By Justin J. Carbonneau (@jjcarbonneau) — At Berkshire’s Hathaway’s annual meeting, Warren Buffett announced he had purchased approximately 75 million additional shares of Apple. Apple is already Berkshire’s largest holding, and the purchase will make Buffett an owner of roughly 5% of the company. With a current market cap of $940 billion, this makes Berkshire’s stake in Apple worth close to $45 billion. His massive stake in the company shows he strongly believes in the… Read More
By Jack Forehand (@practicalquant) — Certainty is often seen as a sign of strength in life. When someone is telling us the best course of action within their field of expertise, we want them to do so with a level of conviction that implies no other outcome is possible than the one they are telling us is going to happen. Think about it. You bring your car into the shop, you want to know definitively what… Read More
A recent Barron’s article offers highlights from an interview with John Doerr in which the Silicon Valley startup veteran investor shares his views on what he sees as the leadership crisis in America and the challenges ahead for venture-capital investing. Here are some highlights: Doerr said his new book, Measure What Matters— was inspired by his belief that our country is at a “particularly relevant moment when a lot of our leaders and great institutions… Read More
On the subject of long-term investing, a recent Economist article outlines six precepts every investor should keep in mind: You can’t start too early—compounding is a compelling reason to start saving when you’re young, the article argues. Risk and reward are related, but don’t think the latter is guaranteed.Risk, the article explains, is not about volatility but rather about loss of capital. “That is why investors should always have some money in cash or government… Read More
Below are links to our most popular posts for this week on Validea’s Guru Investor blog. [1] Industries Concentrate and Investors Profit [2] Small College Endowment Outperforms Harvard by Indexing [3] Bond Laddering Pros and Cons [4] Beware of Expert Forecasts ——- Photo: Copyright: arcady31 / 123RF Stock Photo
A recent CFA Institute article argues that “not even the most credible forecasters can time the market profitably with any consistency,” noting that celebrated economists and market pundits are fallible when it comes to predicting what the market will do. “No academic—not [Robert] Shiller, not Nouriel Roubini—no mainstream talking head Jim Cramer type, or Wall Street strategist can do it,” writes CFA Mark Armbruster, president of Armbruster Capital Management. He cites indicators like the CAPE… Read More
Bill Abt, who oversees the $120 million endowment of Carthage College in Kenosha, Wisconsin, “has returns that beat Harvard’s $37 billion endowment and most others,” according to a recent article in Bloomberg. “In the 10 years through the most recent college fiscal year, ended on June 30, 2017,” the article reports, “the former beer company executive racked up a 6.2 percent average annual return, according to the school.” Based on data from the National Association of… Read More
A recent article by Bloomberg columnist Nir Kaissar discusses the market’s increased volatility within the context of earnings. “More than a century of data,” he writes, “show that declines in the equity market most often precede slumps in earnings rather than the other way around.” Kaissar points out that although “companies are awash in profits” and Wall Street analysts lean on strong business fundamentals as comfort in the face of volatility, “fundamentals have little to… Read More
A recent Morningstar article outlines the pros and cons of bond laddering—holding bonds of different maturities in a portfolio with the goal of creating predictable streams of cash flow. Pros: The current interest-rate environment “doesn’t much matter to you if you’ll get your bond’s face value back at maturity.” Investors don’t need to worry about incurring capital losses by selling their bonds for a discount in a rising-rate environment because they’ll holding the bond to… Read More
According to JPMorgan Chase, “there’s still a logical approach to investing for the expected end of ‘easy money.’” This according to a recent article in Bloomberg. The firm’s strategists have expressed concern around what they see as the lukewarm response by equities to strong earnings reports. While they believe that the February dip was in part a response to higher Treasury yields, the strategists argue that “this month, U.S. rates have risen only half as… Read More
During the quarter ending in March, the U.S. tech “superpowers”—Alphabet, Amazon, Microsoft and Facebook, spent $16 billion on capital projects, a figure 68 percent higher than their combined capital spending during the same quarter a year ago, a rate of growth that outpaces that of revenue. This according to a recent Bloomberg article. “In one sense,” the article says, “the booming spending on big-ticket projects defies economic logic. In principle, once companies achieve gigantic scale,… Read More