> Warren Buffett Blog: May 2017

Tuesday, May 30, 2017

Its not easy to beat the market

If you take half the people in the country and they don't do anything, they just own the average, they are going to get average results, right? If they don't have expenses they will get growth from that. The other by definition average, the other part average left for them, they are going to incur all kinds of fees and they are going to do way better – way worse than the people in the -- who do nothing. And I made this bet in order to just illustrate. The difference is incredible. The amount of money people wasted getting investment advice is just ridiculous in this country.

Only a handful of active investors beat the market
I've known 10 or so people with modest amounts of money, I would bet a lot of money that they would do better than average. And I say that there are hundreds, maybe even thousands. But there's thousands, and thousands, and thousands and thousands of hedge fund managers charging two and twenty is just ridiculous. And you don't get better because you charge a lot. I mean, that does not make you a better judge of securities or anything like that. And so the good salespeople, overwhelmingly, are the ones that attract the money, rather than the very few who are extraordinary at managing money. Phil Fisher, who wrote that book Common Stocks and he was going to do better than average. Charlie was going to do better than average in life in investments. Bill Ruane, a friend of mine, was going to do better. There have been a few. But there are very, very few. And then only if they work with fairly modest sum of money.

Monday, May 22, 2017

Index Funds vs Active Management

Costs really matter in investments. If returns are going to be seven or eight percent and you're paying one percent for fees that makes an enormous difference in how much money you're going to have in retirement.

Just remember, the person you're talking to, your fees are their income.

And it leaves your pocket and goes to them and you'd better get something for it. And you really don't get it in investment management. The record shows that the unmanaged index fund is going to do quite well over time and active investment as a group can't beat it.

Wednesday, May 17, 2017

Buy Index Funds specially when markets are down

The trick is not to pick the right company, the trick is to essentially buy all the big companies through the S&P 500 and to do it consistently and to do it in a very, very low cost way.

Consistently buy an S&P 500 low-cost index fund. I think it's the thing that makes the most sense practically all of the time.

Keep buying it through thick and thin, and especially through thin. The temptation when you see bad headlines in newspapers is to say, well, maybe I should skip a year or something. Just keep buying. American business is going to do fine over time, so you know the investment universe is going to do very well.

Warren Buffett buys more Apple, Airlines and sells IBM

Buffett recently disclosed that Berkshire sold off one-third of its 81 million IBM shares and bought about 133 million Apple shares.

The filing showed Berkshire added to its investments in American Airlines Group Inc. and Southwest Airlines Co. in the quarter. Its United Continental Holdings Inc. stake was unchanged, and its Delta Air Lines Inc. stake was reduced to 55 million from 60 million shares.

Berkshire held 49.3 million American shares at the end of March, up from 45.5 million. Its Southwest stake grew to 47.7 million from 43.2 million.

Buffett first disclosed his airline investments last fall, surprising many because he had long been critical of the industry. He has invested in all the major airlines now because he believes the industry is much healthier now and flying with planes at least 80 percent full most of the time.

Berkshire sold off nearly 9 million shares in Twenty-First Century Fox, the parent company of the 20th Century Fox movie studio and Fox News Channel, which has been hit by allegations of discrimination and harassment.

Tuesday, May 9, 2017

Berkshire Hathaway Shareholder Meeting 2017

Watch above the full 2017 Berkshire Hathaway Annual Shareholder meeting - Full Q&A

The video is just over 5 hours long.

Click here if the above video does not play.

Tuesday, May 2, 2017

Trump and Buffett both like Coca Cola

Coke has a fan in Trump, but it also has a loyal friend in Warren Buffett. The renowned investor is often caught with a bottle to his lips and has claimed to drink five cans a day.

In an interview Buffett said, 
"I'm one quarter Coca-Cola. If I eat 2,700 calories a day, a quarter of that is Coca-Cola. I drink at least five 12-ounce servings. I do it everyday.”

The breakdown is something like this: one at breakfast, two during the day and two at night, with regular Coke at the office and Cherry Coke at home.

Not only is the 86-year-old’s body powered by the soda, but so is his net worth.

Buffett has been a major shareholder for the last few decades and now owns a 9.3 percent, $17 billion stake in the company. His association is so firmly established that Coca-Cola actually capitalized on it when introducing Cherry Coke in China March 10. Buffett’s face graced a limited edition can to appeal to the nation’s emulating investors.

Monday, May 1, 2017

Society needs to do more to help people left out by Globalization

We need an educator in chief, logically the president, not specifically this president but any president, has to be able to explain to the American public the overall benefits of free trade. And then beyond that we have to have policies to take care of the people that become the roadkill in the process.

Investors can diversify their investments so that overall trade benefits them and they don’t get killed by a specific industry condition, but workers can’t do that. If they get destroyed by something that is good for society, they get destroyed.

We should try to hit both objectives, to make sure there is not roadkill and 320m people get the benefits of free trade.