Warren Buffett’s Shareholder Letter and Interview Dissected

 Warren Buffet, Investing, NewsThis weekend, billionaire investor Warren Buffett released his annual letter to shareholders. The “Oracle of Omaha” shared his outlook on the market, investment strategies, and even offered an anecdotal story from his younger days. Early monday morning, Warren Buffett gave an interview on CNBC’s “Squawk Box” further clarifying his thoughts and positions.

When arguably one of the most successful investors alive gives advice, it is prudent to listen. In brief, points from the newsletter:

Logo, News “During the next decade, you will read a lot of news – bad news – about public pensions plans.” Buffett said that state and local financial problems are increasing rapidly because of promised pensions that they could not afford. The private sector was about to shrug of the financial crisis and return to funding, but public pensions have not fared as well.
Logo, News Shares of Berkshire Hathaway (NYSE: BRK.A) grew 18.6%, though that was below the S&P 500, in 2013. The company has been growing steadily at about 20% since the present management has taken over.
Logo, News “Though we invest abroad as well, the mother lode of opportunity resides in America.”

Also from the newsletter were his thoughts on investments strategies, and particularly when to invest. He points to two properties he purchased, a farm in Omaha in 1986, and retail property in New York City. Both investments were made during economic downturns. He highlights five fundamentals to success in investments.

1.    “You don’t need to be an expert in order to achieve satisfactory investment returns.” But warns investors to be honest with their own limitations.

2.    “Focus on the future productivity of the asset you are considering.” Instead of buying into a stock based on how profitable it might be, stocks should be purchased based on the value it provides.

3.    Know the difference between investing and speculating. Investments are made based on the productivity of the item. Speculation is the hope that the value of an equity changes.

4.    “Games are won by players who are focused on the playing field — not by those whose eyes are glued to the scoreboard. If you can enjoy saturday and sundays without looking at stock prices, give it a try on weekdays.” Focus on the long term.

5.    “Listening to marco or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important.” Don’t listen to talking heads. Maybe still listen to Warren Buffett.

The interview with the billionaire on CNBC revealed more of his thoughts.

Logo, News One can achieve good financial returned from investing into a low-cost S&P 500 index fund. He suggested Vanguard’s.
Logo, News “The last thing you’d want to do is to hold money during a war.” The value of money goes down during war, so it is wise to invest it into something. The stock market rose during WWII. He is referring to the Ukraine situation, which some fear could plunge the world into another war.
Logo, News He believes the Keystone pipeline is a good idea, and is “good for the country.”
Logo, News “Bitcoin isn’t a currency.” Buffett believes that bitcoin does not meet the criteria of a currency as a store of value, and wouldn’t be surprised if it disappeared within 20 years.

Overall, Buffett appeared very positive about the U.S economy and retains that most investments opportunities resides stateside.

 

Leave a Comment