> Warren Buffett Blog: 2017

Monday, April 24, 2017

Warren Buffett's son launches charity to support Women

A new philanthropic organization set up by Warren Buffett's son called the NoVo foundation will devote $90 million over seven years to support young women and girls of color in the United States. Most of Warren Buffett's philanthropy typically goes towards helping the Bill & Melinda Gates Foundation eliminate diseases and supporting the developing world.

Peter Buffett and his wife Jennifer will distribute the $90 million through their foundation. The foundation works to advance adolescent girls' rights, ending violence against them, helping local economies, supporting Indigenous communities, and researching social and emotional learning. They first announced their $90 million commitment last year.

Wednesday, April 19, 2017

Berkshire trims Wells Fargo stock for non-investment reasons

Berkshire has sold some of its stake — one-sixth of one per cent of the bank’s outstanding shares — only in order to end negotiations with the Federal Reserve over how to deal with the fact that Berkshire had become such a large shareholder of the bank.

As Wells bought back its own stock last year, Berkshire’s stake increased to more than 10 per cent, triggering scrutiny under the US Change in Bank Control Act.

“These sales are not being made because of investment or valuation considerations,” Berkshire said in a statement.

Those results will show how well Wells is coping with the fallout from the scandal in which its employees opened thousands of fake bank accounts. The bank’s net income is forecast to decline for a sixth straight quarter, down 4 per cent, in part because of mounting legal expenses and a revamp of its sales practices.

Berkshire has netted $500m from selling the sliver of its Wells stake, which has been one of the longest-held pieces of Mr Buffett’s $122bn stock portfolio. It will still hold just below 10 per cent and still be its largest shareholder.

Tuesday, April 11, 2017

Your best asset is yourself - Invest in you


Investing in yourself is the most important investment you'll ever make in your life. There's no financial investment that'll ever match it, because if you develop more skill more ability, more insight, more capacity, that's what's going to really provide economic freedom. … It's those skill sets that really make that happen.

Monday, April 10, 2017

Warren Buffett hiring tips for companies

Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if you don’t have the first, the other two will kill you. You think about it; it’s true. If you hire somebody without [integrity], you really want them to be dumb and lazy.

If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But, if each of us hires people who are bigger than we are, we shall become a company of giants.

Thursday, April 6, 2017

What the wise do in the beginning, fools do in the end

A pin lies in wait for every bubble. And when the two eventually meet, a new wave of investors learns some very old lessons: First, many in Wall Street — a community in which quality control is not prized — will sell investors anything they will buy. Second, speculation is most dangerous when it looks easiest.

Wednesday, April 5, 2017

Recovering from investing mistakes


The best thing is to learn from other guy’s mistakes. [General George] Patton used to say, “It’s an honor to die for your country; make sure the other guy gets the honor.” 

There are a lot of mistakes that I’ve repeated. The biggest one, the biggest category over time, is being reluctant to pay up a little for a business that I knew was really outstanding.”

Monday, April 3, 2017

Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future


We’ve long felt that the only value of stock forecasters is to make fortune tellers look good. Even now, Charlie 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.

Thursday, March 30, 2017

Investing VS Romance - Warren Buffett Quote

Successful Investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant.

Calling someone who trades actively in the market an investor is like calling someone who repeatedly engages in one-night stands a romantic.

Wednesday, March 29, 2017

Time is the friend of the wonderful company, the enemy of the mediocre


I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.

Monday, March 27, 2017

What we look for in companies

We select such investments on a long-term basis, weighing the same factors as would be involved in the purchase of 100% of an operating business:

    (1) favorable long-term economic characteristics;
    (2) competent and honest management;
    (3) purchase price attractive when measured against the yardstick of value to a private owner; and
    (4) an industry with which we are familiar and whose long-term business characteristics we feel competent to judge.

Thursday, March 16, 2017

Free trade is great but can hurt certain segments of the population

Free trade is wonderful for the world and for the United States, but its benefits are diffused among 320 million people. You buy your bananas cheaper because we don't try and produce them in the United States. But the penalties from free trade are terrible to specific industries. And as an investor, I can own – make a dumb decision on owning a shoe company. But if I own a good insurance company, I can diversify away the problems. 

If you're a 55-year-old steelworker, you can't diversify away your talents. I mean, you had it if steel or textiles or shoes become subject to total, it all moves offshore. So you want to have free trade, but you also have to take care of the people who, through no fault of their own, have spent their life learning one profession. And you can talk about retraining and all that, but it just isn't practical. And just take Berkshire Hathaway. We started with 2,000 employees in New Bedford, Mass, turning out textiles. And that business was doomed. And we had workers there who really they didn't have alternatives at age 50. Fair number of them just spoke Portuguese. They didn't have a chance. And a rich country that's prospering because of free trade, and as the world is prospering, should keep the free trade as much as possible. But they also should take care of the people that become the roadkill, you know, when an industry moves.

You've got to take care of those people. And if I were somebody that had spent 25 years in shoes or textiles or you name it, and somebody came around to me and said, "This is great for the world and it's great for those guys on the Forbes 400, but it's just too bad because you lose your job and it makes – we can buy our shoes a little cheaper, our underwear a little cheaper, our steel a little cheaper abroad," I would say that a rich society should figure out a way to take care of those people.

Wednesday, March 15, 2017

Border adjustment tax is essentially a Sales Tax

Border adjustment tax, I mean, it's an import tax, and an import tax is a sales tax. You're looking – we're here at the Nebraska Furniture Mart. This store is in several buildings, does over $400 million a year; 75 percent of what you see is imported. I mean, if we pay an import tax on it, our customers are going to pay for it. It's a sales tax, and it's a sales tax, in this case, on items that are not yachts or anything like that. They're things that the ordinary person buys. So it would be a big sales tax. I think the president said initially that it was – it'd be too confusing or too complicated or something of the sort. 

Tuesday, March 14, 2017

US secretary of state Rex Tillerson is an outstanding individual

 I certainly think Rex Tillerson makes a lot of sense. I mean, you've got an absolutely outstanding person. And incidentally, I would say this too, because you get a lot of this in politics: Rex Tillerson is going to be working for the United States in that job. I mean, people that get all upset because he was with ExxonMobil or something, or because he's got a fair amount of money, I have seen a lot of people enter high levels of public service. And I think the great majority of them take it very seriously, that their employer is the United States. And so I don't worry at all about the fact that somebody comes from the oil industry or that they've got a lot of money or anything of the sort. I do think most people rise to the occasion to quite a degree. Not always, but quite a degree. So, I don't know Tillerson. I've sat next to him one time at dinner. But, you know, he'd be the kind of person I would choose.

Monday, March 13, 2017

There are a lot of regulations that I think have gone too far

I will judge President Trump after four years based, number one, on how safe the country has been kept. I mean, that is the number one job of the chief executive of the United States. And that's not an easy job. And I'm not thinking of random killings or anything like that, I'm thinking of weapons of mass destruction. I mean, that's my number one worry. And that's the number one test I have. 

Secondly, I'll judge him, to a degree, although, they have less control over this – well, they need a little luck on weapons of mass destruction too, but how the economy does overall. And then third, I'll judge him on how if the economy does well, which I expect it to do, how wide the participation in that in a better economy extends. And those are the three primary tests I would have applied to Hillary Clinton or to Donald Trump.

Friday, March 10, 2017

Dont mix politics with business


Last year at our annual meeting, you know, it was clear I was for Hillary, but I got asked a question about the market based on who got elected. And that does not – and I said, America's going to do fine under – in terms of economically under – under either candidate as president. 

People who mix their politics up with their investment activities I don't think that makes sense. I've watched it all my life and obviously probably half the time, my adult life, I've had a president other than the one I voted for. But that has never taken me out of stocks. I mean, the American economy, you know, we're up to number 45 or so and we've done awfully well. If you mix your politics with your investment decisions, you're making a big mistake.

In 1951, I proposed to my wife. And my father-in-law was the most conservative guy in Nebraska except maybe for my dad. My father-in-law said, "I want to have a talk with you." So I went over to his house to have a talk. And he sat there and he said, "Warren," he says, "I just want to absolve you from any worries. You're going to fail. And the reason you're going to fail – my daughter may starve to death and you're going to fail, but I'm not going to blame you because it's because the Democrats are in and they're all Communists." And I listened to this thing for three hours. And I almost withdrew my proposal at the end. But I have seen people make economic decisions based on their political feelings and it is not the way to do it.

Thursday, March 9, 2017

We made a good profit on Dow Chemical stock

We've never owned chemical shares. We own a specialty chemical company Ebersol a chemical common stock we own we bought the preferred stock of Dow because we wanted a preferred position and we held it. It was kind of interesting we bought that stock in July of 2008, the preferred and they were going to acquire, Dow was going to acquire Rohm & Haas and they needed money for it and then the world fell apart in the fall and Dow wanted to get out of the contract, they sued Rohm & Haas to get out of the contract but it was held that they had to stick with it. 

So we closed the deal to buy the preferred stock in April of 2009 by which time the market had totally disintegrated the time we closed that we bought $3 billion worth it probably wasn't worth tops more than 60 cents on the dollar so we showed up with $3 billion for something that was worth $1.8 billion at the time which is one reason why people offer us deals they know we will be around at the closing. We showed up for the Wrigley closing too that was on October 4 or something but during that whole period we had commitments and that kept me from doing some other things we might have done at that time. The fact that we had this $3 billion going out the door.

We ended up making about a billion dollars and plus we had an 8.5 percent coupon those years.

Wednesday, March 8, 2017

Why I bought more Apple shares


Well, I would say Apple's — I mean, obviously it's very, very, very tech-involved, but it's a consumer product to a great extent too. And I mean, it has consumer aspects to it. And one of the great books on investing, which I've touted before, is one that Phil Fisher wrote back around 1960 or thereabouts, called "Common Stocks and Uncommon Profits." It had an effect on me. I went out to meet Phil Fisher after reading the book, I found him in this little office in San Francisco. And I recommend any investor read that book. And it's still in print. And he talks about something called the scuttlebutt method, which made a big impression on me at the time. But I used it a lot, which is essentially going out and finding out as much as you can about how people feel about the products that they ... it's just asking questions, basically. And Apple strikes me as having quite a sticky product and enormously useful product that people would use, and not that I do. Tim Cook's always kidding me about that. 

So I ask people about products all the time. When I take my great-grandchildren to Dairy Queen they bring along friends sometimes. They've all got a iPhone and, you know, I ask 'em what they do with it and how ... whether they could live without it, and when they trade it in what they're gonna do with it. And of course, I see when they come to the furniture mart that people have this incredible stickiness of — with the product. I mean, if they bring in an iPhone, they buy a new iPhone. I mean, they're ... it just has that quality. It gets built into their lives. Now, that doesn't mean something can't come along that will disrupt it. But the continuity of the product is huge, and the degree to which their lives center around it is huge. And it's a pretty nice, it's a pretty nice franchise to have with a consumer product.

But it's a decision-based ... but again, it gets down to the future earning power of Apple when you get right down to it. And I think Tim has done a terrific job, I think he's been very intelligent about capital deployment. And I don't know what goes on inside their research labs or anything of the sort. I do know what goes on in their customers' minds because I spend a lot of time talking to 'em.

Monday, March 6, 2017

Stock markets can be volatile but you should not be afraid

In the spring of 1942 I was 11 years old, and the Dow was at about 100. And we were losing the war in the Pacific at that point, that was early ... was shortly after Pearl Harbor. And there was no doubt in this country we were going to win over time. I mean, and people said, "Well, this is let's wait till things are clear, let's wait till we start winning the war." 

There's always a reason to wait and I've listened to that all my life. You know, when I got out of school the Dow had never been above 200. There'd never been a year when the Dow had not been below 200 during the year. 

Even in 1929, when it got to 381, the low was below 200. Never been a year. Well, so what, you know? But that was a big subject at that time. And then you know, we ran into price controls, we ran into the oil shocks, you name it, just all kinds of things. And those are diversions. So all my life I've been hearing, "You know, maybe there's a better time to invest, you know?" Or, "Things are more unpredictable now." They're always unpredictable. I can't predict what's gonna happen tomorrow. I mean, you could have anything happen tomorrow. We've had October 19th, 1987, 22 percent down in one day. 

So I can predict what'll happen ten or 20 years in a general way, but I have no idea what'll happen tomorrow. And the important thing is if you got these wonderful assets out there, to own 'em, and which ones do you own? I mean, if you ... if you save money you can buy bonds, you can buy a farm, you can buy an apartment, house, or even buy a part of American business. 

And if you buy a 10-year bond now you're paying over 40 times earnings for something whose earnings can't grow. And you know, you compare that to buying equities, good businesses, I don't think there's any comparison. 

But that doesn't mean the stock market can't go down 20 percent tomorrow. I mean, you never know what it's going to do tomorrow, but you do know what it's going to do over ten or 20 years. And people talk about 20,000 being high. Well, I remember when it hit 200 and that was supposedly high. The Dow, I mean, the Dow, in your lifetime. You know, you're going to see a Dow that certainly approaches 100,000 and that doesn't require any miracles, that just requires the American system continuing to function pretty much as it has.

Thursday, March 2, 2017

Why stocks make sense in this low rate environment

I've been talking this way for quite a while, ever since the fall of 2008. I was a little early on that actually. But I don't think you could time it. And we are not in a bubble territory or anything of the sort. 

Now, if interest rates were 7 or 8 percent then these prices would look exceptionally high. But you have to measure, you know, you measure everything against: interest rates, basically, and interest rates act like gravity on valuation. So when interest rates were 15 percent in 1982 they'd pull down the value of any asset. 

So, what's the sense of buying a farm on a 4 percent yield basis if you can get 15 percent in government's? But measured against interest rates, stocks actually are on the cheap side compared to historic valuations. But the risk always is, is that — that interest rates go up a lot, and that brings stocks down. 

But I would say this, if the ten-year stays at 230, and they would stay there for ten years, you would regret very much not having bought stocks now.

Wednesday, March 1, 2017

Stay in the game and stay invested


I don't know anybody that can time markets over the years. A lot of people thought they can. But, if you were buying a farm and you decided that farms were gonna be worth more money ten, or 20, or 30 years from now and that would be a productive asset, go out and buy it unless it was just ... some absurd price. 

And the best thing with stocks actually is to buy 'em consistently over time. You wanna spread the risk as far as the specific companies you're in by owning a diversified group, and you diversify over time by buying this month, next month, the year after, the year after, the year after. I ... but you ... making a terrible mistake if you stay out of a game that you think is going to be very good over time because you think you can pick a better time to enter it.

Monday, February 27, 2017

One word sums up our country's achievements: miraculous

One word sums up our country's achievements: miraculous.

From a standing start 240 years ago — a span of time less than triple my days on earth — Americans have combined human ingenuity, a market system, a tide of talented and ambitious immigrants, and the rule of law to deliver abundance beyond any dreams of our forefathers.

I mean, we have hiccups in the economy and we even had a panic in 2008. And we had a war during that period that when they started we were losing the war, actually, in the spring of 1942. But this country always comes back and wins. And it's astounding when you think about it, what's happened in 240 years. That is less than three of my lifetimes. And let's look at this place, I mean, there wasn't anything here 240 years ago. And civilization is gone on, you know, for centuries, and centuries, and centuries with people making very little progress in their lives. And then America showed the way and it ... and we have not lost the secret sauce.

Wednesday, February 22, 2017

Selling all Walmart shares


Warren Buffett's Berkshire Hathaway has sold off $900 million of Walmart stock, choosing instead to invest billions in airlines.

The sale, which leaves Buffett with nearly no shares in Walmart, comes as the US's largest traditional retailer has been rushing to catch up to Amazon and other online competitors.

Monday, February 20, 2017

Warren Buffett selling his Laguna Beach home for a cool $11 million profit

Warren Buffett is ready to sell his home in Laguna Beach, California for at $11 million. He bought the house originally in 1971 for $150,000. 

The home, built in 1936 has three levels and has 3600 square feet space. It was remodeled during Buffett’s ownership, sits on a corner lot and has a view of Emerald Bay. 

Buffett mainly resides in Nebraska and said he had previously spent summers and Christmases at the beach house. Buffett also bought a neighboring property. “That became kind of the annex,” he said. He sold the second property in 2005.

Tuesday, February 14, 2017

Warren Buffett believes in Wearable tech and Richline Group

"Jewelry is a centuries-old business that isn't going anywhere, so it's a safe bet. With the addition of technology, we're simply updating something everyone knows and loves to better fit our modern age." - Warren Buffett


Warren Buffett is embracing wearable technology. The billionaire investor, who has been cautious about investing in the tech sector in the past, is diving into wearables with a new smart jewelry line produced by his company Berkshire Hathaway's jewelry subsidiary Richline Group.

The line, dubbed Ela, will debut this spring, starting with smart wristwear—but don't expect to see a smartwatch from the get-go. Ela has been working on elegantly designed smart bracelets and plans to extend into other product categories, including rings and earrings, in the future. 

Ela devices will connect to both Android and iOS devices and share activity data with Apple's HealthKit and Google Fit, although the specific activity sensors that each device will have are unknown. Ela devices will also receive smartphone notifications, and the user can set gems on the device to glow in different colors and vibrate depending on the alert they're receiving.

Cliff Ulrich, product innovation manager for the Richline Group, told ZDNet that a goal was to create devices that are more than just "prettier step trackers." Ela devices will also have their own mobile app with which users can create "memories" that can be shared with a specific device. Content like photos, voice recordings, and songs can be preloaded to Ela devices so that users who are given the device as a gift can open up the content on their smartphones and relive "special memories" they have with the gifter.

Monday, January 23, 2017

President Trump deserves our respect


America works... I've said this before. It'll work wonderfully under Hillary Clinton, and I think it'll work fine under Donald Trump.

It doesn't work all the time perfectly... but you just look at where we go, milestone after milestone. Never bet against America.

I support any president of the United States. It's very important that the American people coalesce behind the president.

That doesn't mean they can't criticize him or they can't disagree with what he's doing maybe. But we need a country unified... He deserves everybody's respect."

Monday, January 9, 2017

Buffett's airline stocks soaring sky high

Buffett's Berkshire Hathaway disclosed in mid-November 2016 that it bought stakes in American, United Continental and Delta at some point during the third quarter.

On the same day as that filing, Buffett told CNBC that Berkshire also bought shares of Southwest in the fourth quarter. The Oracle of Omaha cited his friendship with Southwest co-founder, former CEO and chairman emeritus Herb Kelleher as a reason.

Since Berkshire's airline bets became public knowledge, shares of all four companies have been gaining in altitude. Delta (DAL) has risen 6%. American (AAL) is up 7%. Southwest (LUV) has soared nearly 13%. And United (UAL) has skyrocketed 14%.

Stocks often get a Buffett bump after Berkshire buys new stakes in them. Buffett is known as a consummate value investor, sifting through the rubble for bargains.

He's only recently begun to dip his toe into higher growth tech stocks -- and even there, Berkshire has limited itself to more mature (i.e. slower growth, gigantic and relatively cheap) tech companies like Apple, IBM and Verizon.

It's also worth noting that airline stocks took a breather last year after a couple of strong years, buffeted by terrorism fears, several high-profile technical glitches that led to major cancellations, rising jet fuel prices and a new round of fare wars sparked by discount carriers like Spirit (SAVE) and JetBlue (JBLU).

The airlines might be slowly getting back on track though. Delta reported on Wednesday that its passenger unit revenue -- a key measure of financial health for airlines -- was flat in December. 


Warren Buffett documentary on HBO preview

Wednesday, January 4, 2017

Owning Berkshire similar to diversification ?


In line with Berkshire's owner-orientation, most of our directors have a major portion of their net worth invested in the company. We eat our own cooking.

Charlie's family has 90% or more of its net worth in Berkshire shares [that's Charlie Munger, Berkshire's vice chairman]; my wife, Susie, and I have more than 99%. In addition, many of my relatives -- my sisters and cousins, for example -- keep a huge portion of their net worth in Berkshire stock."

Charlie and I feel totally comfortable with this eggs-in-one-basket situation because Berkshire itself owns a wide variety of truly extraordinary businesses. Indeed, we believe that Berkshire is close to being unique in the quality and diversity of the businesses in which it owns either a controlling interest or a minority interest of significance.