming macro opinions or listening to the macro or market predictions of others is a waste of time.

-What the economy, interest rates, or the stock market might do in the years immediately following.. was of no importance..."

Wednesday, March 5, 2014

Buffett reduces position in Tesco

Billionaire US investor Warren Buffett has trimmed his stake in Tesco after a turbulent period for the chain. The annual letter from his Berkshire Hathaway investment vehicle revealed a cut in its Tesco supermarket holding from 5.2 per cent to 3.7 per cent.

Tuesday, March 4, 2014

Investing analogy with farming

If a moody fellow with a farm bordering my property yelled out a price every day to me at which he would either buy my farm or sell me his – and those prices varied widely over short periods of time depending on his mental state – how in the world could I be other than benefited. 

If his daily shout-out was ridiculously low, and I had some spare cash, I would buy his farm. If the number he yelled was absurdly high, I could either sell to him or just go on farming.

Monday, March 3, 2014

Pension problems coming due

Local and state financial problems are accelerating, in large part because public entities promised pensions they couldn't afford. Citizens and public officials typically under-appreciated the gigantic financial tapeworm that was born when promises were made that conflicted with a willingness to fund them. 

Unfortunately, pension mathematics today remain a mystery to most Americans... During the next decade, you will read a lot of news – bad news – about public pension plans. I hope my memo is helpful to you in understanding the necessity for prompt remedial action where problems exist.