Learning from Buffett and Others During Market Crises

By Justin J. Carbonneau As of this writing, the S&P 500 will have dropped close to 30% in less than 20 trading days. The decline is the fastest drop into bear market territory ever. The degree of health related and economic damage for businesses, profits and employment, a result from fallout of the coronavirus, remains so unknown that stocks in general are getting significantly hit and some industries, like airlines, cruise liners and entertainment concerns,… Read More

Berkshire Adds ETFs to Pension Plan

Berkshire Hathaway purchased two ETFs for one of its pension plans in the fourth quarter of 2019, according to a recent article in Bloomberg. The purchases, reported in a regulatory filing, totaled $25 million and are the firm’s only publicly recorded ETF holdings, the article reports. “Buffett, whose Berkshire holds a record $128 billion in cash and U.S. Treasury bills, has been questioned before about why he didn’t put the firm’s unused cash into an… Read More

Excess Returns, Ep. 15: Some Thoughts on Market Panics

The argument that investors should stay the course during market declines is an easy one to make. It also in most cases is the correct one, since figuring out when to get out of the market, and when to get back in, is very difficult for most investors to do. Despite the strength of the stay the course argument, those of us who make it can sometimes fail to deliver it with the proper recognition… Read More

Active Investors’ Mental Mistakes

Many amateur investors stick to active strategies, even when the evidence shows that “it’s more than likely to be a fool’s errand,” because we allow mental shortcuts to lead us to mental errors. This according to a recent Wall Street Journal article by finance professor and author Meir Statman Ph.D. Many amateur active investors think of stock trading as a skill that they will get better at with time and practice, Statman notes, which is… Read More

You Don’t Have to Sell Stocks Now

If individual investors keep their cool as coronavirus fears continue to pummel stocks, they “might even get to buy bargains as the big money bails out,” writes columnist Jason Zweig in a recent Wall Street Journal article. Professional investors tend to move quickly when the market turns to avoid the ire of clients, Zweig explains, which can lead them to “chase the market trend too far and too long.” However, a 2002 study found that… Read More

Inside the Mystery of Brookfield Asset Management

An article in the Financial Times profiles what it describes as the $500 billion “secretive investment firm” Brookfield Asset Management, a Canadian group that grew out of the Seagram liquor dynasty and today “attracts money from ordinary stock market investors, sophisticated public pension systems and sovereign states including Qatar.” “Brookfield began with a $15 m inheritance and a family feud,” the article reports, chronicling the company’s founding by Samuel Bronfman, who “made a fortune out… Read More

History Tells Us When the Dow Will Bounce Back

While no one knows for sure what will happen as the market continues to react to coronavirus developments, “history could perhaps strengthen the resolve of aggressive traders debating whether or not to jump into the market right now.” This according to a recent article in Barron’s. Since the Dow Jones Industrial Average was created, it has dropped by more than 10% in one week just 17 times, the article reports—less than .3% of the time.… Read More

Downside-Protected Funds

In 2018, Bruce Bond and John Southard listed their ETFs that gave exposure to stock index returns while offering downside protection, which are getting increased attention as markets continue to struggle. This according to an article in Institutional Investor. “For some,” Bond said in an interview, “they may see a buying opportunity but the markets could also continue to slide. If the market zooms up, you’ll be part of it, but if there’s a slide,… Read More

How to Be Like Warren Buffett in Times Like These

“When fear defines financial markets, remember Warren Buffett,” says a recent Barron’s article. Buffett once asserted that the secret to beating the market was to “be fearful when others are greedy and greedy when others are fearful,” a simple idea that the article notes can be difficult to follow, “especially now, when no one knows what the coronavirus might do.” The negative market reaction to the recent health threat, the article points out, raises a… Read More

Vanguard Dips Toe into Private Equity

In February, low-cost index fund manager Vanguard announced plans to offer a private equity fund. This according to an article in Bloomberg. “The move represents a surprising convergence of two very different investing worlds,” the article states, noting the contrast between Vanguard’s reputation for keeping things simple (by offering low-cost index funds) and the inherent complexity of private equity funds–which typically include “opaque” portfolios that can keep cash locked up for years. Private equity funds,… Read More