tshk1221

Why You Don't Want Berkshire to Pay Dividends

It is too early to expect any dividend from BRK since BRK's history is very short compared to other companies with consistent dividend-paying history that have more than 100 years of surviving history. For example, CL has existed for 200 years. PG, 170 years. HNZ, 140 years. KMB, 130 years and so on.

BRK must survive another 40 - 50 years from now to show to the market that it has a proven track record of surviving history. From my point of view, BRK is not that different from MSFT in terms of its speed of market capitalization during a very short period of time and relatively short business history.

However, MSFT is definitely a better choice for us because of its dividend yield of 2.6% and its firm standing as industry leader even if we have $10,000,000 to invest with.

Why You Don't Want Berkshire to Pay Dividends

The problem of BRK's no dividend policy seems to be this:

I cannot hold BRK forever. I MUST sell BRK someday to enjoy the economic benefits (cash).

However, I can hold KO, PG, JNJ, KFT, HNZ, KMB, CL and WMT including other quality-dividend paying companies forever because of the continuous, increasing streams of economic benefits (dividends) coming to me, and I don't need to sell these companies to reap and enjoy the economic benefits.

5 Stocks Selling At a Discount to Fair Value

We all think when the market goes down, stocks have become cheap and cheaper than before.

But, the real problem of thinking that everything got cheaper is the stock market went up so much from 1980 to 2000. Way too much that we tend to think companies with P/Es of 30 - 300 is ok to invest in. Way too much that we think companies paying not a penny of dividends is ok to invest our money in.

It is very possible that during 1950 - 1980, dividend yields of KO, PG and JNJ could have been 6% - 7% or more with P/Es of 5 or less since there were not a lot of market participants back then other than rich people.

5 Stocks Selling At a Discount to Fair Value

TLassen,

I thought a lot about intrinsic value of a company. I think a company's source of intrinsic value is composed of the following three factors:

1. Brand power
2. Product quality
3. Human resource

I know discounted future value of dividends less risk-free investment rate could be used to determine a company's intrinsic value since dividends are a reflection of intrinsic value of a company, but there are somethings that we cannot figure out such as the power of excellent human resource that contributes to generation of earnings and dividends and brand power that's not really easy to measure its value of. My conclusion is we cannot measure true intrinsic value of a company.

And, ROI of 30% appears to be way too conservative. If you apply an ROI of 30% to KO, PG or JNJ, you're requiring an ROI that is applied to riskier micro-cap companies or small businesses. As for big-cap renowned companies like KO, PG and JNJ, I think 10% ROI appears more reasonable.

Berkshire Hathaway Stock Holdings and Investment Ideas

I think it will be better for small investors to choose some of the right ones among the stocks owned by BRK. There are a lot of companies in the list that we do not know well about or that we don't need to own at all. I would go with the following only: AXP, GE, WFC, PG, JNJ, KO, GSK, KFT and WMT

5 Stocks Selling At a Discount to Fair Value

I completely agree with TLassen except for "That is not the point."

I think how to value a business' fair value is one of the single most important thing we small investors must know of to maximize cash flows and stock values from dividend reinvestment by holding forever. It is because the fair values directly impacts acquisition cost and dividend yield.

Of no real good use at all if KO was bought in 2000 when its price was its max and its dividend yield was less than 1% even if KO is considered to be one of the best companies in the world to invest in.

5 Stocks Selling At a Discount to Fair Value

It seems to me that all four companies except for CVX are still expensive. I used 10 x most recent earnings to come up with the fair values.

Dividend Investing vs. Trading

This is a great article that illustrates one of the best ways for small investors to accumulate wealth over long-term through dividend reinvestment.

As I invested a litttle in the market, I came up with my own conclusion that quality dividend, rather than sell-buyer-agreed market cap, is the true reflection of intrinsic value of a company. Through dividend reinvestment, we get a portion of intrinsic value realized from a company, reinvest it back to the company and get it back again. This continuous circulation of intrinsic value between an investor and a company appears to create something more than simple compounding.

After a few mistakes, I decided to stick to quality-dividend company and divident reinvestment.

5 Dividend Stocks for a Bear Market

Can you analyse KMB, HNZ, VZ, GSK and KFT, too for us?

How We Could Let AIG Fail, Sort Of

1. The government must lay off all the employees of AIG and replace them with new government employees. Pay for each employee must not be over $30,000 to $50,000 a year with no bonuses, 401(k)s, insurances or any type of fringe benefits whatsoever to save costs (tax payers' money).

2. The government must set insurance sales goals to these new government employees such as generation of $10,000,000 new life insurance policies a month per employee.

3. If any of the employee cannot meet this sales goal, the government must lay off under-performing employees one by one again to save more costs.

4. When there is no employee left other than a security guard, the government must declare itself Chapter 7 bankruptcy for AIG.

5. The politicians will handle the effects, good or bad, by blaming others and pinpointing scapegoats.

Outing AIG's Bonus Babies: What's the Point?

The government must lay off all the employees of AIG including Edward Liddy and have them replaced with new government employees with a pay of $30,000 to $100,000 a year with no bonuses and have them run AIG until the loan gets paid off.

Outing AIG's Bonus Babies: What's the Point?

These government bureaucrats who do not know how insurance industry works in terms of compensation and bonuses are driving the public insane for these little bonuses. How can a for-profit insurance company be operated properly without employees who receive monetary compensations based on sales-driven performances? AIG is not a non-profit government entity which can be operated for a compensation of $50k a year for an employee.

How come these bureaucrats do not rage against the bonuses to be paid to the employees of Fannie Mae? Fannie Fae's historic recklessness in accepting absurd and exotic mortgage loans from banks and churning out below-junk-bond like MBSs played a major role for this mortgage crisis, too. These bonuses for Fannie Mae execs must be stopped immediately, too. In addition, Fannie Mae employees officially belong to the government. Therefore, they just need only $50,000 to $90,000 annual flat pay with no annual performance bonuses. Why do the government employees need those huge bonuses?

Once the government gave Edward Liddy general right to restructure and operate tangled AIG as CEO, the government including the bureaucrats must trust him unconditionally until this mess in AIG is resolved. Edward Liddy is not one of the Wall Street greed-trapped CEOs or incentive-crazy mortgage bankers and lenders. All he wants to do is to finish his job for his honor and duty given by the government for $1 a year.

I just feel so sorry for Edward Liddy who could have been paid more than $5 million a year in a different company as CEO.

It's better for AIG to just declare Chapter 7 bankrutcy. Edward Liddy needs rest home.

Fannie Mae and Freddie Mac: More Bonuses for Failure

No bureaucrats' outrage for bonuses for the employees of defunct mortgage giant, Fannie Mae?

AIG Bonus Imbroglio: $165 Million vs. $165 Billion

We all now know what happened with AIG and the numerous financial institutions including the State of California thanks to Edward Liddy's brave statement telling us all the details of the use of the $165 billion tax payers' money.

Instead of lashing out at AIG, we have to think of good solutions to help AIG stand up again since our billions of dollars at stake now, and AIG must pay back the money to us. Since getting on board of AIG as CEO right after this crisis, Edward Liddy has been showing us the strongest tenacity, courage and commitment to restructure this complex company into a smaller but nimbler insurance company, trying all of his best and ideas to sell other AIG units in the midst of this historic credit-cruched market. News say AIG generated about 45 billion dollars from asset sales and is ready to pay down the bail-out loan by that much. We have to applaud Edward Liddy for these tremendous jobs done to finish his responsibilities given as CEO. I've never seen this strong tenacity and commitment to his or her responsibilities in any other CEOs.

For $1 compensation a year, Edward Liddy must be struggling by himself every day and ever hour to restructure and get this company stand up again and pay the loan back to the government and go home to take a real rest. He graduated from a catholic university. He must be praying every night to God to give him the courage to finish this daunting task given to him in the midst of criticisms being poured on AIG. Instead of bashing out at him and AIG, we have to at least pray together for him to finish his job good, real good so that he can go home and take a real good rest and so that we get our tax money back.

Rage at the AIG Machine

The government must choose a softer approach when dealing with AIG. The government and the public should not drive this time-bomb like company into a corner to explode. If it explodes, we can't get our tax money back. The fact that even the State of California got the bail-out money through AIG signifies that the whole thing entangling AIG and world's financial institutions is a matter of problem solving, not the matter of criticizing. We must calm ourselves and must be cooled down.

The single most important thing we have to think of is how we are going to get our billions of dollars of tax money back from AIG, not the bonuses paid already. If we can get the billions of dollars back from AIG, it wouldn't be a big deal to get the bonuses back. Reduction of future bonuses will do. We must help AIG stand up again as one of the economic engines of the US to get our tax money back. If not, we will just end up with pennies for billions of dollars poured in.