Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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Buffett Tells Shareholders His Thoughts On the Market,
Explains Berkshire's Latest Moves |
[http://www.streetauthority.com/includes/article-top-ao.htm]Published:
March 3, 2009
Warren Buffett's 2008 letter to Berkshire Hathaway
shareholders says the economy will remain in a "shambles" at least
throughout this year. Buffett, Berkshire's longtime chairman,
points out America's resilience throughout past panics and crises
and says America's greatest days still lie ahead.
"Though the path has not been smooth, our economic system has
worked extraordinarily well over time," Buffett wrote. "It
has unleashed human potential as no other system has, and it
will continue to do so."
He predicted the S&P will rise in three-fourths of the next
44 years -- the same performance it has notched since
Buffett took Berkshire's reins in 1965. He also noted
that a market rebound and an economic rebound don't always
share a direct correlation.
Buffett -- himself the son of a Nebraska congressman --
is a supporter of and unofficial economic adviser to
President Barack Obama. Buffett gave his nod to the
government's actions to repair and stimulate the economy,
though he says the downside of the moves will be inflation.
"Whatever the downsides may be, strong and
immediate action by government was essential last year if the
financial system was to avoid a total breakdown," Buffett wrote.
"Had that occurred, the consequences for every area of our economy
would have been cataclysmic. Like it or not, the inhabitants of Wall
Street, Main Street and the various Side Streets of America were all
in the same boat."
The Oracle of Omaha saved his criticism for a
group he has never cut any slack -- managers who post lackluster
performance. Though he allows that fear lead to contraction,
which spawned more fear, he nevertheless chastised financial
companies' weak balance sheets and overuse of derivatives, which
made them too dependent on one another. He offers a lengthy
discourse on derivatives, which he describes as dangerous. (You can
read the full text of the shareholder letter
here.)
Buffett, revered for his plainspoken talk
about sophisticated financial issues, tempers his optimism with
realism. He opened this year's letter with the exact phrasing he has
used for years to describe the change in Berkshire's book value. The
only difference was that shareholder equity
fell this year. That's
something that has happened only once before. Book value decreased
-9.6%, the worst year on record, though Berkshire's two most
important businesses -- insurance and regulated utilities -- are
mostly immune to the economic cycle.
The 22-page missive -- part textbook,
part narrative, part confession -- pulled no punches. Buffett admits
he screwed up by buying shares in ConocoPhillips (NYSE: COP) when
oil was at its peak. He beats himself up for buying two banks that
were subsequently written down by -89%. And he reports he sold
stakes in Johnson & Johnson (NYSE: JNJ), Procter & Gamble (NYSE: PG)
and ConocoPhillips that he would have preferred keeping. (He needed
to raise cash for deals with Wrigley, Goldman Sachs and General
Electric.)
For a detailed look at Buffett's portfolio,
click here.
The Future
Buffett's hopeful read on the nation's economic prospects is
atypical: The shareholders letter, by its nature, looks
back. But in addition to his economic optimism, he also
included what I think is a hint as to the future leadership
of Berkshire.
Now, one of Buffett's favorite things about Berkshire --
other than the people he works with -- is "float." Float is
the key to Berkshire's success. This is the money that
policy-holders entrust to an insurer to hold until claims
are presented. Most insurers pay more in claims than they
receive in premiums but make money in the meantime by
investing the cash.
A few lucky companies, like Berkshire, actually get paid to hold
other people's money, an outcome known as an "underwriting
profit." Berkshire generated nearly $3 billion this way last
year. Buffett's success has been built on using float to
make other investments that generate cash, then to use that
cash to buy more companies, and so forth. Without float,
Berkshire would likely be good, but not great. It wouldn't
have any legs. Buffett absolutely reveres the managers who
make this happen.
One in particular -- and the time has come for investors to read
between Buffett's lines. Here's what he had to say about Ajit Jain, who runs General Re: "From year to year, Ajit's
business is never the same. It features very large
transactions, incredible speed of execution and a
willingness to quote on policies that leave others
scratching their heads. There isn't anyone like Ajit."
Buffett is 78 and in good health, but no one lives forever, and
Buffett has said he will step down if his abilities or
energy slips. To that end, Berkshire's succession plans have
been made -- but they have not been disclosed. This
kind of plug, which Jain receives regularly, is the best
clue as to who the next Berkshire chairman will be.
[http://www.streetauthority.com/includes/editor-profiles-ao.htm]
Disclosure: Andy Obermueller does not own shares of Berkshire
Hathaway.
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Investing Doesn't Get Any Easier Than This |
Stock picker Amy
Calistri's strategy is as simple as investing gets -- just one idea
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and you don't have to worry about oil prices, automaker bailouts, or
what the Fed is up to -- because every "bad" economic development
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