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  • Warren Buffett's Secret Leverage... And Why You Should Be Using It  [View article]
    Thanks to the Mr. D'Asaro for clueing me in on the incredibly low margin rates at Interactive Brokers, an unexpected bonus for reading this article, even though I share the reservations of many commenters about relying on leverage. I just did a little research on Interactive and found they topped the Barron's list of "Best Online Brokers of 2014." 1.60% leverage beats the heck out of the typical 8.0% leverage charge from the good big brokerages.

    It is worth remembering one of Mr. Buffett's most striking observations: the two things most likely to ruin the investment activities of smart people are alcohol and leverage.
    Jul 18, 2014. 07:42 PM | 2 Likes Like |Link to Comment
  • U.S. Bancorp - Great Bank, Trading At A Great Premium To Tangible Book Value  [View article]
    Mr. bobmarks:

    What is this phantom Obama fiasco you refer to? USB closed at $15.34 on President Obama's inauguration day. It closed yesterday at $39.66, so its market price has more than doubled since the merciful end of the Cheney-Bush administration.
    Dec 7, 2013. 06:35 PM | 5 Likes Like |Link to Comment
  • How To Beat 99.9% Of Professional Investors  [View article]
    to larryl9:

    Your "caveat" about long recovery times is well taken.

    However, one should factor in the following observation found on the website of Dividend Growth Investor, a Seeking Alpha contributor whom I find well worth paying attention to:

    "Most people are told that it took twenty five years for the Dow Jones Industrials Average index to surpass its 1929 high after The Great Depression and the Second World War. This is not true – accounting for dividend reinvestment Dow Jones Industrials index was actually able to surpass its 1929 high about fifteen years later."

    With further research I found that it took the CPI roughly the same time period to regain its 1929 level. So by 1943-44 the dividend-reinvested D-J would have held roughly the same purchasing power as was put into it in 1928-29, except that some of this would have been lost to taxation.

    Sad to say, there could not have been many investors sufficiently well-off, well-employed, foresighted, or just plain lucky to hold faithfully to this investment strategy during this time period.
    Jun 28, 2013. 12:25 PM | 1 Like Like |Link to Comment
  • Berkshire-owned BNSF Railway (BRK.A, BRK.B), one of the biggest U.S. consumers of diesel fuel, plans this year to test using natural gas to power its locomotives. If successful, the experiment could weaken oil's dominance as a transportation fuel and provide a new outlet for the glut of cheap natural gas in North America.  [View news story]

    BRKB closed today (March 5) at $102.66. It has exactly the same economic value as 1500 shares of BRKA. So you can buy, e.g., 10 shares of BRKB for a little over $1,000. I don't think you are ready to buy one share of BRKA for about $154,000.

    To educate yourself regarding Berkshire Hathaway, go to the website, berkshirehathaway.com. There you can get and print out the entire 2012 annual report (over 100 pages). All you need to read to get started understanding a uniquely great company are;

    Owner's Manual;
    Warren Buffett's Letters ... (including the latest);
    Comparative Rights... of Class A and Class B Stock

    Seeking Alpha often has good articles about BRK.

    Don't pay much attention to the large numbers of ill-informed, sometimes hate-mongering trolls who think we should read their comments. Fortunately Seeking Alpha is much less used as a dummies' graffiti board than the Wall Street Journal or Marketwatch.com.
    Mar 6, 2013. 12:58 AM | 2 Likes Like |Link to Comment
  • Buffett Defends Investments, No-Dividend Policy, Chastises CEOs  [View article]
    To gh1616:

    Any long-time holder of BRKA with enormous LT capital gain who wants to raise cash can convert each A share into 1500 shares of BRKB, ($102.66 at today's market close) in order to raise only the cash wanted. The proceeds could be almost entirely LT Capital Gain, favorably taxed (compared to earned income) at highest rate of 20% (in the 39.6% bracket). If BRK had been paying out dividends over all this time, they would have been taxed earlier, often at a higher rate, and LT capital gains to be harvested per share today would be a lot lower.
    Mar 5, 2013. 11:02 PM | Likes Like |Link to Comment
  • The Real Secret Of Warren Buffett's Performance  [View article]
    Macro Investor --

    MDY, with roughly 10 Billion in assets and an expense ratio of 0.25%, is collecting roughly 25 Million per year. Don't you think it not only charges way more for its management than BRK but also employs a lot more than 15 people? (None of them need to be smart or outstanding investors, just to match an index.)

    Mr. Buffett has angered and been attacked verbally by many of "the whole breed of professional money management" for his own outspoken criticisms of disgraceful overcharging and underperforming, so you may have more in common with him than you thought.

    Any of us can buy and hold both MDY and BRK. Prudent diversification would suggest the wisdom of holding both, but BRK, for its significant undervaluation, should be a better bargain at present.
    Jan 17, 2013. 02:14 AM | 2 Likes Like |Link to Comment
  • The Real Secret Of Warren Buffett's Performance  [View article]
    I disagree with two of your "facts" :

    1) "... Buffett has an army of people working for him to select investments." His "army" of smart people consists of himself and Charlie Munger, along with an Omaha office staff of about 15 last time I heard the number. Add to this Todd Combs and Ted Weschler, now running some of the investment portfolio and preparing to run it all when Buffett and Munger need to be succeeded. If you include the smart people who run Berkshire's fully or partly owned businesses, that is indeed more like an army; but Buffett and Munger are smart enough to buy into businesses whose managers are outstanding and then to stay out of their way.
    I fully agree with you that "the odds of an individual investor successfully replicating even Buffett's return is slim to none," EXCEPT for individual investors invested in Berkshire.

    2) "Buffett is a money manager and earns his living through fees on money managed by him." Buffett's only fee is his $100,000 annual salary. BRK shareholders share his skills for pennies per year -- a far cry from the cost of hedge fund management or even low cost mutual fund management. He can sell shares just like any other shareholder when he wants cash; however he doesn't need to do this, since he has his own personal investments (outside of BRK) to draw upon.

    Aside from this, thank you for a very informative article, particularly for alerting me to the excellent returns of MDY.
    Jan 15, 2013. 02:59 PM | 6 Likes Like |Link to Comment
  • Hedge Funds: The Most Expensive Bargain In Town  [View article]
    Mr. Seides --

    Thank you for your very significant, well documented evidence that much of hedge funds' outperformance stems from good hedging -- from underperforming far less than the averages in down markets. With net losses instead of gains there is no 20% flow from investors to managers. Wouldn't this be a significant component of minimized underperformance?
    Jan 15, 2013. 01:04 PM | Likes Like |Link to Comment
  • Avoid Paying Taxes The Warren Buffett Way  [View article]
    Cannon Fodder --

    The Eisenhower era's 90% top rate and the Kennedy c70% rate were too high. Those rates also distorted economic good sense by giving much bigger advantages to legal tax avoidance strategies than such strategies can achieve under today's too low top rate. Today's too low rates on the highest incomes should not be raised too sharply while we are still trying to recover from our Great Recession. Our "dysfunctional" government, with its 57th minute of the 11th hour agreement, actually ended up with about the right legislation for the present.

    Although my family sometimes benefits from this, I think it is anomalous and very wrong for earned income to be taxed at a higher rate than unearned income (L.T. Capital Gains and Dividends). Genuine Conservatives should be more concerned with this distortion of incentives to gainful work than with the bogus disincentive that is claimed to flow from modestly raising multi-millionaires' historically low tax rates on unearned income.

    Saibus Research and quite a few commenters should label me a hypocrite of the Buffett genre for advocating higher taxation of unearned income while my family sometimes enjoys these currently prevailing lower rates. I only wish I could be as right in investing prowess as I think both Mr. Buffett and I are in believing that the public good will benefit from tax reforms detrimental to our personal gain.
    Jan 9, 2013. 06:42 PM | Likes Like |Link to Comment
  • Avoid Paying Taxes The Warren Buffett Way  [View article]
    Saibus, I have been paying social security taxes--mostly on self-employment income, so over 12%--for 53 years. I would appreciate it if you and others (including official governmentspeak) would at least put the word "entitlement" into quotation marks when discussing social security. I am at last collecting social security payments, while still working and still paying into the system. Measured in constant (inflation-adjusted) dollars, I am not that likely to live long enough to get out of the system what I paid in. I do not resent this. I am happy to have had my taxes help people like my parents and my aunts and uncles, along with other people's parents and aunts and uncles. I do resent having my situation (and that of so many others) called an "entitlement." I think it is much more of an entitlement for multi-millionaires to have been paying, for close to ten years, the lowest (by far) federal income tax rates of my lifetime while so many of them and their congresspeople fight against paying a fairer share and seek to cut our deficits by slicing more holes in our already inadequate social welfare safety net.
    Jan 9, 2013. 06:04 PM | 1 Like Like |Link to Comment
  • Avoid Paying Taxes The Warren Buffett Way  [View article]
    Responding this previously posted author's reply from Saibus Research:

    "Ted, government spends too much money at all levels. Our opposition to higher taxes is based on Warren Buffett's quote about how he thinks the charities run by his friends and family "will do a better job with lower administrative costs and better selection of beneficiaries than the government."

    Being that you were a credit analyst for about 10 years, you are aware that the federal government has increased spending in 48 out of the last 50 fiscal years and that spending has increased at a compounded average annual growth rate of 7.4%, right? You are aware that entitlements and other transfers of income are over 60% of the federal budget, right?"

    You should be aware that your figures are grossly misleading as cause for alarm unless expressed in constant (inflation-adjusted) dollars. The Consumer Price Index for the 50 years from November, 1962, to November, 2012, is about 7.6 times as high, for a compounded annual increase of 4.13%. Gross Domestic Product for the same time period is about 30 times as high for a compounded annual increase of 7.04%. These figures show federal government spending's average annual growth of 7.4% to have outstripped GDP growth by a rather slight margin.

    You must be aware that the tax change just legislated for personal incomes over $400,000 was a fairly modest increase to the lowest rate on the highest earners since World War II or even earlier. The top rate was over 90 % during the Eisenhower Administration.

    I defer to Ted Barac's (above) excellent demolition of your silly "Tax-me-more-I'm a hypocrite- for-cleverly-and-legal... Buffett mantra.
    Jan 8, 2013. 07:30 PM | Likes Like |Link to Comment
  • Taking A Longer Look At Apple's Secret Hedge Fund  [View article]

    Why do you find it useful or necessary to tell us the color of your friend who limits her work hours in order to maximize her and her child's government assistance? Would she remain your friend if she knew you assumed that this makes her a lazy worker and if she knew that you considered her race relevant to your illustration? 
    Jan 7, 2013. 07:33 PM | 6 Likes Like |Link to Comment
  • Why Dividend Stocks Are A Shield Against Mr. Market  [View article]

    Berkshire Hathaway A share price had 13.2% annual compounded appreciation from January 1, 1993 ($11,750) to January 4, 2013 ($140,803).

    I believe you could have avoided starvation and freezing by selling about 5% of your BRK holding each year (helped by the quasi-split of BRKB priced at about 1/30 of BRKA) leaving you still with a big average annual increase in your BRK capital. No doubt you would also have been prudent enough to remain well diversified with other reliable dividend paying stocks and lucky enough or confident enough not to overdo rebalancing of your BRK shares, which you could now sell off to reinvest in dividend payers.

    Another S.A. reader noted that astute selling of high-priced calls could create the equivalent of a BRK dividend (not, however, a strategy I woud feel competent to try for myself or my dependents).
    Jan 7, 2013. 07:17 PM | Likes Like |Link to Comment
  • Why Dividend Stocks Are A Shield Against Mr. Market  [View article]

    Berkshire Hathaway A share price had 13.2% annual appreciation from January 1, 1993 ($11,750) to January 4, 2013 ($140,803).

    I would not be the only Seeking Alpha reader who would love to hear the names of all your "quite a few companies" that have outperformed BRK over this 20 year period (or over ANY recent 20 year period).
    Jan 7, 2013. 06:54 PM | Likes Like |Link to Comment
  • Dividend Investors Should Get Ready To Load Up  [View article]
    To Mr. WmHilger1:

    Your profile says you are 82 years young. You could send to your favorite charities (tax deductible) or to Grover Norquist (not tax deductible) every dollar you have received from social security over your roughly 13-17 years of eligibility, along with all the health care money Medicare has saved you from spending over your past 17 years of Medicare eligibility (Figuring this out will, by the way, make federal income tax calculations look like a piece of cake.) Are you doing anything to curtail the Socialistic programs in your own local community, such as fire department, police department, public works, public schools?
    Dec 31, 2012. 04:50 PM | 19 Likes Like |Link to Comment