If a billionaire who is one of the world’s richest people, gave you investment tips every single year, would you listen?
We certainly do. And we have for the last 30+ years.
This week’s Update contains all of the market data from last week of course, but more importantly, it contains wisdom from Warren E. Buffett, Chairman of the Berkshire Hathaway group of companies. Mr. Buffett is admittedly one of our idols here at J.L. Davis, and we can’t wait to share with you what he had to say last week in his letter to shareholders.
You may just want to pass this along.
Best always,
Lee and Jeremy
This Week’s Quote:
“(We) have always considered a ‘bet’ on ever-rising U.S. prosperity to be very close to a sure thing”
― Warren E. Buffett, Chairman, Berkshire Hathaway
JL Davis Thoughts This Week:
OK, we admit it. We at JL Davis Financial Corporation are raving fans of Warren Buffett, chairman of Berkshire Hathaway. We have been for our entire careers.
Each year at this time, Mr. Buffett produces his annual letter to shareholders. We’ve read every one of them which now date back well over forty years. In fact, if you’re interested, you may find them yourself at http://www.berkshirehathaway.com/letters/letters.html. All are worth reading, but the 2013 version which was published last weekend is a particular gem. Following are some of our favorite nuggets, with which we wholeheartedly agree:
On keeping a lean team:
“Berkshire’s yearend employment – counting Heinz – totaled a record 330,745, up 42,283 from last year. The increase, I must admit, included one person at our Omaha home office.”
On owning quality:
“…we much prefer owning a…substantial portion of a wonderful company to owning 100% of a so-so business; it’s better to have a partial interest in the Hope diamond than to own all of a rhinestone.”
On America:
“Though we invest abroad as well, the mother lode of opportunity resides in America”
“Charlie and I have always considered a “bet” on ever-rising U.S. prosperity to be very close to a sure thing. Indeed, who has ever benefited during the past 237 years by betting against America?... America’s best days lie ahead”.
On financial strength:
“…we will always maintain supreme financial strength…”
On investing:
“You don’t need to be an expert in order to achieve satisfactory investment returns… you must recognize your limitations and follow a course…Keep things simple and don’t swing for the fences. When promised quick profits, respond with a quick “no.”
“Games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard.”
“Forming macro opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous…”
On his own fallibility:
“(I acknowledge) some serious mistakes I made in my job of capital allocation. I was not misled: I simply was wrong …”
On the future:
“During the next decade, you will read a lot of news – bad news – about public pension plans.”
“With (the purchase of) Heinz, Berkshire now owns 8 1⁄ 2 companies that (as) stand-alone businesses would be in the Fortune 500. Only 491 1⁄ 2 to go.”
Indeed. Rock On, Warren!**
-Lee and Jeremy
Market Week: March 3, 2014
The Markets
After making several attempts at setting a new all-time record high, the S&P 500 finally managed it at the end of the week. Buoyed by the possibility of a slowdown in Fed tapering, domestic equities more than erased the previous week's losses; it was the first week so far this year that the S&P has ended in positive territory year-to-date.
Last Week's Headlines
• The U.S. economy grew a bit more slowly in Q4 2013 than previously thought (2.4%). According to the Bureau of Economic Analysis, that put growth for all of 2013 at 1.9%.
• Home prices saw a slight (0.1%) decline in December, according to the S&P/Case-Shiller 20-City Composite Index--its second straight drop--but were 13.4% higher than the previous December.
• Despite the frigid winter weather in much of the country, the Commerce Department said sales of new homes were almost 10% higher than in December and more than 2% higher than the previous January.
• Orders for durable goods fell 1% in January, according to the Commerce Department. Though it was the third month of the last four to see a decline, it wasn't nearly as bad as December's 5.3% drop, and most of the decline was due to the often volatile transportation sector. Excluding the 5.6% transportation loss, new orders were up 1.1%.
• Tokyo-based Mt. Gox, at one time the largest Bitcoin exchange, filed for bankruptcy following days of suspense after its website went dark. The company said hackers may have made off with roughly 750,000 bitcoins owned by customers and 100,000 of its own--the equivalent of nearly half a billion dollars' worth of the virtual currency. Meanwhile, Federal Reserve Chair Janet Yellen told a congressional committee that the Fed has no authority to regulate Bitcoin but suggested that Congress could look into doing so.
• Yellen also told Congress that the Fed is keeping a close eye on signs of weakness in economic data over the last month and is prepared to slow its tapering efforts if necessary. The Fed wants to assess the extent to which the weakness was the result of a slowing economy or simply lousy weather.
Eye on the Week Ahead
In addition to Friday's jobs numbers, investors will be watching the European Central Bank on Thursday to see if any additional monetary easing policies might be announced. On Wednesday, the Chinese government will announce its forecast for economic growth there in 2014. Finally, the tense situation in Ukraine could also factor into the psychology of the markets.
Data sources: All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. News items are based on reports from multiple commonly available international news sources (i.e., wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: U.S. Treasury (Treasury yields); WSJ Market Data Center (equities); Federal Reserve Board (Fed Funds target rate); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold, NY close); Oanda/FX Street (currency exchange rates). Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment