Search Results for: munger

Crazy Rich IRAs: From Peter Thiel to Ted Weschler

August 31, 2021 By Jonathan Ping 6 Comments
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Propublica recently reported that venture captialist Peter Thiel has a $5 billion Roth IRA. Essentially, he bought some lottery tickets using his IRA wrapper, and they paid off. The controversial part is that these lottery tickets weren’t available to everyone. They were dirt-cheap private shares of a startup that were only available to founders and a handful of early investors. At such an early stage, you can pretty much value your private company shares at whatever you wish. Here’s the Propublica version:

Open a Roth with $2,000 or less. Get a sweetheart deal to buy a stake in a startup that has a good chance of one day exploding in value. Pay just fractions of a penny per share, a price low enough to buy huge numbers of shares. Watch as all the gains on that stock — no matter how giant — are shielded from taxes forever, as long as the IRA remains untouched until age 59 and a half. Then use the proceeds, still inside the Roth, to make other investments.

It’s not clear how they found this data, but they also included the owners of other large IRAs:

Ted Weschler, a deputy of Warren Buffett at Berkshire Hathaway, had $264.4 million in his Roth account at the end of 2018. Hedge fund manager Randall Smith, whose Alden Global Capital has gutted newspapers around the country, had $252.6 million in his. Buffett, one of the richest men in the world and a vocal supporter of higher taxes on the rich, also is making use of a Roth. At the end of 2018, Buffett had $20.2 million in it. Former Renaissance Technologies hedge fund manager Robert Mercer had $31.5 million in his Roth, the records show.

Ted Weschler, along with Todd Combs, are the heirs to the “stock picking” part of Warren Buffett’s job at Berkshire Hathaway. Greg Abel will be the future CEO and help handle all the wholly-owned subsidiary companies within Berkshire, and Ajit Jain will run the large insurance operation.

As a public figure, Weschler submitted this personal statement defending and explaining his IRA, and it reveals some interesting details. He opened his first “IRA” in 1984 as a 22-year-old Junior Financial Analyst making $22,000 a year. He seems to be mixing up the terms for 401k and IRAs in his letter (confirmed in WaPo story below). His timing was lucky, as 401k plans had just been born with the earliest ones starting around 1980. Here is a 1982 WSJ newspaper scan about these newfangled “salary reduction plans”, which were what 401k plans were initially called.

Anyhow, his 401k/IRA balance had grown to $70,385 by the end of 1989, when he rolled it over into a self-directed IRA at Charles Schwab. Fast forward 23 years, and by the end of 2012, his IRA was worth $131,000,000! Thanks to the new Roth IRA conversion option when he promptly rolled it over into a Roth IRA even though he had to pay $29 million in taxes. By 2018, the balance was at $264 million.

Also significant:

I invested the account in only publicly-traded securities i.e., all investments in this account were investments that were available to the general public.

[…] In closing, although I have been an enormous beneficiary of the IRA mechanism, I personally do not feel the tax shield afforded me by my IRA is necessarily good tax policy. To this end, I am openly supportive of modifying the benefit afforded to retirement accounts once they exceed a certain threshold.

This WaPo article is a follow-up with Ted Weschler about his amazing IRA skills.

I also realized that Weschler wanted to encourage young people to do what he did to accumulate his nine-digit net worth: save and invest, early and often, and take advantage of any retirement account benefits offered by their employer. “In a perfect world, nobody would know about this account,” he said. “But now that the number is out there, I’m hopeful that some good can come of it by serving as a motivation for new workforce entrants to start saving and investing early.”

My takeaways:

  • You may not agree with all the tax rules, but there is a reason why standard personal finance advice includes maximizing your Roth IRA contribution each year AND taking full advantage of your 401k plan with any employer contribution.
  • If you believe that your future tax rate after age 60 will be higher than your current tax rate, then you should consider converting any pre-tax “Traditional” IRA balances into Roth IRAs, even if it requires a big lump sum payment today.
  • If your income is too high to qualify for a regular Roth IRA, check if you are eligible to contribute to a “backdoor” Roth IRA, essentially making a non-deductible Traditional IRA contribution and quickly performing a Roth IRA conversion. If you are high-income and a big saver, look up the “mega backdoor” Roth IRA, which involves making a non-deductible contribution to your 401k plan (if allowed by employer plan document).
  • Roth IRAs have differences from Traditional IRAs beyond just the timing of the tax being upfront or at withdrawal. If you want to leave an inheritance (as these rich people most likely do), realize that Roth IRAs don’t have the required minimum distribution (RMD) rules that apply to traditional IRAs. Bottom line: More compounding + more tax shelter = bigger estate.
  • Consider putting your riskiest investments with the highest potential upside inside your Roth IRA. My Roth IRA holds REITs: low tax-efficiency and higher risk/return profile. No sleepy bonds!
  • As a BRK shareholder, if you were to think of a contest to win “The Next Warren Buffett”, finding the person who built the biggest IRA in the world using publicly-available investments would be a pretty smart filter! Maybe Berkshire Hathaway’s investment side will be alright after Buffett and Munger are gone.
Filed Under: Investing, Taxes
Last updated: August 31, 2021
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Richer, Wiser, Happier: Notes From 40+ Super Investors NOT Named Warren Buffett

August 18, 2021 By Jonathan Ping 1 Comment
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

It was very telling that the first chapter of Richer, Wiser, Happier: How the World’s Greatest Investors Win in Markets and Life by William Green was a profile of Mohnish Pabrai. In other words, not Warren Buffett! If you aren’t a student of value investing, then you probably have never even heard of him before. He is best known for a being a “clone” investor.

“I’m a shameless copycat,” he says. “Everything in my life is cloned.… I have no original ideas.” Consciously, systematically, and with irrepressible delight, he has mined the minds of Buffett, Munger, and others not only for investment wisdom but for insights on how to manage his business, avoid mistakes, build his brand, give away money, approach relationships, structure his time, and construct a happy life.

That descriptor always seemed a bit derogatory, but after reading more about Pabrai in this book, I grew quite a lot of appreciation and respect for his approach. If you also like collecting outside wisdom (especially about investing) and incorporating into your life, you will likely enjoy this book as well. Green is an excellent writer and journalist that has managed to interview over 40 of the world’s greatest investors (many of which I’d never heard of until now), and this became the most heavily-highlighted book in my Kindle. Here are a fraction of them:

Mohnish Pabrai

Rule 1: Clone like crazy. Rule 2: Hang out with people who are better than you. Rule 3: Treat life as a game, not as a survival contest or a battle to the death. Rule 4: Be in alignment with who you are; don’t do what you don’t want to do or what’s not right for you. Rule 5: Live by an inner scorecard; don’t worry about what others think of you; don’t be defined by external validation.

Cloning Buffett, who once showed him the blank pages of his little black diary, Pabrai keeps his calendar virtually empty so he can spend most of his time reading and studying companies. On a typical day at the office, he schedules a grand total of zero meetings and zero phone calls. One of his favorite quotes is from the philosopher Blaise Pascal: “All of humanity’s problems stem from man’s inability to sit quietly in a room alone.” […] He says it helps that his investment staff consists of a single person: him. “The moment you have people on your team, they’re going to want to act and do things, and then you’re hosed.”

John Templeton

To his credit, Templeton was especially demanding of himself. Take his attitude toward saving and spending. “After my education, I had absolutely no money and neither did my bride,” he told me. “So we deliberately saved fifty cents out of every dollar we earned.”

Distrustful of debt, he always paid cash for his cars and homes. He also claimed that his wartime bet was the only time he ever borrowed money to invest. During the Great Depression he’d seen how easy it was for overextended people to come undone, and he regarded fiscal discipline as a moral virtue.

Howard Marks

“Look, luck is not enough,” he says. “But equally, intelligence is not enough, hard work is not enough, and even perseverance is not necessarily enough. You need some combination of all four.

He plans to work indefinitely because he finds it intellectually rewarding, not because he has an “unquenchable” thirst for money or status. He recalls his Japanese studies professor explaining a Buddhist teaching that “you have to break the chain of getting and wanting”—an aimless cycle of craving that leads inevitably to suffering.

Irving Kahn

Kahn became Graham’s teaching assistant at Columbia in the 1920s, and they remained friends for decades. I wanted to know what he’d learned from Graham that had helped him to prosper during his eighty-six years in the financial markets. Kahn’s answer: “Investing is about preserving more than anything. That must be your first thought, not looking for large gains. If you achieve only reasonable returns and suffer minimal losses, you will become a wealthy man and will surpass any gambler friends you may have. This is also a good way to cure your sleeping problems.”

Just think for a moment about those basic ingredients that helped to make for a richly rewarding life. Family, health, challenging and useful work, which involved serving his clients well by compounding their savings conservatively over decades. And learning—particularly from Graham, an investment prophet who, Kahn said, “taught me how to study companies and succeed through research as opposed to luck or happenstance.”

Joel Greenblatt

This raises an obvious but crucial question: Do you know how to value a business? There’s nothing admirable or shameful about your response. But you and I need to answer this question honestly, since self-delusion is a costly habit in extreme sports such as skydiving and stock picking. “It’s a very small fraction of people that can value businesses—and if you can’t do that, I don’t think you should be investing on your own,” says Greenblatt. “How can you invest intelligently if you can’t figure out what something is worth?”

These experiences have led him to an important revelation: “For most individuals, the best strategy is not the one that’s going to get you the highest return.” Rather, the ideal is “a good strategy that you can stick with” even “in bad times.”

Charlie Munger

Munger often preaches about the importance of avoiding behavior with marginal upside and devastating downside. He once observed, “Three things ruin people: drugs, liquor, and leverage.”

Asked for career advice, he opines: “You have to play in a game where you’ve got some unusual talents. If you’re five foot one, you don’t want to play basketball against some guy who’s eight foot three. It’s just too hard. So you’ve got to figure out a game where you have an advantage, and it has to be something that you’re deeply interested in.”

Survivorship bias! I would say that one of the dangers of this book is that it may make you want to be a stock picker. All of the people profiled are probably have a net worth of over $50 million if not much more. Many made a few bold bets, and they paid off big. I want an oceanfront house in Newport Beach, my own private jet, and a vintage car to drive across Asia too!

The rewards for investing intelligently are so extravagant that the business attracts many brilliant minds.

Beating the market means being different. Can you make “unconventional bets that the crowd would consider foolish”? Are you a good fit for the “bizarrely lucrative discipline of sitting alone in a room and occasionally buying a mispriced stock”? Do you have enough humility to make a good judgment, mixed with the self-confidence to bet big when you think you have an edge?

Even if you think you do, survivorship bias reminds us that there are many, many highly-intelligent, hard-working people who tried their best to apply these concepts, but did not succeed. They are missing from the pages of this book, and you’ll never read their stories.

The true goal is independence. The good news is that you don’t need be a great stock picker. Even if you just invest in low-cost index funds and can stick with it, you can do quite well and still achieve the ability to be independent and become in control of your time on Earth.

Buffett said, “If you’re even a slightly above average investor who spends less than you earn, over a lifetime you cannot help but get very wealthy.”

Howard Marks: “Most people should index most of their money.”

The pattern is clear. In their own ways, Greenblatt, Buffett, Bogle, Danoff, and Miller have all been seekers of simplicity. The rest of us should follow suit. We each need a simple and consistent investment strategy that works well over time—one that we understand and believe in strongly enough that we’ll adhere to it faithfully through good times and bad.

“You build capital and then you can do whatever you want because you’re independent.” For many of the most successful investors I’ve interviewed, that freedom to construct a life that aligns authentically with their passions and peculiarities may be the single greatest luxury that money can buy.

p.s. Here is a list of the people profiled in this book; I can’t guarantee I got all of them but it’s definitely close. A good source for additional research.

  • Sir John Templeton
  • Irving Kahn
  • Bill Ruane
  • Marty Whitman
  • Jack Bogle
  • Charlie Munger
  • Ed Thorp
  • Howard Marks
  • Joel Greenblatt
  • Bill Miller
  • Mohnish Pabrai
  • Tom Gayner
  • Guy Spier
  • Fred Martin
  • Ken Shubin Stein
  • Matthew McLennan
  • Jeffrey Gundlach
  • Francis Chou
  • Thyra Zerhusen
  • Thomas Russo
  • Chuck Akre
  • Li Lu
  • Peter Lynch
  • Pat Dorsey
  • Michael Price
  • Mason Hawkins
  • Bill Ackman
  • Jeff Vinik
  • Mario Gabelli
  • Laura Geritz
  • Brian McMahon
  • Henry Ellenbogen
  • Donald Yacktman
  • Bill Nygren
  • Paul Lountzis
  • Jason Karp
  • Will Danoff
  • François Rochon
  • John Spears
  • Joel Tillinghast
  • Qais Zakaria
  • Nick Sleep
  • Paul Isaac
  • Mike Zapata
  • Paul Yablon
  • Whitney Tilson
  • François-Marie Wojcik
  • Sarah Ketterer
  • Christopher Davis
  • Raamdeo Agrawal
  • Arnold Van Den Berg
  • Mariko Gordon
  • Jean-Marie Eveillard
  • Guy Spier
Filed Under: Book Reviews, Happiness, Investing
Last updated: August 18, 2021
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

2021 Berkshire Hathaway Annual Shareholder Meeting Video, Transcript, and Notes

May 6, 2021 By Jonathan Ping 5 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Here are my notes on the 2021 Berkshire Hathaway Annual Shareholder Meeting (YouTube, transcript). It was nice to see things nearly back to “normal” with Buffett offering up some lessons and going into some side details, while Munger just gets to the point (and says the stuff Buffett probably secretly wants to say but doesn’t due to the potential blowback).

Preshow comments. First up, a good observation by Karen Wallace of Morningstar during the Yahoo Finance Preshow (of the Super Bowl for Capitalist?!):

Buffett and Munger Don’t really like to speculate with their shareholders’ money. The thing about Warren Buffett is that he didn’t strike oil or develop software, inherit a big pile of money. He built his fortune by picking really solid businesses that generate a lot of cash and that he believes will continue to do well. And he takes the cash from that, he reinvests, he holds on for the longterm. He looks for new opportunities. He wants businesses that he can understand, which is a big part of it.

Here are a few more from William Green, author of the book Richer, Wiser, and Happier.

…think about the ways in which most of us mess up as investors. We’re impatient, we try to time the market, we speculate on things that we don’t really understand. We trade in and out. We’re we’re much too emotional. We get caught up in fads and here you have Charlie and Warren basically just avoiding all of those standard stupidities. And it’s as Charlie says, it’s actually easier to avoid being stupid than to be smart. And so I thought that was a wonderful paradox that you have the smartest guy alive just trying to be systematically less stupid.

And so if you look at a period like this, where everyone is saying I can’t believe they have $145 billion in cash, and they’re not doing anything, why don’t they do something? They’re just so blindly indifferent to those cries from the crowd. And Warren just says we’re not paid for activity, we’re paid for being right.

So there’s an-old fashioned sense of honor and decency and transparency and humor that I think is one of the reasons why we’ve all been coming back year after year and why we’re all happy to see Charlie back this year after being absent last year.

Guess what? Buffett and Munger both own their houses mortgage-free, which they have lived in for the last 62 years.

On my left, Charlie Munger, and I met Charlie 62 years ago. He was practicing law in Los Angeles. He was building a house at that time, a few miles from here and 62 years later, he’s still living in the same house. Now that was interesting because I was buying a house just a few months before 62 years ago, and I’m still living in the same house. So you’ve got a couple of fairly peculiar guys just to start with in terms of their love affair with their homes.

Indirect warning about Tesla. Buffett put up a huge list of automotive companies that went bankrupt. Even if you knew very early on that internal-combustion cars would take over the world, it was quite difficult to know ahead of time the best place to invest. Buffett:

So there was a lot more to picking stocks than figuring out what’s going to be a wonderful industry in the future.

My interpretation: Just because you know that electric vehicles will be huge in the future, doesn’t mean you can pick a big winning EV company (or even that there will be a single big winning EV company).

Why didn’t you buy more during the March 2020 crash bottom? My interpretation: Buffett basically said that they didn’t sell much (just the airlines, which accounted for 1% of all the businesses they own), while they did buy a lot of Berkshire stock via buybacks. They bought Berkshire because they knew BRK was cheap. Everything else, they weren’t as sure. Also, no BRK business took a PPP loan or other government bailout money. Munger adds:

Well, it’s crazy to think anybody’s going to be smart enough to husband money and then just come out on the bottom tick in some crazy crisis and spend it all. Always there’s some person that does that by accident, but that’s too tough a standard. Anybody who expects that of Berkshire Hathaway is out of his mind.

Do you think BRK will do better than the S&P 500 in the future? My interpretation: This question has been asked many times before. Buffett says that index funds are fine, they are what he recommends to others, and what his future widow will own (though still less than 1% of his estate). Upon his death, the rest of Buffett’s shares of BRK (much more valuable) will be donated and sold off gradually over 10+ years, so obviously he still has some faith in it. Munger has no intention of selling. Munger adds:

Well, sure. Well, I personally prefer holding Berkshire to holding the market. So I’m quite comfortable holding Berkshire. I think our businesses are better than the average in the market.

LOL about Munger’s response to the idea of Chevron being evil…

Well, I agree. You can imagine two things. A young man marries into your family, he’s an English professor at, say, Swarthmore, or he works for Chevron. Which would you pick? Sight unseen? I want to admit, I’d take the guy from Chevron. Yeah.

Low interest rates are like reduced gravity.

…it gets back to something fundamental in investments, I mean, interest rates, basically, are to the value of assets, what gravity is to matter, essentially.

[…] I mean, if I could reduce gravity, it’s pull by about 80%, I mean, I’d be in the Tokyo Olympics jumping. And essentially, if interest rates were 10%, valuations are much higher. So you’ve had this incredible change in the valuation of everything that produces money, because the risk-free rate produces, really short enough right now, nothing.

Munger hates Bitcoin.

I think I should say, modestly, that I think the whole damn development is disgusting and contrary to the interests of civilization, and I’ll let leave the criticism to others.

Munger hates SPACs.

I call it fee driven buying. In other words, it’s not buying because it’s a good investment. They’re buying it because the advisor gets a fee, and of course the more that you get, the sillier your civilization is getting, and to some extent, it’s a moral failing too, because the easy money made by things like SPACs and returned derivatives and so on, and so on. You push that to excess, it causes horrible problems with the civilization and reflects no credit on the people who are doing it, and no credit on the regulators and voters that allow it. So I think we have a lot to be ashamed of current conditions.

Munger hates Robinhood, day-trading, and speculating on options.

Well, that is really waving red flag of the bull. I think it’s just God awful that something like that would draw investment from civilized men and decent citizens. It’s deeply wrong. We don’t want to make our money selling things that are bad for people.

Buffett has more cash than ideal, but the prices aren’t right and he will be patient until the prices are right.

We’ve got probably 10 to 15% of our total assets in cash beyond what I would like to have just as a way of protecting the owners and the people that are our partners from ever having us ever getting a pickle. You know, we really run Berkshire and make sure that we don’t want to lose other people’s money who stick with us for years. We can’t help somebody who does and buys it today and sells it tomorrow. But we’ve got a real gene that pushes us in that direction, but we’ve got more than we… We’ve got probably 70 or 80 billion, something like that, maybe that we’d love to put the work, but that’s 10% of our assets, roughly. And we probably won’t get, we won’t get a chance to do it under these conditions, but conditions change very, very, very rapidly sometimes in markets.

Munger on high valuations today leading to lower returns in the future.

…with the, everything boomed up so high and interest rates, so low what’s going to happen is the millennial generation is going to have a hell of a time getting rich compared to our generation. And so the difference between the rich and the poor and the generation that’s rising is going to be a lot less.

On the failure to reform healthcare. My interpretation: When average people don’t directly pay for the service (healthcare), they don’t feel the appropriate pain and thus aren’t motivated to fix things.

My overall observation is one of the biggest skills that Buffett and Munger have is the ability to avoid being swept up in the current trends. They maintain a steady and reasoned mind. They aren’t overly bullish or overly bearish. People have been bugging them about their cash hoard for years, and well, things are too expensive right now, but they know that one day that will change. They still own a lot of businesses and are still net optimists.

If you were to try to copy them (not a recommendation), you might hold 10% more bonds than you held in the past, but still hold onto the rest in stocks. If you were 100% stocks, you might be 90% stocks and 10% bonds. If you were 80%/20%, you might be 70% stocks and 30% bonds. You’re still net optimistic about the future and exposed to more upside, but you realize valuations are high and there may be bargains if there is a crash. This assumes that you have the right personality to buy things during a crisis, however.

Filed Under: Investing
Last updated: May 6, 2021
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Berkshire Hathaway 2020 Annual Letter by Warren Buffett

March 1, 2021 By Jonathan Ping Leave a Comment
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Berkshire Hathaway (BRK) released its 2020 Letter to Shareholders over the weekend. If you also found reading this letter and Charlie Munger’s Daily Journal transcript an enjoyable way to spend your weekend… you might be an investing geek! As usual, the letter is not long at 15 pages. Here are my personal highlights.

I found the overall theme to be “Here’s a reminder of the many ways that Berkshire Hathaway is different than other companies”. For example, Buffett and Munger both started out with partnerships, where they invested nearly all their own net worth alongside their partners. They treated the investments as carefully as if it was their own money, because it was! I want to take the same care in writing this blog. I want to write things that I would want to read myself, and make recommendations that I would want to see being made to my own family and friends.

A minor surprise was that Buffett’s biggest purchase was $25 billion of BRK’s own shares in 2020 – roughly 5% of all outstanding shares! In other words, they though BRK itself was one of the best investments available in 2020. I guess I should have bought more BRKB when it was lingering at $165 a share.

Last year we demonstrated our enthusiasm for Berkshire’s spread of properties by repurchasing the equivalent of 80,998 “A” shares, spending $24.7 billion in the process. That action increased your ownership in all of Berkshire’s businesses by 5.2% without requiring you to so much as touch your wallet.

He also bought shares of a few big companies like Chevron ($8.6 billion) and Verizon ($4.1 billion), but it would seem that he thinks that most public and all available privately-held businesses are overpriced right now.

While Buffett indirectly pointed out that his Apple shares have gained nearly $90 billion for shareholders ($120B current value minus $31B cost basis), he also admitted a mistake in the price he paid for Precision Castparts:

The final component in our GAAP figure – that ugly $11 billion write-down – is almost entirely the quantification of a mistake I made in 2016. That year, Berkshire purchased Precision Castparts (“PCC”), and I paid too much for the company.

High prices for a stock can be a temporary illusion:

Investing illusions can continue for a surprisingly long time. Wall Street loves the fees that deal-making generates, and the press loves the stories that colorful promoters provide. At a point, also, the soaring price of a promoted stock can itself become the “proof” that an illusion is reality.

But, we should still appreciate our ability to own shares of wonderful businesses by buying shares with just a few clicks:

It took me a while to wise up. But Charlie – and also my 20-year struggle with the textile operation I inherited at Berkshire – finally convinced me that owning a non-controlling portion of a wonderful business is more profitable, more enjoyable and far less work than struggling with 100% of a marginal enterprise.

Be realistic about your expectations for bonds:

And bonds are not the place to be these days. Can you believe that the income recently available from a 10-year U.S. Treasury bond – the yield was 0.93% at yearend – had fallen 94% from the 15.8% yield available in September 1981? In certain large and important countries, such as Germany and Japan, investors earn a negative return on trillions of dollars of sovereign debt. Fixed-income investors worldwide – whether pension funds, insurance companies or retirees – face a bleak future.

Don’t take on unknown risk to chase higher yields:

Some insurers, as well as other bond investors, may try to juice the pathetic returns now available by shifting their purchases to obligations backed by shaky borrowers. Risky loans, however, are not the answer to inadequate interest rates. Three decades ago, the once-mighty savings and loan industry destroyed itself, partly by ignoring that maxim.

Buffett shared some historical profiles of Berkshire-owned companies that started out only as an idea from a single person or couple with limited funds. Through many years of hard work, determination, and taking advantage of the opportunities available in America, these turned into huge businesses. You may recognize the names: GEICO, See’s Candies, Clayton Homes, and Pilot Travel Centers.

Our unwavering conclusion: Never bet against America.

On the creation of wealth (reminds me of this):

Productive assets such as farms, real estate and, yes, business ownership produce wealth – lots of it. Most owners of such properties will be rewarded. All that’s required is the passage of time, an inner calm, ample diversification and a minimization of transactions and fees. Still, investors must never forget that their expenses are Wall Street’s income.

Past shareholder letters.

  • 1977-2020 are free on the Berkshire Hathaway website (PDF). 1965-2019 are $2.99 at Amazon (Kindle). Three bucks seems pretty reasonable for a permanent copy with the ability to search text and maintain highlights.
  • 2018 Letter discussed why BRK will continue to do fine without Warren Buffett around.
  • 2018 Letter discussed using debt very sparingly and the importance of holding productive assets over a long time.
  • 2017 Letter discussed patience, risk, and why they have so much cash.
  • 2016 Letter touched on the rarity of skilled-stock pickers and some insight on his own stock-picking practices.
  • 2015 Letter discussed his optimism in America and his “Big 4” stock holdings.
  • 2014 Letter discussed the power of owning shares of productive businesses (and not just bonds).
  • 2013 Letter included Buffett’s Simple Investment Advice to Wife After His Death.

The annual shareholder meeting will be virtual again this year, but at least it will include Charlie Munger! Yahoo Finance will livestream it on May 1st at 1pm EDT. I will probably wait to listen in the car via the Yahoo Finance podcast version.

Filed Under: Inspirational, Investing
Last updated: March 1, 2021
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

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Emergency Funds Are The First Building Block For Retirement

November 19, 2020 By Jonathan Ping 1 Comment
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

The Blackrock article Emergency Savings = Better Retirement? comes from Blackrock’s department that helps companies manage their retirement plans. They propose the idea of creating a separate “sidecar savings account” in order to prevent early withdrawals via 401k loans (and often defaults):

A “sidecar savings” account may help build short-term stability, giving participants the confidence to commit to long-term retirement goals. […] Plan sponsors could help participants meet short-term financial needs by taking steps to help reduce [401k loan] defaults.

In other words, they want to give employees an emergency fund! Not exactly a new idea, but it supports the idea that the highest priority should be a short-term emergency fund, even if the real goal is higher retirement savings balances.

At the recent BlackRock Retirement Summit, Rachel Schneider of the Aspen Institute Financial Security Program explained that if participants have confidence about near-term stability through access to emergency cash, it may improve long-term behavior. “If they have more security today,” she said, “It should translate into more long-term savings.”

Build up your financial fortress in stages:

  • Looking past the next payday. Going from paycheck-to-paycheck to having $1,500 in the bank lets many things become minor speed-bumps instead of derailing your life. Do whatever you can to create this fund. For example, I’d even deliver Uber Eats/Doordash/Instacart in my open hours.
  • Looking past your current job. Going from having a minimal emergency fund to ~$10,000 gives you the ability to take career risks and thus the opportunity to turbo-boost your income. You might deliver on Uber Eats to build up this fund, but Uber Eats won’t take to you financial freedom. You need to build up valuable skills and/or business equity.
  • Reaching the point of inevitable financial freedom. Finally, going from $10,000 to $100,000 is amazing because that’s when you realize that reaching financial independence is a matter of WHEN, not IF. It’s a sign that you’ve put in the dirty work and developed the habits and structure required. The only remaining component is time, so now you can make some more minor adjustments to make that time more enjoyable. Similar job with more flexible hours? Less hours? Less politics? Better boss? “The first $100,000 is a b****.”

I prefer the comfort of cash in the bank, but you just need something that you know will float you in the short-term, be it cash or a stock portfolio or whatever else you’re willing to sell. I’ve heard various things like “I can just use my credit cards” or “I can just take a home-equity loan”. Unfortunately, 2020 has shown us that long-term unemployment and long-term depressed wages can happen out of nowhere. Taking on debt when you don’t even have enough income to make the payments can quickly spiral out of control.

Filed Under: Banking, Retirement
Last updated: November 19, 2020
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

2020 Berkshire Hathaway Annual Shareholder Meeting Video, Transcript, and Notes

May 3, 2020 By Jonathan Ping 3 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

The 2020 Berkshire Hathaway Annual Shareholder Meeting was on May 2nd, 2020 and is now available as a recorded video on Yahoo Finance and a handy Rev.com transcription. As usual, I recommend listening or reading on your own, as my notes always differ slightly from what the business media chooses to highlight.

What makes Berkshire Hathaway (BRK) interesting to me is that it all started out as Buffett investing his own money alongside a few close family and friends. He’s always had nearly all of his own money in it. Even today, Berkshire is the main investment vehicle for many family members. People you run into at the store. People with whom you’ve shared a meal. This changes the types and amounts of risk you take.

And, now, I would never take real chances with money, of other people’s money under any circumstances. Both Charlie and I come from a background where we ran partnerships. I started mine in 1956 for really seven either actual family members or the equivalent. And Charlie did the same thing six years later. And we never, neither one of us, I think, I know I didn’t, and I’m virtually certain the same is true of Charlie, neither one of us ever had a single institution investment with us.

Buffett has stated that when he writes his annual letters, he imagines his sister reading them. That’s how I try to write as well, as an enthusiast making careful shares and recommendations to family. This overall sentiment helps you understand how BRK is run.

He started out with a familiar story of “betting on America”. This country has been though a lot, and it will recover again.

One of the scariest of scenarios, when you had a war with one group of States fighting another group of States, and it may have been tested again in the great depression, and it may be tested now to some degree, but in the end the answer is never bet against America, and that in my view is as true today as it was in 1789, and even was true during the civil war, and the depths of the depression.

In terms of investing, this means holding onto stocks for 20 or 30 years. But to survive the shocks during those times, you should never borrow money to invest in stocks, you need to have adequate reserves in 100% safe cash, and you need the proper psychological temperament.

The American tailwind is marvelous. American business represents, and it’s going to have interruptions, and you’re not going to foresee the interruption, and you don’t want to get yourself in a position where those interruptions can affect you either because you’re leveraged or because you’re psychologically unable to handle looking at a bunch of numbers.

You just don’t know what’s going to happen. You know, at least in my view, you know that America’s tailwind is not exhausted. You’re going to get a fine result if you own equities over a long period of time. And the idea that equities will not produce better results than the 30-year Treasury bond, which yields one and a quarter percent now, it’s taxable income. It’s the aim of the Federal Reserve to have 2% a year inflation. Equities are going to outperform that bond. They’re going to outperform Treasury bills. They’re going to outperform that money you’ve stuck under your mattress.

Simple, low-cost S&P 500 index fund for growth. Avoid the salespeople.

So find businesses. Get a cross section. And in my view, for most people, the best thing to do is to own the S&P 500 index fund. People will try and sell you other things because there’s more money in it for them if they do. And I’m not saying that that’s a conscious act on their part. Most good salespeople believe their own baloney. I mean, that’s part of being a good salesperson. And I’m sure I’ve done plenty of that in my life too, but it’s very human if you keep repeating something often enough.

100% backed-by-the-government cash for safety. For them, it means Treasury-backed bills. For individual investors, this extends to FDIC-insured savings accounts and certificates of deposit.

And that means we own nothing but treasury bills. I mean, we’ve never owned, we never buy commercial paper. We don’t count on bank lines and a few of our subsidiaries have them, but we basically want to be in a position to get through anything. And we hope that doesn’t happen but you can’t rule out the possibility anymore than in 1929 you could rule out the possibility that you know you would be waiting until 1955, or the end of 1954, to get even.

Ignore the two things above if you have credit card debt.

My general advice to people, I mean, we have an interest in credit cards. But I think people should avoid using credit cards as a piggy bank to be rated. I had a woman come to see me here not long ago, and she’d come on some money. Not very much, but it was a lot to her. She’s a friend of mine, and she said, “What should I do with it?” I said, “Well, what do you owe on your credit card?” She says, “Well, I owe X.” I said, “Well, what you should do…” I don’t know what interest rate she was paying, but I think I asked her and she knew. It was something like 18% or something. I said, “I don’t know how to make 18%.” I mean, if I, owed any money at 18% the first thing I do with any money I had would be to pay it off. It’s going to be way better than any investment idea I’ve got. That wasn’t what she wanted to hear.

Be safe with your finances at this time. You don’t sell your airline stocks at a multi-billion dollar loss if you think a V-shaped recovery is likely. Just because we are still recovering from one horrible event, doesn’t mean another might not happen.

I would say that there are things that I think are quite improbable. And I hope they don’t happen, but that doesn’t mean they won’t happen. I mean, for example, in our insurance business, we could have the world’s, or the country’s, number one hurricane that it’s ever had, but that doesn’t preclude the fact that could have the biggest earthquake a month later. So we don’t prepare ourselves for a single problem. We prepare ourselves for problems that sometimes create their own momentum. I mean 2008 and 9, you didn’t see all the problems the first day, when what really kicked it off was when the Freddie and Fannie, the GSEs went into conservatorship in early September. And then when money market funds broke the buck… There are things to trip other things, and we take a very much a worst case scenario into mind that probably is a considerably worse case than most people do.

After listening to this entire Buffett talk and reading this Munger interview, the overall takeaway is definitely that of safety. They have been safe and will stay safe, no matter who complains about their cash levels. The world has changed, and just because something has a lower price today than in January, doesn’t automatically mean it is a better deal than in January.

Here is a NYT Dealbook article by Andrew Ross Sorkin, who has attended many shareholder meetings in person and also sensed a different tone this year.

You can find links to previous years’ Berkshire Hathaway Shareholder Meeting Full Videos, Transcripts, and Podcasts here.

Filed Under: Investing, Retirement
Last updated: May 4, 2020
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Berkshire Hathaway Shareholder Meeting Full Videos, Transcripts, and Podcasts

May 1, 2020 By Jonathan Ping 14 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

(2020 update. The 2020 Berkshire Hathaway Annual Shareholder Meeting took place virtually with a Q&A session with Warren Buffett and Greg Abel (the likely next CEO). Right now it is available on replay at Yahoo Finance with the full transcript linked below.)

Berkshire Hathaway’s Annual Shareholder Meetings are held in Omaha, Nebraska every May. Although most of my portfolio is in a diversified mix of index funds, I also own individual shares of Berkshire Hathaway and respect the rational and practical advice given out by Warren Buffett and Charlie Munger.

I also like getting the information directly! I missed the live event again in 2019, but I plan catch up by first reading the WSJ liveblog, and then listening to the entire Q&A session via Yahoo Finance podcast at my own pace. Here are the many ways that you can catch up on past shareholder meetings.

Full Videos

  • Yahoo Finance Livestream. Yahoo Finance is the exclusive online host of the Berkshire Hathaway 2020 Annual Shareholders Meeting that occurred May 2nd, 2020. View the entire Q&A session in its entirety on demand.
  • CNBC Warren Buffett Archive. Footage of shareholder meetings from 1994-2019 In 2018, Berkshire gave CNBC a box of old VHS tapes (!) which were converted to digital videos so that everyone can view them for free. Additional material from CNBC including interviews, highlights, and short-form videos is also available.

Transcripts

Liveblogs

Podcasts

  • Yahoo Finance also makes the BRK meeting available as a podcast, so you can listen in parts during your commute or chores. I listened to the entire 2018 meeting in the car while driving, and I liked it much better than sitting in front a computer. 2019 is already uploaded. iTunes. Player.fm.

Books

This post is about the live shareholder meeting, and is separate from the 2019 annual shareholder letter (which are also great).

Filed Under: Investing, Retirement
Last updated: May 30, 2020
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

National Emergency Library: Free Digitized Book Access During Pandemic

April 2, 2020 By Jonathan Ping Leave a Comment
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

It is estimated that 1 in 5 students across the world are currently unable to attend school. In response, the Internet Archive opened the National Emergency Library, which suspends the normal lending waitlists on its 1.4 million digitized books. Your local library also has an eBook section, but only has a finite number of copies that it can lend out at one time. (I’m still waiting patiently to read Ali Wong’s Dear Girls…) The National Emergency Library is essentially lending out unlimited copies through June 30, 2020, or the end of the US national emergency, whichever is later.

Announcing the National Emergency Library, a collection of books that supports emergency remote teaching, research activities, independent scholarship, and intellectual stimulation while universities, schools, training centers, and libraries are closed.

Here are their Frequently Asked Questions.

This may be is another helpful resource for those that can’t utilize their normal libraries.You won’t necessarily find the current bestsellers, but there are a number of classic books and good options for children. I randomly checked a few investing geek books that are relatively rare and expensive to buy, and they even have scans of Poor Charlie’s almanack : the wit and wisdom of Charles T. Munger and Margin of Safety by Seth Klarman.

Filed Under: Deals & Offers
Last updated: April 2, 2020
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Berkshire Hathaway 2019 Annual Letter by Warren Buffett

February 23, 2020 By Jonathan Ping 4 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Berkshire Hathaway (BRK) has released its 2019 Letter to Shareholders. I highly recommend sitting down and reading the entire thing straight from the source. It’s only 13 pages long this year and written in a straightforward and approachable manner. Here are my notes with quoted excerpts. In my opinion, the overall theme of the letter was “Here’s why Berkshire will be fine without Warren Buffett”.

Buffett reviewed the various unique points of BRK and why he make it that way. Allowing their wholly-owned companies to retain earnings lets them grow exponentially like compound interest. Each company is run by their own management with great freedom. Their insurance side has both exceptional underwriting skill and effective investment of the float. If you can’t own an entire company, you can own part of it through common stocks. The shares of companies that BRK owns have high returns on net tangible equity capital (solidly profitable) and do not hold a lot of debt.

In other words, Berkshire is (still) built to survive and thrive beyond the next recession. None of these things are dependent on Buffett or Munger.

“Your company is 100% prepared for our departure.” If you didn’t read between the lines, Buffett straight up says it.

The two of us base our optimism upon five factors. First, Berkshire’s assets are deployed in an extraordinary variety of wholly or partly-owned businesses that, averaged out, earn attractive returns on the capital they use. Second, Berkshire’s positioning of its “controlled” businesses within a single entity endows it with some important and enduring economic advantages. Third, Berkshire’s financial affairs will unfailingly be managed in a manner allowing the company to withstand external shocks of an extreme nature. Fourth, we possess skilled and devoted top managers for whom running Berkshire is far more than simply having a high-paying and/or prestigious job. Finally, Berkshire’s directors – your guardians – are constantly focused on both the welfare of owners and the nurturing of a culture that is rare among giant corporations. (The value of this culture is explored in Margin of Trust, a new book by Larry Cunningham and Stephanie Cuba that will be available at our annual meeting.)

I remember a quip by Charlie Munger on this topic that went like this: “Do you really think Warren will mess this up?”

Stocks and interest rates. BRK owns a lot of stocks and zero 30-year Treasury bonds at 2%. I look to their actions as well as reading their words:

Forecasting interest rates has never been our game, and Charlie and I have no idea what rates will average over the next year, or ten or thirty years. Our perhaps jaundiced view is that the pundits who opine on these subjects reveal, by that very behavior, far more about themselves than they reveal about the future.

What we can say is that if something close to current rates should prevail over the coming decades and if corporate tax rates also remain near the low level businesses now enjoy, it is almost certain that equities will over time perform far better than long-term, fixed-rate debt instruments.

The catch. Individual investors should read this carefully:

Anything can happen to stock prices tomorrow. Occasionally, there will be major drops in the market, perhaps of 50% magnitude or even greater. But the combination of The American Tailwind, about which I wrote last year, and the compounding wonders described by Mr. Smith, will make equities the much better long-term choice for the individual who does not use borrowed money and who can control his or her emotions. Others? Beware!

Personally, I do agree that Buffett has spent a lot of time on the “estate plan” for Berkshire Hathaway. I applaud that, as it is another example of his rationality. People usually hate thinking about their death and put off making wills, etc. He has done everything in his power to keep the Berkshire culture going for decades to come. As a shareholder myself, I really do hope that he is successful. I don’t plan to sell any shares upon his death. However, I’m comfortable that most of my money is in index funds as any company culture can erode over time.

Past shareholder letters.

  • 1977-2019 are free on the Berkshire Hathaway website (PDF). 1965-2018 are $2.99 at Amazon (Kindle). Three bucks seems pretty reasonable for a permanent copy with the ability to make searchable highlights using Kindle software.
  • 2018 Letter discussed using debt very sparingly and the importance of holding productive assets over a long time.
  • 2017 Letter discussed patience, risk, and why they have so much cash.
  • 2016 Letter touched on the rarity of skilled-stock pickers and some insight on his own stock-picking practices.
  • 2015 Letter discussed his optimism in America and his “Big 4” stock holdings.
  • 2014 Letter discussed the power of owning shares of productive businesses (and not just bonds).
  • 2013 Letter included Buffett’s Simple Investment Advice to Wife After His Death.

Berkshire’s 2020 annual meeting will take place on Saturday, May 2nd. Last year, I again enjoyed listening to it in the car via the Yahoo Podcast. Here are the many ways you can access Berkshire Hathaway Shareholder Meeting Full Videos, Transcripts, and Podcasts.

Filed Under: Investing
Last updated: February 23, 2020
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

How To Lose Your Money Investing

September 27, 2019 By Jonathan Ping 1 Comment
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Sometimes the best solution to a problem comes by approaching it backwards. Charlie Munger often spoke about the principle of inversion. Instead of looking for things that you should do to achieve a goal, make a list of things you would do to make sure you never reach that goal. Then do whatever you can to avoid those things.

Safal Niveshak offers us this related graphic in his post 5 Ways to Destroy Your Wealth. I’m always a sucker for a clever Venn diagram…

Definitely a good list. However, I would say this graphic is more focused on “How To Destroy Wealth Investing“, as I can think of plenty of other ways to destroy wealth…

Filed Under: Investing
Last updated: September 27, 2019
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Official Warren Buffett / Berkshire Hathaway Book Reading List 2019

June 5, 2019 By Jonathan Ping Leave a Comment
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

At every annual shareholder meeting, Berkshire Hathaway publishes an official reading list and sells discounted copies through a local Omaha bookstore called The Bookworm. Both Warren Buffett and Charlie Munger have consistently attributed a significant part of their success to their constant reading:

“I insist on a lot of time being spent, almost every day, to just sit and think. That is very uncommon in American business. I read and think. So I do more reading and thinking, and make less impulse decisions than most people in business. I do it because I like this kind of life.” – Warren Buffett

“In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time—none. Zero. You’d be amazed at how much Warren reads—and how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.” – Charlie Munger

Here is the 2019 annual meeting handout. Since they don’t archive these handouts and books are removed each year, I decided to track the changes here. I just bought a used copy of the Lowenstein biography of Warren Buffett and a copy of the Secret Millionaire’s Club (For Kids) from Amazon and the 50th anniversary book direct from Berkshire.

New additions for 2019

The Moment of Lift: How Empowering Women Changes the World by Melinda Gates. From the Amazon page: For the last twenty years, Melinda Gates has been on a mission to find solutions for people with the most urgent needs, wherever they live. Throughout this journey, one thing has become increasingly clear to her: If you want to lift a society up, you need to stop keeping women down. In this moving and compelling book, Melinda shares lessons she’s learned from the inspiring people she’s met during her work and travels around the world. As she writes in the introduction, “That is why I had to write this book?to share the stories of people who have given focus and urgency to my life. I want all of us to see ways we can lift women up where we live.”

Letters to Doris – One Woman’s Quest to Help Those with Nowhere Else to Turn. From the Amazon page: The Letters Foundation is a foundation of last resort that provides humanitarian grants to people experiencing a crisis when no other options exist. These one-time grants provide a hand-up to individuals as they work to stabilize their lives. Established by siblings Warren and Doris Buffett, the Letters Foundation reads and replies to letters from individuals living within the United States.

The Future Is Asian: Commerce, Conflict, and Culture in the 21st Century by Parag Khanna. (Charlie’s Pick) From the Amazon page: There is no more important region of the world for us to better understand than Asia – and thus we cannot afford to keep getting Asia so wrong. Asia’s complexity has led to common misdiagnoses: Western thinking on Asia conflates the entire region with China, predicts imminent World War III around every corner, and regularly forecasts debt-driven collapse for the region’s major economies. But in reality, the region is experiencing a confident new wave of growth led by younger societies from India to the Philippines, nationalist leaders have put aside territorial disputes in favor of integration, and today’s infrastructure investments are the platform for the next generation of digital innovation.

Saudi America: The Truth about Fracking and How It’s Changing the World by Bethany McLean. (Charlie’s Pick) From the Amazon page: Investigative journalist Bethany McLean digs deep into the cycles of boom and bust that have plagued the American oil industry for the past decade, from the financial wizardry and mysterious death of fracking pioneer Aubrey McClendon, to the investors who are questioning the very economics of shale itself. McLean finds that fracking is a business built on attracting ever-more gigantic amounts of capital investment, while promises of huge returns have yet to bear out. Saudi America tells a remarkable story that will persuade you to think about the power of oil in a new way.

Berkshire 50th Anniversary

About Warren Buffett

About Charlie Munger

On Investing

General Interest

Books from past lists, likely removed due to space constraints.

Here are my own posts related to the books listed above:

Filed Under: Book Reviews, Investing
Last updated: June 6, 2019
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Warren Buffett CNBC Interview 2019 Full Video, Full Transcript, and Notes

March 7, 2019 By Jonathan Ping Leave a Comment
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

I’m one of the many folks who like to keep up with Warren Buffett content to see if there is any wisdom to be gained. After the release of the 2019 Berkshire Hathaway shareholder letter, Buffett did a 2-hour interview with Becky Quick of CNBC. While I don’t like when CNBC encourages average folks to treat investing like sports betting, I do appreciate that they offer up the entire interview online along with a full transcript.

Here are my personal notes after both watching (listening, actually) and then reading the text as well.

If you don’t DIY, the person who manages your money should invest it as they would their own family’s money. Most of Buffett’s and Munger’s family money is invested in BRK stock. Maybe not Buffett’s wife, but their children and grandchildren. That is why Berkshire Hathaway is run with such care and conservatism such that no disaster would make it permanently impaired. This is different from when a CEO has an agreement to make lots of money if the share price goes up in the short-term, and he/she simply jumps ship if things go horribly wrong. Check out this excerpt about the target audience for his shareholder letter:

I’ve always had the image that I am talking to my sisters. I have two sisters. They’re both– Berkshire’s pretty much their whole investment. They’re smart. They’re not active in business. So– they’re not reading about it every day. But I pretend they’ve been away for a year and I’m reporting to them on their investment. And then this year because we may be repurchasing shares, I tried to have the vision that they were talking to me about whether they should sell their shares and I was explaining to them exactly how I would look at it if I were in their shoes. So– it’s, “Dear Doris and Bertie,” at the start and then I take that off at the end. But I’m talking to them. And I’m trying to talk to ’em in a manner where if– you know, they’re practically entirely in Berkshire and if they were thinking of selling some, here’s what I’d want ’em to know before they made a decision.

That is how I try to write this blog. I am telling you my asset allocation, the names of the mutual fund and ETFs that I own, the brokerage accounts that I hold them in, the banks that I keep my cash in, the credit cards that I have applied for and use everyday. These are the same things I would recommend to my parents and siblings (and children eventually). Hopefully, if something happens to me, then my writing here can serve as a resource about what my (their) portfolio is and why I bought them and how they should spend from it. I want my spouse to hopefully keep the faith and allow it to provide for them even if I’m not around.

Even if markets aren’t perfectly efficient, it’s still really hard to beat the S&P 500. In response to a viewer question, Buffett discloses the two men picked to replace him in the stock-picking arena, Ted Weschler and Todd Combs, have lagged the S&P 500 slightly since they started 8 years ago. Yes, this was during a bull market, but they still lagged over a pretty long period. These guys sit around all day reading 10-Ks and were handpicked by Warren Buffett himself! You must ask yourself, do you really think you have an edge on them?

BECKY QUICK: That worked the last 77 years, but there’s a question that came in, T29. This is from Scott Baker. “With so many people in the S&P index funds is it still market neutral and the best investment vehicle for most people?”

WARREN BUFFETT: Yeah, I think it’s the best investment– because most people don’t know how to pick stocks. And– most of the time I don’t know how to pick stocks. I mean, it’s– it is not an easy game. And by definition people are going to do average. I mean, if you take everybody in aggregate, and if half of ’em are paying big fees and jumping around and paying brokerage commissions, the other half have to do better. And– no, it is– as I’ve told people in– and my widow will I’ve instructed– the trustee to put 90% in an S&P 500 index fund and 10% in governments, just so that– just for a feeling of security. But– there’s been no better bet than America. There’s been nothing like it.

Be patient. Be prepared. Buffett is still waiting for an opportunity, probably in the next recession or down part of the economic cycle. One of the things that makes Buffett special is his rationality and patience. Berkshire still has a ton of cash, and he won’t spend it just because talking heads says he should. With the size of their cash hoard, they want to buy an entire business at a good price. However, private equity has too much money to deploy, and is bidding up all the private businesses because they are willing to use leverage. This will eventually change. One day, probably within the next decade, the short-term outlook for businesses will be quite gloomy.

Filed Under: Investing
Last updated: March 8, 2019
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