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Is Warren Buffett’s Value Investing Still Relevant?

Investors Alley
Is Warren Buffett’s Value Investing Still Relevant?
I have no doubt that one of the very best investors over the long-term is Warren…

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Investors Alley
Is Warren Buffett’s Value Investing Still Relevant?

I have no doubt that one of the very best investors over the long-term is Warren Buffett. The real proof to me is how he especially shines in times of crisis, as in the current environment.

Over two decades, his Berkshire Hathaway (BRK.A & BRK.B) stock has outperformed the S&P 500, 570% versus 465%. This amounts to an annual outperformance of one percent.

If Berkshire Hathaway can, over the long run, give you an extra percentage point of performance a year, then it’s a great investment to own. All you have to do is buy the stock and sleep well at night owning it, knowing Warren Buffett is in your corner.

However, here’s one interesting note: if you look at the 10-year performance, Berkshire’s entire outperformance versus the S&P 500 happened this year—2022—a year of crisis.

And, as of a month ago, Berkshire Hathaway was in the process of passing up the ARK Innovation Fund (ARKK), run by the “queen of the Bull Market,” Cathie Wood, for post-pandemic performance. It is now ahead in that race between the tortoise and the hare.

Here are the numbers comparing the two for the past year and year-to-date: over the past year, Cathie is down 52% and Warren is up 33%; year-to-date Cathie is down 38% and Warren is up 12.5%.

Why Berkshire Is Outperforming in 2022

The outstanding performance so far in 2022 and over the past year suggests that Berkshire Hathaway may offer something more than what Buffett calls “very modest” outperformance in a changing market environment.

Berkshire focuses on businesses that were out of favor in the tech-dominated, low-inflation era that may be coming to a close. And these businesses are likely to be much more appealing as technology stocks’ valuations cool and inflation rises.

Berkshire Hathaway has roughly double the exposure to energy and utilities that the S&P 500 has.

Then, there is its railroad business (perhaps 15% of the company’s value), a pseudo-monopoly with terrific pricing power. And don’t forget the manufacturing and retail businesses that Berkshire has bought over the years, which were chosen in part for their pricing power (what Buffett likes to call their “moats”), too.

Beyond a large stake in Apple, Berkshire has almost no tech exposure.

This combination of investments hitting on all cylinders at the moment. The five top-performing S&P sectors in 2022—energy, consumer staples, financials, utilities and industrials—are basically a laundry list of Berkshire’s heaviest exposures.

In other words, value is beating growth rather handily at the moment.

There is one other factor at work in the wobbly market conditions of 2022. Berkshire Hathaway has nearly $150 billion in cash, a massive pile that has been a drag on performance in prior years. But in the current global economic environment, $150 billion can provide a lot of comfort.

All Investing Is Value Investing for Buffett

I believe that Buffett’s investing style is suited perfectly to fit just about any economic environment over the long-term.

That’s because, to Buffett, all investing is value investing.

He wants to buy a business that will grow over decades, at a time when other investors are either scared or they don’t understand why it’s going to be such a good thing over the next 20 or 30 years. Then he sits back and enjoys the revaluation of the stock, as the price investors are willing to pay for each dollar of earnings growth rises as the earnings number itself grows.

Consider Coca-Cola (KO), which is Warren Buffett’s oldest stock position at Berkshire Hathaway. It has provided some of the best returns, with the stock up well over 1,800% since he started buying it 34 years ago.

Warren Buffett first bought Coke stock from 1988 to 1989, scooping up more than 23 million shares. When he started buying in early 1988, many investors were still in shock from the Black Monday stock market crash of October 1987. But not Buffett—even though many at the time considered Coke to be a risky, non-Buffett type investment by Wall Street.

Buffett defended the position in the 1988 annual Berkshire letter to shareholders with what would become one of his most famous aphorisms. In speaking about Coke, Buffett said: “…We expect to hold these securities for a long time. In fact, when we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.” True to his word, to this day, Berkshire hasn’t sold any of its Coca-Cola stock.

Berkshire Hathaway went on to more than quadruple its position, to 100 million shares by 1994. After two stock splits, the share count is now 400 million, but Berkshire’s cost basis has remained a mere $1.3 billion since 1994. And today, Buffett’s 9.3% stake in Coca-Cola is worth about $24 billion. I’d call that a successful long-term investment!

It shows that Buffett’s style of investing—value with growth—never truly goes out of style.

I expect Buffett and Berkshire Hathaway to continue outperforming in the current tumultuous global environment. The BRK.B shares are a buy anywhere around the current price of $330 a share.

I'm 65 years old. The days of me betting it all on the "next Google or Amazon" are long gone.

People like you and me don't have time to wait around for massive capital gains.

We need cash to live NOW.

Cash to cover our bills every single month.

And today, I believe we're looking at the greatest opportunity in 22 years to generate monthly income from the stock market.

Let me show you.

 

Is Warren Buffett’s Value Investing Still Relevant?
Tony Daltorio

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Government

Mike Pompeo Doesn’t Rule Out Serving In 2nd Trump Administration

Mike Pompeo Doesn’t Rule Out Serving In 2nd Trump Administration

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Former Secretary…

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Mike Pompeo Doesn't Rule Out Serving In 2nd Trump Administration

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Former Secretary of State Mike Pompeo said in a new interview that he’s not ruling out accepting a White House position if former President Donald Trump is reelected in November.

“If I get a chance to serve and think that I can make a difference ... I’m almost certainly going to say yes to that opportunity to try and deliver on behalf of the American people,” he told Fox News, when asked during a interview if he would work for President Trump again.

I’m confident President Trump will be looking for people who will faithfully execute what it is he asked them to do,” Mr. Pompeo said during the interview, which aired on March 8. “I think as a president, you should always want that from everyone.”

Then-President Donald Trump (C), then- Secretary of State Mike Pompeo (L), and then-Vice President Mike Pence, take a question during the daily briefing on the novel coronavirus at the White House in Washington on April 8, 2020. (Mandel Ngan/AFP via Getty Images)

He said that as a former secretary of state, “I certainly wanted my team to do what I was asking them to do and was enormously frustrated when I found that I couldn’t get them to do that.”

Mr. Pompeo, a former U.S. representative from Kansas, served as Central Intelligence Agency (CIA) director in the Trump administration from 2017 to 2018 before he was secretary of state from 2018 to 2021. After he left office, there was speculation that he could mount a Republican presidential bid in 2024, but announced that he wouldn’t be running.

President Trump hasn’t publicly commented about Mr. Pompeo’s remarks.

In 2023, amid speculation that he would make a run for the White House, Mr. Pompeo took a swipe at his former boss, telling Fox News at the time that “the Trump administration spent $6 trillion more than it took in, adding to the deficit.”

“That’s never the right direction for the country,” he said.

In a public appearance last year, Mr. Pompeo also appeared to take a shot at the 45th president by criticizing “celebrity leaders” when urging GOP voters to choose ahead of the 2024 election.

2024 Race

Mr. Pompeo’s interview comes as the former president was named the “presumptive nominee” by the Republican National Committee (RNC) last week after his last major Republican challenger, former South Carolina Gov. Nikki Haley, dropped out of the 2024 race after failing to secure enough delegates. President Trump won 14 out of 15 states on Super Tuesday, with only Vermont—which notably has an open primary—going for Ms. Haley, who served as President Trump’s U.S. ambassador to the United Nations.

On March 8, the RNC held a meeting in Houston during which committee members voted in favor of President Trump’s nomination.

“Congratulations to President Donald J. Trump on his huge primary victory!” the organization said in a statement last week. “I’d also like to congratulate Nikki Haley for running a hard-fought campaign and becoming the first woman to win a Republican presidential contest.”

Earlier this year, the former president criticized the idea of being named the presumptive nominee after reports suggested that the RNC would do so before the Super Tuesday contests and while Ms. Haley was still in the race.

Also on March 8, the RNC voted to name Trump-endorsed officials to head the organization. Michael Whatley, a North Carolina Republican, was elected the party’s new national chairman in a vote in Houston, and Lara Trump, the former president’s daughter-in-law, was voted in as co-chair.

“The RNC is going to be the vanguard of a movement that will work tirelessly every single day to elect our nominee, Donald J. Trump, as the 47th President of the United States,” Mr. Whatley told RNC members in a speech after being elected, replacing former chair Ronna McDaniel. Ms. Trump is expected to focus largely on fundraising and media appearances.

President Trump hasn’t signaled whom he would appoint to various federal agencies if he’s reelected in November. He also hasn’t said who his pick for a running mate would be, but has offered several suggestions in recent interviews.

In various interviews, the former president has mentioned Sen. Tim Scott (R-S.C.), Texas Gov. Greg Abbott, Rep. Elise Stefanik (R-N.Y.), Vivek Ramaswamy, Florida Gov. Ron DeSantis, and South Dakota Gov. Kristi Noem, among others.

Tyler Durden Wed, 03/13/2024 - 17:00

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International

Riley Gaines Explains How Women’s Sports Are Rigged To Promote The Trans Agenda

Riley Gaines Explains How Women’s Sports Are Rigged To Promote The Trans Agenda

Is there a light forming when it comes to the long, dark and…

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Riley Gaines Explains How Women's Sports Are Rigged To Promote The Trans Agenda

Is there a light forming when it comes to the long, dark and bewildering tunnel of social justice cultism?  Global events have been so frenetic that many people might not remember, but only a couple years ago Big Tech companies and numerous governments were openly aligned in favor of mass censorship.  Not just to prevent the public from investigating the facts surrounding the pandemic farce, but to silence anyone questioning the validity of woke concepts like trans ideology. 

From 2020-2022 was the closest the west has come in a long time to a complete erasure of freedom of speech.  Even today there are still countries and Europe and places like Canada or Australia that are charging forward with draconian speech laws.  The phrase "radical speech" is starting to circulate within pro-censorship circles in reference to any platform where people are allowed to talk critically.  What is radical speech?  Basically, it's any discussion that runs contrary to the beliefs of the political left.

Open hatred of moderate or conservative ideals is perfectly acceptable, but don't ever shine a negative light on woke activism, or you might be a terrorist.

Riley Gaines has experienced this double standard first hand.  She was even assaulted and taken hostage at an event in 2023 at San Francisco State University when leftists protester tried to trap her in a room and demanded she "pay them to let her go."  Campus police allegedly witnessed the incident but charges were never filed and surveillance footage from the college was never released.  

It's probably the last thing a champion female swimmer ever expects, but her head-on collision with the trans movement and the institutional conspiracy to push it on the public forced her to become a counter-culture voice of reason rather than just an athlete.

For years the independent media argued that no matter how much we expose the insanity of men posing as women to compete and dominate women's sports, nothing will really change until the real female athletes speak up and fight back.  Riley Gaines and those like her represent that necessary rebellion and a desperately needed return to common sense and reason.

In a recent interview on the Joe Rogan Podcast, Gaines related some interesting information on the inner workings of the NCAA and the subversive schemes surrounding trans athletes.  Not only were women participants essentially strong-armed by colleges and officials into quietly going along with the program, there was also a concerted propaganda effort.  Competition ceremonies were rigged as vehicles for promoting trans athletes over everyone else. 

The bottom line?  The competitions didn't matter.  The real women and their achievements didn't matter.  The only thing that mattered to officials were the photo ops; dudes pretending to be chicks posing with awards for the gushing corporate media.  The agenda took precedence.

Lia Thomas, formerly known as William Thomas, was more than an activist invading female sports, he was also apparently a science project fostered and protected by the athletic establishment.  It's important to understand that the political left does not care about female athletes.  They do not care about women's sports.  They don't care about the integrity of the environments they co-opt.  Their only goal is to identify viable platforms with social impact and take control of them.  Women's sports are seen as a vehicle for public indoctrination, nothing more.

The reasons why they covet women's sports are varied, but a primary motive is the desire to assert the fallacy that men and women are "the same" psychologically as well as physically.  They want the deconstruction of biological sex and identity as nothing more than "social constructs" subject to personal preference.  If they can destroy what it means to be a man or a woman, they can destroy the very foundations of relationships, families and even procreation.  

For now it seems as though the trans agenda is hitting a wall with much of the public aware of it and less afraid to criticize it.  Social media companies might be able to silence some people, but they can't silence everyone.  However, there is still a significant threat as the movement continues to target children through the public education system and women's sports are not out of the woods yet.   

The ultimate solution is for women athletes around the world to organize and widely refuse to participate in any competitions in which biological men are allowed.  The only way to save women's sports is for women to be willing to end them, at least until institutions that put doctrine ahead of logic are made irrelevant.          

Tyler Durden Wed, 03/13/2024 - 17:20

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Part 1: Current State of the Housing Market; Overview for mid-March 2024

Today, in the Calculated Risk Real Estate Newsletter: Part 1: Current State of the Housing Market; Overview for mid-March 2024
A brief excerpt: This 2-part overview for mid-March provides a snapshot of the current housing market.

I always like to star…

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Today, in the Calculated Risk Real Estate Newsletter: Part 1: Current State of the Housing Market; Overview for mid-March 2024

A brief excerpt:
This 2-part overview for mid-March provides a snapshot of the current housing market.

I always like to start with inventory, since inventory usually tells the tale!
...
Here is a graph of new listing from Realtor.com’s February 2024 Monthly Housing Market Trends Report showing new listings were up 11.3% year-over-year in February. This is still well below pre-pandemic levels. From Realtor.com:

However, providing a boost to overall inventory, sellers turned out in higher numbers this February as newly listed homes were 11.3% above last year’s levels. This marked the fourth month of increasing listing activity after a 17-month streak of decline.
Note the seasonality for new listings. December and January are seasonally the weakest months of the year for new listings, followed by February and November. New listings will be up year-over-year in 2024, but we will have to wait for the March and April data to see how close new listings are to normal levels.

There are always people that need to sell due to the so-called 3 D’s: Death, Divorce, and Disease. Also, in certain times, some homeowners will need to sell due to unemployment or excessive debt (neither is much of an issue right now).

And there are homeowners who want to sell for a number of reasons: upsizing (more babies), downsizing, moving for a new job, or moving to a nicer home or location (move-up buyers). It is some of the “want to sell” group that has been locked in with the golden handcuffs over the last couple of years, since it is financially difficult to move when your current mortgage rate is around 3%, and your new mortgage rate will be in the 6 1/2% to 7% range.

But time is a factor for this “want to sell” group, and eventually some of them will take the plunge. That is probably why we are seeing more new listings now.
There is much more in the article.

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