Monthly Archives: September 2013

Warren Buffett’s Berkshire Hathaway Letters to Shareholders (1965-2012)

Warren Buffet Berkshire Hathaway Letters to Shareholders (1965-2012)

Warren Buffet Berkshire Hathaway etters to Shareholders (1965-2012)

Warren Buffett’s Berkshire Hathaway Letters to Shareholders is exactly what it sounds like – a book compiled of all the shareholder letters Warren Buffet has written, since he took the helm at Berkshire Hathaway (then a small textile company) in 1965.

What’s so special about that?

These Berkshire Hathaway letters present an impressive and insightful case study on investing success. Buffett shares the logic, reason and analysis behind all of his major capital allocation decisions.

But I know what you’re thinking…

“Aren’t the Berkshire Hathaway Shareholder Letters Available Free Online?”

And you would be correct. Sort of. You see only the letters from 1977 and onward are available at berkshirehathaway.com. The Berkshire website even has a link to the Shareholder book so you can get the annual letters in their entirety.

And more importantly:

Getting the book version really allows you to study the Berkshire Hathaway Annual Shareholder Letters. Having the letters in front of you in print is much better than skimming them in PDF format on a screen. Plus, it really does make sense to start at the beginning and get the whole narrative.

So now that you have an idea why this book is different from the free Berkshire Hathaway Annual Shareholder Letters available online, let’s get into the details. Although this book covers a lot of material, I just finished reading it so I hope to give you an accurate and thorough summary of what the shareholder letters are really about…

Why The Berkshire Hathaway Annual Letters to Shareholders Are a MUST Read:

To put it simply, The Berkshire Hathaway Letters to Shareholders allow you to follow along with Warren Buffet from day 1. And you get a front row seat to his capitalistic empire building. The first annual letters are short and quick. You can really move through the first couple of years quickly and get a great grasp on why Buffett bought Berkshire.

But then before you know it, the annual letters to shareholders are expanding in length. You quickly find that Warren has started to acquire large positions in publicly traded securities (stocks, bonds and even some derivatives). The letters grow longer and more complex as the scope of Berkshire Hathaway gradually expands from a small textile mill to a $280 Billion conglomerate owning everything from private jet companies to car insurance (did you know Warren Buffet owns Geico?)

The Berkshire Hathaway Annual Letters to Shareholders are incredibly educational and insightful. While I have already done a few book reviews on Warren Buffet’s biography, these letters are much more focused on his capital allocation skills. It’s applicable stuff and you get to see exactly what Warren Buffet looks like in his investments.

And getting a 700 page lesson from the most successful investor in the world is a pretty good value proposition for anyone who is thinking about money management, or even just securities and business analysis. But that’s not even the best part.

My Favorite Thing About The Berkshire Hathaway Annual Letters to Shareholders

The best part of The Berkshire Hathaway Annual Letters to Shareholders is that you get unfettered access to the thoughts of Warren Buffet. These shareholders letters are so educational, in part, because they are not obfuscated or “spun” by a journalist or interviewer. Instead…

This is just Warren Buffet talking directly to you about the thing he loves most. And to be honest, Buffett is actually a great writer. His shareholder letters are not only educational and instructive – but kind of funny! Seriously.

Buffett peppers his letters with all kinds of colloquialisms and quotes. He uses baseball analogies and simple thought experiments to help you grasp complex accounting and capital allocation decisions. I was actually very surprised at what a good writer Buffett is, and how accessible his shareholder letters are – in that they don’t assume any prior knowledge.

When you’re discussing a conglomerate the size of Berkshire, that’s no small feat! I actually really enjoyed reading each other, which further helped with the knowledge retention.

But let me just warn you:

The Only Downside To The Berkshire Hathaway Annual Letters to Shareholders:

The Berkshire Hathaway Letters to Shareholders are incredibly educational. And that’s in large part because they cover 45 years of operations of one of the most successful companies in corporate America. But…

The downside is that it takes about 700 pages to summarize and analyze all of Berkshires behavior throughout that time frame. And these are not small pages. The book is printed in full 8.5×11″ paper. So each page is about the size of two regular paperback pages.

Now I’m a very fast reader. But getting through The Berkshire Hathaway Annual Letters to Shareholders took me about a month. I was able to read the first 10-15 years very quickly. But then the reports started getting longer and I was only able to read 1-2 a day. So…

Even though The Berkshire Hathaway Annual Letters to Shareholders are the most instructive investment material I’ve seen in a long time, I just want to warn you that the book is a little long. And if you’re only curious about Warren Buffet the shareholder letters are probably not for you.

On the other hand, if you’re interested and committed these letters can really provide an eye opening experience. So…

The Berkshire Hathaway Annual Letters to Shareholders – The Final Word

Whether or not you buy The Berkshire Hathaway Annual Letters to Shareholders, you can always access the most recent ones on BerkshireHathaway.com But this book is the only way you can get the complete Berkshire story, from start to presence. And it’s truly a story like no other.

If you’re a professional in the finance and investing industry, or if you’re just really interested in Warren Buffet and capital allocation, then I suggest that you buy this book for 26% off on Amazon (as it’s unlikely your local book store will carry it). You won’t regret it. And it’s a reference tool you can always come back to.

Book Details and Video Book Review:


Author: Warren Buffett
Publisher: Max Olson
Pages: 730

Related Books You Might Enjoy:

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Stock Market Analysis: September 25, 2013

Pre Market Analysis: September 25, 2013

Questrade Option Magnets

Option Puns from Questrade

Futures are flat coming into this mid-week session. Bulls are still stinging from yesterday’s close. So we’ll see if the small caps can lead us higher at the open, or if the XOM’s of the world continue to act as a drag.

One thing I want to say:

In times of macro-economic uncertainty I always find it pays to watch the price action of your favorite indicators – rather than worrying too much about how analysts are interpreting policy decisions, news headlines and world economic events. Even most data points that come out aren’t exactly market moving. Instead, look at how different asset classes are moving relative to one another.

This is probably old news to all of you chart chompers. But it’s worth reminding myself to stay attuned to the global money flow, (and letting that be my guide) rather than getting too caught up in my interpretation of policy statements or data points (both of which will later be revised anyways).

And by the way, thanks to Questrade for those fun magnets I won. Their social media team is doing a pretty good job.

Portfolio Review: September 25 2013

I’m going on vacation tomorrow. So today it’s about paring down risk and preparing for some time away from the screens. Most of my positions are small enough and the cost-basis is conservative enough that I don’t feel a huge need to raise cash. But if the market gives me the chance at profitable exits I just might take it.

I might throw on a small IAG position before leaving, just for the sake of diversity. But the miners have been incredibly weak since last Wednesday and I wouldn’t rule out another leg lower, you know? UUP might be a tell on this one too.

Interesting Articles for September 25 2013:

Is it time for the debt ceiling to be front and centre?

Banks have $155 Billion Capital Shortfall.

— What Recovery? Most Americans Don’t Believe the Economy is Rebounding.

Solazyme gets Unilever as a customer… (could be bullish for TINY?)

Stock Market Day in Review: September 25 2013

It was another choppy day for markets. But it sure didn’t start that way! For a few hours this morning (when IWM was breaking out), I thought we would be back to all time highs. But the strength was fleeting as IWM stalled into the afternoon trade.

Speaking of which…

Don’t you find it interesting that since the Fed announcement of no-taper last week, the SPY, EEM, UUP GDX and XHB have sold off almost every day, while IWM, (and to an extent the QQQ) have managed to grind higher? Meanwhile TLT is trying to convince you it’s putting in a trade-able bottom (although I remain unconvinced).

Thus…

No matter how you slice it, the money is being pushed around in unusual ways. And you can bet the divergences will resolve one way or the other. So what’s my gut feeling you ask?

I’m looking for a big bounce in the indices soon. But if that’s what everyone is expecting, can you really expect it to happen?

Maybe IWM is a red herring, and it will get pulled down with our emerging “risk off” environment.

But enough with stock market generalities…

My portfolio put in a solid showing, despite the red day for the stock market in general. Don’t you just love when that happens? If you’re looking for specific stock ideas:

TINY surprised me with some end of day following through, after threatening to break back down early this afternoon. While I’m hesitant to declare victory, maybe the sellers are exhausted after attacking this stock all summer long. Further: today’s move came on 150% average volume. And the Solazyme-Unilever deal is a positive for the company (although admittedly their share of SZYM is small).

SNV was the other story of the day. It closed a little bit off of it’s intra-day highs, and the grind higher was on low volume. But I’ll take what I can get. I’m still holding the position and hope that if the rest of the market bounces this will really get going. I’m solidly in the green on this one and might scale some profits if it gets above $3.30. The Bollinger bands have been pinching in the last week though, so I’m willing to wait around see if there’s going to be a real move.

How did your trading go today?

Always Be Trading

Classic from HitTheBidRadio

Stock Market Analysis September 24, 2013

Pre-Market Analysis September 24 2013:

Finally, Blackberry (NASDAQ:BBRY) is getting bought out by Fairfax, for $9 per share. Although I haven’t owned a Blackberry in years, it’s nice to see this saga come to an end. As for the rest of the market…

Futures are flat right now. And it looks like the drubbing in gold has continued through the overnight session. It’s pretty amazing how the miners have all given back their no-taper gains and more. This tape will drive you crazy.

There are a couple of economic data points coming out today, including the Case-Shiller index for house price index from July at 9am. There are also some manufacturing and consumer confidence numbers coming out a little later. Throw in 2 more speeches from local Fed presidents and you’ve got a pretty exciting day lined up.

So what am I trading?

Portfolio Review: September 24 2013…

Given all the selling the last few days, it will be interesting to see if anything bounces today. I would be smitten to see follow through in SNV after yesterday’s little bump into the close. I’ll cross my fingers but I won’t hold my breath.

I will also have a close eye on IAG. I think the company presents good value here. But it’s hard to hold on through these bear market rallies. So I will try to be nimble in picking my entry. If you’re a long term investor though I think IAG under $5 has a strong margin of safety.

As for my position in BRKS, I think it will be a “wait and see” kind of day. The stock traded relatively flat yesterday, but on almost twice the average volume. I don’t see any news so I’ll watch for a directional move today, either one way or the other.

Articles I’m Reading on September 24 2013:

Effects of QE on Emerging Markets

Chart School is a great source of technical analysis education

Jim Cramer’s Real Money Book Review.

September 24 2013: Stock Market Day in Review

I hope your day went as well as mine did. I don’t mean to brag, but a green portfolio on a red day is always cause to celebrate, right? So just how did I benefit?

Well for starters, the perennial under-performer (TINY) managed to close above where it opened. I know that doesn’t sound like much. But the price action today finally felt like sellers have exhausted themselves over the last 3 months. I’m not declaring victory yet. And one day does not make a trend. But I’ll watch closely to see if this is an inflection point.

I was also encouraged by the action in SNV, until the close. Given the surge in KRE I felt like this move should have legs. But the low-volume on the session was a red flag. And XLF lagged in general, foreshadowing the retreat in SNV share prices at the close.

On the other hand, I felt relatively confident in the productive trading session BRKS saw today. So I was a little dismayed when (after trading higher on heavy volume) the stock collapsed at the end of the day. Luckily my position here is only modest. And if the stock seriously pulls back I will almost certainly add more. I’m also keeping a tight eye on IAG.

On the whole though, and even though we closed down, breadth was a lot stronger at the close than the open. And if you pull up a SPY daily chart, you’ll see selling volume has come in a little over the last few sessions. So…

Do you think bulls can muster a bounce in the latter half of the week? My money’s on yes.

 

Real Money (Jim Cramer’s Book Review)

Real Money Book Review

Real Money by Jim Cramer

Real Money by Jim Cramer finally provides you with a framework for, “Sane investing in an insane world!

And I can assure you…

Real Money is Cramer’s most applicable and actionable book. By far.  It’s like he took his entire career in the financial industry (as described in Confessions of a Street Addict) and condensed all the lessons into a single book.

Seriously. Drop your preconceived notions about Cramer. And try to remember that he ran a hedge fund that did 30% a year for 10 years.  This book is a must-read if you’re interested in understanding how you can make money from stock market movement

Let me explain…

Why “Real Money” is a Must Read:

Real Money surprised me. To be honest with you, I wasn’t expecting this book to be so good. Cramer gives you a candid insiders look at how he made money in the stock market, every single year. And he shares plenty of ways you can apply his lessons to your own portfolio.

It’s great.

Another awesome aspect of Real Money is the way Cramer attacks the notion of “buy and hold” as a responsible investment strategy.  It’s clear that Cramer wants you to save up money. And he wants you to manage it responsibly, using what he calls “buy and homework.”

But it’s not like he stops there.

Once Cramer lays out the logic behind his “buy and homework” methodology, he quickly starts sharing his best tips and tricks for how you can benefit from moves in the market, too.

And let me emphasize one more thing…

Real Money does not talk in abstractions. It’s tactic after tactic, all grounded in a reasonable methodology that anyone can carry out on their own, with a little attention and focus. Sounds pretty good right?

Well, now that you’re feeling curious, let me tell you a little bit more.

The Best Part of Real Money:

Even though Real Money gives you a lot of tactics you can implement, the best part about the book is the strategic framework Cramer lays out for you. His “buy and homework” philosophy is practical and applicable. And it’s the keystone supporting everything else in the book.

I don’t want to give it all away. But basically Cramer gives you an idea of how to find specific stock ideas that will work for you. Then he tells you how to study them and stay on top of any developments in the company. You quickly learn when you should buy. And when you should sell.

What more can you ask for?

So the best part about Real Money is the way Cramer doesn’t just give you a metaphorical fishing rod. He takes you out on a boat to the deep water, and with the expert of a local guide he really makes sure you understand how to consistently land a catch.

Cramer’s Real Money uses a blend of fundamental and “price action” analysis to edge out more money, and boost his returns. Most importantly, his “buy and homework” framework makes all his tactics much more realistic to implement.

So by now you’re probably wondering if this is the investment book of the year, right? Well, before I get too carried away singing the praises of Real Money, let’s quickly talk about the downsides of Cramer’s most actionable book.

Where “Real Money” Comes Up Short:

Real Money is a great book. But buying any book for the wrong reason sucks. So I want to highlight one aspect of Real Money that might stop some of you from enjoying the book. And actually, this little shortcoming is the result of the main strength of the book.

Confused yet? Let me explain…

You see, Cramer has done a very good job compressing all his trading genius into Real Money. But as a result, the book covers a very wide breadth of material. Without a little bit of prior knowledge you might find that Real Money moves a little bit too fast.

Of course, the good part about all of this is how Cramer gives you enough information to take intelligent action in a number of different stock market scenarios. But if you’re curious about one of his techniques, you’ll need to look to external resources to dive deeper. Of course in this day and age, well, that’s pretty easy.

And anyway…

I think one of the great things about Real Money is exactly that: Cramer opens your eyes to a bunch of the different ways you can actually make a profit in the stock market. He gives you a lot of proven possibilities. And you can take it from there, right? So…

Is Real Money the investment book for you?

“Real Money”- The Final Word:

I guess whether or not you can benefit from Real Money depends on where you are in your stock market education. But getting the inside secrets from an industry expert is a sure way to shave years off your path to profitability. You know what I’m saying?

And truthfully…

When you’re successfully in the stock market you can make money so fast that these books often pay for themselves in a single afternoon. That said, if you’re worried about cost I recommend you buy Real Money on Amazon and get a discount.

“Real Money” Book Details and Video Book Review:


Author: Jim Cramer
Pages: 320
Publisher:Simon and Schuster

More Books By Jim Cramer:

Stock Market Analysis: September 23, 2013

Pre-Market Analysis: September 23 2013

Futures are basically flat this morning. And it will be interesting to see which way the tides turn after last week’s post-taper sell off. Will we see scary follow through selling?

Or is the buy-the-dip crowd already at it again?

Over in Germany, Merkel remains in the drivers seat. Meanwhile in America, the fiscal policy debate is starting to become a front and centre concern. I think Wall Street expects a last minute deal, replete with partisan bickering until the final hour.

My Trading Plans: September 23, 2013…

I’m taking some vacation in the latter half of the week. So I’m going to use these upcoming days to try and reduce exposure and tie up loose ends. Most of my positions are small enough – and long term in focus – so I’m not too worried about their particular price action.

Namely:

I will try to scale out of SNV, if there’s an opportunity. But it might be wishful thinking. So I’ll be watching KRE for further context on that signal (although it’s not looking good). XLF also gave back all of it’s gains last week.

What are you trading today?

September 23 2013 Trading News:

–Get Ready for the Week with Quint Tarts’ Tape Talk

— Investing Titans Say Stocks Are Fully Valued.

— Joe Weisenthal has some good charts showing upticks in Eurozone PMI in periphery countries and Chinese exports improving.

Ray Dalio’s take on the economy in 45 slides.

Stock Market Day In Review – September 23 2013:

After a shaky open, it was reassuring for bulls to see at least a little price stability into the close. Plus, IWM actually closed green, so is it really that bearish?

Despite the damage in the indices, breadth was a relatively healthy 40%. So maybe we just grind-on… up, then down… 0.5% every other day. If so, I’ll continue to look for conservatively valued stocks and slowly build positions around a favorable cost-basis.

At least looking for good stock ideas is more productive than front-running the Fed.

Speaking of well-valued stocks, I was happy to see TINY and SNV both do their best to close near the session highs. The end of day action in SNV was particularly encouraging because of the ongoing weakness in KRE. It’s nothing to write home about. But I’ve saved some shekels for another day.

Stock Market Analysis: September 20 2013

Pre-Market Analysis September 20 2013:

Futures are pointing a little lower this morning. It looks like the drop was prompted by the St. Louis Fed Chief saying their could be an October taper (and that the Fed can call a press conference, even if one isn’t scheduled).

Given Wednesday’s surge higher, it’s unlikely an October taper is priced in at these levels. So this seems to explain why precious metals are getting hit pre-market. And just wait until the debt ceiling becomes a front and centre thing.

At least the new iPhones seem to be selling out around the world. So maybe that will prove bullish for AAPL shares. I really find it funny how fickle investors seem to be on AAPL. This company is not the next BBRY. C’mon.

By the way, watch out for European consumer confidence out at 10am eastern. But I don’t expect that to make a huge dent in today’s market action.

So what else are we trading today?

Portfolio Review: September 20 2013

I don’t mean to sound too reactionary, but my game plan today is to sit and see what happens. I know it’s good to be proactive. But I’m still sort of waiting for the dust to settle before deploying much more capital.

As I described yesterday evening, I think SNV is still fairly priced, despite the damage in KRE. So if the broader-sector bounces today (on hopes of an October taper), then I think SNV has got to be in play.

On the other hand, I’ll probably steer clear of IAG for now, because it looks like gold is about to get hammered at the open. This might prove to be an entry opportunity. But I’ll want to look at the charts a little closer before making a play on any gold miners – make sense?

More Interesting Articles From Around the Internet:

— Carly Icahn and Warren Buffet think the stock market is fully valued

Is this what a currency war looks like?

— Twitter May IPO Before Thanksgiving!

Back with more later! Have a great Friday.

September 20 2013: Stock Market Day in Review

It was another wild one on Wall Street. And I know you’re probably dying to get on with your weekend, so I’ll be sure to keep this short…

I bought some SNV this morning, only to see it flop about for the day. I was a little surprised with the lack of upside, given the bounce in KRE. But I didn’t sustain much damage relative to the Dow Industrials, so I can’t be too upset.

The decline in BRKS caught me a little off guard too. Luckily I have a conservative cost basis and my position isn’t actually that big. And honestly…

I’m feeling increasingly lucky about my daytrading of IAG – since it’s now given back all of the no-taper gains, which followed Wednesday’s Fed announcement. To make matters worse for this Canadian gold miner, it was downgraded by Goldman Sachs, further exacerbating the selling. If it can close above $5.10 I might consider re-evaluating the stock early next week.

The last thing I want to point out before packing it in for the weekend is the divergence between the major Dow stocks and the small caps. Notably, IWM hardly sustained any selling on the day. And QQQ didn’t look too bad either. For these reasons I’m not too concerned with today’s sell off in the Dow.

There may very well be a debt ceiling sell-off coming at us. But for now I’m buying that dip.

Plus I’m going on vacation next week. So who cares.

The Snowball (Warren Buffet Book Review)

The Snowball (Warren Buffet) Book Review

The Snowball (Warren Buffet) Book Review

The Snowball, by Alice Schroeder is about “Warren Buffet and the Business of Life.”

Warren Buffet is obviously the most successful investor in the world. So The Snowball should be of huge interested to anyone who is considering a career in money management.

The Snowball is an incredibly in-depth look at how the “Oracle of Omaha” got to be where he is today.  And to make matters better: This is the only biography Buffet has ever actively cooperated with, so you know this memoir is instructive.

It’s also a cool story about success. And there are some clear takeaway lessons that any ambitious person can use to improve their own standing in life (even if you think capital allocation is a yawn).

But before we really get started with this book review: There’s something else worth mentioning to you.

I read this book recently, and I actually took notes while reading it. So I have a pretty good handle on the content and I will do my best to give you an honest and accurate review so you can decide if you want to The Snowball (or someone in your family).

Let’s cut to the chase:

Why The Snowball is Worth Reading:

The Snowball is much more thorough than most biographies. The result is, you really feel like you’re walking in Warren Buffet’s shoes, throughout each year of his life. If that doesn’t sound like a learning opportunity… well… you might just be a lost cause.

I’m kidding of course. But please, understand:

The Snowball is ripe with anecdotes and examples that you can easily extract lessons from. And as I alluded to earlier, these lessons aren’t restricted to the world of finance.

Because the truth is…

To be as successful at anything as Warren Buffet is at investing would be a huge accomplishment. Accordingly, understanding how Buffet views his “craft” of capital allocation is incredibly insightful. Throughout the book it’s clear that Warren focuses on studying companies and investment opportunities for the entirety of his waking hours.

And at one point:

Warren Buffet and Bill Gates are discussing success. And they both agree that the most important factor in success is focus. I found this passage to be incredibly eye-opening because not only are two titans of industry discussing strategies to win. But they also agreed on the most important factor in making it big. This lesson in itself made the book worth it for me.

But we’re really just getting started. Because The Snowball has over 700 pages of great ideas.

For example:

Another neat aspect of The Snowball is all of the lessons on human nature and psychology. Warren Buffet is an incredibly rational guy. So the book is peppered with advice about how you can make smarter decisions (and examples of people who don’t).

You’ll learn some common fallacies that affect almost everyone, even at the highest levels of business, and how they apply in real life situations that have happened.

And since Warren Buffet has been making big-stakes deals for so long, there are no shortage of awe-inspiring examples. But let me share my favorite part of The Snowball with you…

My Favorite Thing About The Snowball:

The Snowball starts out by profiling Warren’s family, including his parents and grandparents. Then it talks about his sisters, brothers and aunts. So when Warren finally comes into the picture, you meet him in the context of his humble Omaha roots.

And here’s the best part:

Since The Snowball profiles Warren Buffet in this step-by-step manner, you really see up close and in detail how he went from a lowly newspaper delivery boy to a billionaire owner of a private jet company. More specifically…

I always wondered how Warren Buffet got his first big pay check. I mean, once somebody has a couple million surely they can invest it and earn a good return. So what I really found fascinating in The Snowball was that it showed exactly how Warren earned his first nest egg

You learn in detail about how Warren first became interested in investing. Then you watch him stumble along until he picks up a certain book, and meets a certain man. You see what helps him and what hinders him along the way. Each turning point gives surprising insight into how Warren Buffet actually got rich.

And from there… (as per the title)… things quickly snowball.

But it was learning about the formative years and the early stages of Warren Buffet’s investing career that really had an impact on me. And given Warren’s stature as the most successful investor alive, I think you can probably benefit too.

Now before we get too carried away, there’s one last thing you should know before deciding if you want to buy The Snowball or not. So let me just share with you…

What The Snowball Doesn’t Teach:

The Snowball is an incredibly comprehensive look at the life and business decisions of Warren Buffet. It gives amazing insight into his personality, and what he sacrificed to get where he is. But buying a book for the wrong reason sucks. So I want to make one thing clear.

The Snowball does not teach you how to invest like Warren Buffet. I’m sure some of you were hoping for Warren’s investing secrets so you could copy and paste his portfolio. And while the book is absurdly instructive, the lessons are a little bit more abstract.

By understanding how Warren Buffet thinks and lives, you can infer a lot about his investment priorities, and his philosophy towards business and capital allocation. But the book doesn’t talk too much about which financial metrics Buffet uses in his investment decision making, or why he made a particular investment.

The Snowball is just a little bit more big picture.

But don’t fret:

If you want to learn more about Warren Buffet’s direct views on investing, I recommend you read his shareholder letters, which are available as a book, or on berkshirehathaway.com. Buffet has been CEO of Berkshire Hathaway since 1965. And his annual reports are dedicated to explaining his investment decisions, so if that’s your main interest I would recommend you read those.

But just keep in mind: Getting the big picture view of Buffet’s life is an amazing way to put all of his investment advice from the shareholder letters into context. And having read all the Berkshire letters, and The Snowball, I feel qualified to say that.

So let’s wrap this book review up, shall we?

The Snowball – The Final Word

Whether or not you are interested in capital allocation or not, this book is entertaining to read and incredibly educational. The Snowball helps you understand the kind of dedication, patience and determination that is required for lasting legacy and success. It also gives you an accurate look at some of the downsides.

After reading The Snowball I can’t help but feel that Warren Buffet is more of a regular guy than you might think. He has eccentricities like you and me. But he also has focus, passion and a burning desire to improve society. It’s really quite inspiring.

So I hope this book review has given you a good idea of what you can expect from The Snowball. Usually Amazon has discounts so I suggest you buy The Snowball on Amazon to get it cheap (in true Buffet fashion).

The Snowball Book Details and Video Book Review:


Author: Alice Schroeder
Pages: 703 (816 with notes and index)
Publisher: Bantam

 

Stock Market Analysis September 19 2013

Pre Market Briefing: September 19 2013

Futures are up this morning. But they have faded off their highs. So you can bet I’ll be watching closely to see where we open. And obviously…

The ten-million dollar question is going to be… “can the stock market can hold yesterday’s gains?” And there are a few ways to broach this subject.

Trying to reason our way to the answer is one approach. But it’s a convoluted one that’s not necessarily actionable. Yes, the Fed easing should be bullish for stocks in the short term. And paradoxically it should also indicate economic data is weaker than expected (which would be bearish for stocks, in the longer term, right?) On the other hand it’s especially bearish for the US dollar – so maybe that’s bullish for stocks? And we haven’t even talked about the implications of real inflation ramping up.

Man…

My head is spinning already.

So while I think it’s helpful to be attuned to monetary and fiscal policy discussions around the globe (and particularly in the US) – if you’re in the business of trading you should let the market action be your guide. And if you’re in the business of investing you should always be on the lookout for value.

I prefer you to refine your trading and investing methodologies, than try to place bets on your interpretation of macro happenings around the world. So here are the stocks I’m looking at today:

My Portfolio on September 19 2013:

Just like the rest of the market, I’ll be looking to see if my stocks can follow through on yesterday’s afternoon action. I’m a little sceptical about SNV because of the late day fade last trading session. Plus the action in KRE (regional banks) yesterday was atrocious. So we’ll need to see some strength in that sector-ETF before I can get very bullish about deploying more cash into SNV.

On the other hand, if the market does gap up and grind higher, I think my BRKS and AEG should participate. I’ll also be keeping an eye on IAG. Gold is looking strong pre-market but after yesterday’s success I’m apt to jump on a pullback (should I be so lucky). ChessnWine pointed out the high buy volume on GDX yesterday. There could be interesting things afoot in the gold miners.

Above all I will try to be cautious and patient. The last thing I want is to get trapped up here. Even if the market is higher 6 months from now, it doesn’t mean we can’t have a debt-ceiling-induced sell of in the interim. So let me ask you…

What are you planning on trading today?

Stock Market News and Ideas From Around the Internet:

John McCain wrote an Op-Ed in Russia’s Pravda Newspaper

Does The Fed Have a Tiger By The Tail?

Bank loans don’t support a taper.

Free Value Investing Videos.

September 19 2013: Stock Market Day In Review

All in all that was a pretty constructive day. Stocks didn’t show the gains that futures were telegraphing. But they held up relatively well. So I’m sorry to say it but there isn’t all that much to report.

I did keep an eye on IAG for a trade, but it looked weak from the get-go. So I refrained from making any purchases for now. Plus, given the huge drop in UUP yesterday I’m kind of expecting an oversold bounce in the US dollar, which might provide a good entry point for gold next week. But today I felt like the LONG GDX trade was a little bit too obvious.

Along the same lines though…

I also did some research on NSU this morning. The company looks well run and very well valued. The only problem is that all of their operations are in a small African country I’ve never heard of. And that makes me a little nervous. So maybe more research is required?

The rest of my stocks did just as I expected: entirely nothing. AEG, STLY and BRKS flip-flopped around while TINY looked for new lows and SNV followed suit. Although in the latter case it was reassuring to see some late day strength and a close off the lows.

With regards to Synovus:

I was thinking about adding to SNV this afternoon when it was down around $3.19-3.20. But I refrained because of the broad weakness in KRE. Like many of the regional banks, SNV ramped up in the last few months – arguably because of expectations that tapering would lead to rate increases which would be beneficial to the regional banks.

However I believe SNV is much cheaper than most other regional banks. And while it may suffer from a low-rate environment, the year-to-date price increase has been a result of a return to profitability and repayment of TARP loan. And despite a future

So while I think it’s wise to stay tuned to the Georgia real estate market, and the sell-off in KRE might be a temporary setback, shares of SNV will ultimately be much higher from current prices. Now hopefully I don’t end up eating these 3-6 months from now.

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The right financial metrics can help you determine if your favourite stock idea is a bargain worth buying… or, a dog you should avoid at all costs.

And of course:

You can always read about P/E ratios and book values in business school textbooks or Investopedia entries. But sometimes it’s nice to have someone really explain what these financial terms mean, and how you can easily apply them to value investing.

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Free Fundamental Value Investing Videos Series:

  1. What is a Debt/Equity Ratio
  2. Assessing Free Cash Flow
  3. Free Cash Flow Revisited
  4. What You Need To Know About P/E Ratio
  5. How to Calculate Book Value
  6. Watching the Working Capital Ratio
  7. Examining What Dividend Yield Means

Value Investing Videos

What is a Debt/Equity Ratio

Assessing Free Cash Flow

Free Cash Flow Revisited

What You Need To Know About P/E Ratio

How to Calculate Book Value

Watching the Working Capital Ratio

Examining what Dividend Yield Means

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