Posts Tagged ‘warren buffett’
Sunday, February 28th, 2010
An excerpt:
Our gain in net worth during 2009 was $21.8 billion, which increased the per-share book value of both our Class A and Class B stock by 19.8%. Over the last 45 years (that is, since present management took over) book value has grown from $19 to $84,487, a rate of 20.3% compounded annually.*
Berkshire’s recent acquisition of Burlington Northern Santa Fe has added at least 65,000 shareholders to the 500,000 or so already on our books. It’s important to Charlie Munger, my long-time partner, and me that all of our owners understand Berkshire’s operations, goals, limitations and culture. In each annual report, consequently, we restate the economic principles that guide us. This year these principles appear on pages 89-94 and I urge all of you – but particularly our new shareholders – to read them. Berkshire has adhered to these principles for decades and will continue to do so long after I’m gone.
In this letter we will also review some of the basics of our business, hoping to provide both a freshman orientation session for our BNSF newcomers and a refresher course for Berkshire veterans.
Read Buffett’s full letter to shareholders here.
Tags: 45 years, acquisition, annual report, Berkshire, bnsf, burlington northern santa, burlington northern santa fe, charlie munger, decades, economic principles, excerpt, freshman orientation, letter to shareholders, net worth, newcomers, orientation session, refresher course, time partner, warren buffett
Posted in ANALYSIS, EDUCATION | No Comments »
Wednesday, February 3rd, 2010
 Conventional wisdom is defined as: the generally accepted belief, opinion, judgment, or prediction about a particular matter.
Conventional wisdom is almost universally agreed upon by everyone that it rarely gets questioned, even if sometimes the belief isn’t really true.
The conventional wisdom with regards to investing is to buy and hold great companies for long periods of time so that your portfolio compounds with capital appreciation and dividend re-investment. This approach has strong validity and is best exemplified by Warren Buffett. He has the long term returns to prove it.
But it may not be for everybody, or else everyone would have invested like Warren Buffett. Very few have the right skill set to buy-and-hold and be successful like Buffett, or be successful for decades.
In short term trading, the conventional wisdom is enter stocks at pivot points, trade small and cut your losses and let your gains run, and use risk and money management. Very few can succeed with the short term trading approach, due to lack of skillset or lack of discipline. Also, in the short term, the market fluctuates too much so that stoplosses get frequently hit. Even if successful, it is doubtful many can beat the returns of buy-and-hold investors in the long run.
Another conventional wisdom is that in order to get bigger returns, one has to dramatically increase risk. Like getting into leverage instruments such as options, futures and penny stocks. Very few can succeed long term via this route, mainly due to the extreme risk factor.
One can go through a lifetime or even several lifetimes and still cannot get through the stock market dilemma and confusion. For many people, only through a paradigm shift in thinking and approach can they increase their chances of market success.
A paradigm shift is a change in accepted theories, opinions or approaches, a step above and beyond, and is almost always better than the conventional wisdom. That’s why it’s called a paradigm shift.
The question is:
Is there such a paradigm-shifting stock market approach out there?
Tags: 2c, c2, capital appreciation, compounds, conventional wisdom, dilemma, dividend, extreme risk, lifetimes, long periods of time, market success, money management, options futures, paradigm shift, penny stocks, pivot points, risk factor, skillset, stock market, warren buffett
Posted in EDUCATION | No Comments »
Monday, February 1st, 2010
 Everybody is bullish on gold these days. You even have outfits like ‘Cash For Gold’ peddling their trades at your local mall. But historically, gold has never been a great long term investment.
While the love for gold can take this commodity to $3,000, be sure to get off the train before the top. Because once it goes down, it stays down for decades.
NEW YORK (Commodity Online): A gold boom is on and despite the ‘bubble talk’ on gold, every investor worth the name is running after the shining metal. From Jim Rogers to John Paulson, most investors or investing analysts have argued that gold is the best investment bet against rising inflation and declining US dollar value. They all are waiting for a gold bull run that will go past $2000 per ounce in 2010.
But Warren Buffett, the world’s richest investor and billionaire businessman, has not yet fallen for gold. His ideas on gold and why he is not interested obsessed with investing in the shining yellow metal should be an eye opener for all those who are running after gold.
Here are some reasons why gold is not luring Warren Buffett, and why there are better, erudite and lasting investing options than gold.
”Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.” Warren Buffett. (more…)
Tags: billionaire, bull run, conocophillips, dollar value, economic uncertainty, energy company, exxon mobil, exxon mobil corp, eye opener, gas producer, gold gold, gold mining, industrial construction, jim rogers, john paulson, local mall, long term investment, platinum gold, precious metals, warren buffett
Posted in ANALYSIS, EDUCATION | 4 Comments »
Wednesday, January 27th, 2010
 I just completed my read of “The Snowball – Warren Buffett and the Business of Life” by Alice Schroeder. This biography covers some 800 pages and provides a perspective on a unique individual. I must admit, he is much different than what I expected. The following is my summary of the major factors that have contributed to Mr. Buffett’s incredible success and wealth:
Singular focus – Since Warren Buffett was a young boy, he had almost a singular focus to accumulate wealth. He also believed his way to wealth would be through the stock market. At a very early age, he knew what he wanted and where he wanted to go. Successful people always have long-term visions of their life. This is a lesson especially for younger folks. You will only really succeed in life once you know what you want to accomplish. As Yogi Berra said, “If you don’t know where you are going, you may end up some place else.”
Dedication – Mr. Buffett spends about 18 hours every day dedicated to investing capital. This is the type of dedication needed to succeed at his level. I doubt he wastes anytime in front of the television or shopping at the mall. Almost all his time is spent thinking and working on Berkshire Hathaway. This type of dedication can have its drawbacks as well. The book does not portray his family life in a very positive manner. He was separated from his first wife (it appears they did not divorce for P.R. reasons) and did not spend much time with his children as they grew up. There is only so much time in a day, and he spent it mostly on business-related activities. (more…)
Tags: alice, berkshire hathaway, dedication, divorce, first wife, mr buffett, peo, perspective, schroeder, shopping, singular focus, snowball, stock bubble, stock market, technology stock, television, telling story, term visions, warren buffett, yogi berra
Posted in ANALYSIS | No Comments »
Wednesday, January 27th, 2010
 Warren Buffett, the US investor, has expanded his reinsurance holdings by becoming one of the largest shareholders in industry giant Munich Re. Buffett has built a stake worth €660m ($934m) in the German reinsurer, according to a market announcement triggered when his stake rose above 3%. It makes him the second-largest investor in Munich Re, after US asset manager BlackRock with almost 4.6%.
Tags: asset manager, blackrock, industry giant, investor, munich, reinsurance, shareholders, stake, warren buffett
Posted in ANALYSIS, EDUCATION, GLOBAL INDICES, LINKS | No Comments »
Saturday, January 9th, 2010
 Some people have claimed that Warren Buffett made all his money from the 80’s and 90’s bull market. He happened to be at the right place at the right time, they say.
If so, how come nobody came close? There were lots of people at the right place and right time like Buffett. They are what we call baby boomers!
It really isn’t about bull markets that Buffett made his money. He started out in the early 70’s. (The secular bull market started over 10 years after that).
The first few years, he was making 50-100% returns per year.
So if he were to do a redo, his results wouldn’t be that much different 40 years later.
Tags: 10 years, baby boomers, bull markets, first few years, money, right place at the right time, role model, secular bull market, warren buffett
Posted in EDUCATION | 1 Comment »
Tuesday, November 17th, 2009
 Travelers
Nestle
Walmart
Wells Fargo
Exxon Mobil
source
Buying the number 1 railroad company was a smart move  Only problem now is that the SP 500 is doing better than Berkshire Hathaway Inc (BRK-A).
The SP 500 pays you a dividend …. Berkshire pays you nothing !
Tags: berkshire hathaway, berkshire hathaway inc, brk, brka, dividend, exxon, exxon mobil, number 1, railroad company, smart move, sp 500, stock, travelers, walmart, warren buffett, wells fargo
Posted in ANALYSIS, US MARKET | No Comments »
Friday, November 13th, 2009
 Alice Schroeder is the author of “The Snowball: Warren Buffett and the Business of Life”, a former managing director at Morgan Stanley, and is a Bloomberg News columnist. Below is a great opinion piece she wrote for Bloomberg.
Read more here:
A group of university students I spoke to recently asked if it was possible to make a living on Wall Street without compromising your values. I had to tell them no.
Wall Street has many decent, honorable people, but they work in a system that fundamentally compromises people’s ethics. The high pay is like an anesthetic that numbs you from feeling how you are being corrupted. Not only that, many honest people who work there would agree with an even more extreme statement: It’s hard to make a living legally on Wall Street. (more…)
Tags: alice, anesthetic, bloomberg news, columnist, extreme statement, honorable people, investors, managing director, money managers, morgan stanley, schroeder, securities laws, snowball, university students, wall street, warren buffett
Posted in ANALYSIS, EDUCATION | No Comments »
Friday, October 23rd, 2009
 WARREN BUFFETT Chairman, Berkshire Hathaway
I have no idea what the stock market’s going to do tomorrow, or next week, or next month or next year. But over a ten-year period you will do considerably better owning a group of equities than you will owning Treasuries. In fighting the economic war, we’ve taken action that sows the seeds of substantial inflation down the road. Not in the next six months or year, but ten years from now the dollar will buy a lot less than it buys today.
BOB RODRIGUEZ Chief executive officer, First Pacific Advisors
Don’t run with the herd. Being surrounded by people who are doing the same thing as you offers a false sense of protection. Being a loner is extremely uncomfortable, but it’s far better. Today, being a loner means owning short-maturity, high-quality debt on the bond side. And if the U.S. government continues to blow up the nation’s balance sheet through massive deficits, you should probably move at least 20% to 40% of your assets out of the U.S. (more…)
Tags: being a loner, berkshire hathaway, bill gross, chief executive officer, chief investment officer, chief investment strategist, economic war, false sense, first pacific advisors, grantham mayo van otterloo, gross co, lows, mattress money, money market account, pacific investment management co, panies, quality debt, risky assets, treasuries, warren buffett
Posted in EDUCATION | 2 Comments »
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