Seven Key Takeaways From The Berkshire Hathaway Annual Meeting

f3697debcc2252a60093_9c664b007f092798a4d8_IMG_8193__1_.jpg
Point View's Founder, President and Chief Investment Strategist, David Dietze.
c15fa42a7871a31b3b16_Screen_Shot_2018-05-11_at_4.59.35_PM.jpg
f3697debcc2252a60093_9c664b007f092798a4d8_IMG_8193__1_.jpg

I was honored to present at the recent GuruFocus Value Conference in Omaha, and then to hear Warren Buffett and Charlie Munger at the CenturyTel Convention Center in Omaha on Saturday.

Bottom Line

Warren Buffett and his partner Charlie Munger were in fine form, dispensing timeless investment wisdom, opining on current events, and even getting a bit feisty. Their observations are always valuable, not because they have been so successful, but rather because they make so much common sense.  Here are some key takeaways.

Sign Up for E-News

Current State of the Markets:  Stay the Course!  Warren Buffett measures holding periods in terms of decades; he has little use for market timing.  Buffett indicated that stocks today are somewhat overvalued but not in a bubble; stocks offer much better potential than bonds.  While offering no economic forecast, he noted that current results from the Berkshire businesses show economic strength.  Caveats were expressed:  If bonds go to 7% no markets will fare well.  Further, the fact that they are sitting on perhaps $100 billion to invest reflects their struggles to find decent investment opportunities.  Buffett will stay patient, noting “we won't always be in a world of low interest rates or high private-market prices" for investments.

Stocks are the Best Long Term Investments: Buy and Hold!  Buffett continues to be an unabashed cheerleader for the long term buy and hold approach.  He cited his first investment, made in 1942, and used that as a hypothetical starting point.  Had you put $10,000 into the stock market then, you’d be sitting on $51 million now. Should geopolitical developments cause you to rethink?  Buffett held up copies of the New York Times from that year, making the point that despite daily gruesome war headlines an investor’s best course of action was simply to hold on.  He even criticized himself for exiting his own first investment after making just a few dollars; those who trade after a small profit are doing a great disservice to their financial health.

We are Not Happy with the Current State of Politics But Don’t Let It Affect Your Investing Plans. Several asked how Buffett’s fundamental optimism squared with the current White House chaos. Buffett and Munger urged attendees to take the long view, basically suggesting we’ve been through worse or similar, and America, the economy, and stocks came through fine.  Through their investment lifetimes, they’ve seen seven Democratic presidents, seven Republicans, the Cuban Missile Crisis, a president forced to resign, an assassination, etc. and through all this the economy and markets powered higher.  Therefore, the current issues are something we will get through.

Cryptocurrencies:  Avoid! These make no sense as an investment because they produce nothing.  Munger and Buffett much prefer investing in businesses that produce profits, farms that produce crops, even bonds that generate income.  People are buying the cryptos on the greater fool theory, that others will want to pay more later. 

Bonds:  Avoid! Buffett criticized bonds as poor investments.  Today, with the low yields, they are “terrible.”  Buffett noted that the Federal Reserve is targeting a 2% inflation rate so if the 10 year Treasury is less than 3%, after inflation and taxes there is little left.  Warren did note a brief period in the early 1980s when yields approached 15%; locking those rates in then would have made sense.

Federal Reserve: It Does Not Affect Our Investment Plans. Per Munger, the Federal Reserve’s reduction of interest rates to near zero to combat the Great Recession wasn’t “fair to savers” and produced huge windfalls to stockholders.  We are “undeserving” but hope it continues that way.  In terms of the outlook on the Fed, interest rates, and inflation, Buffett said:  I don’t know, and the Fed doesn’t know, either.”  We agree that the Fed’s plans should not affect most investors’ long term strategy.

Trade: The Freer, the Better!  Free trade is a positive, but problems can develop if one side tries too hard to win.  Neither Munger nor Buffett seems to be making any adjustments to their investment strategy considering uncertainty over NAFTA and Chinese trade.  Buffett is optimistic there won’t be an enduring end to trade, noting: “we have a lot of common interests and like any two big economic entities, there are times when there will be tensions, but it is a win-win situation when the world trades basically in China and the U.S….It’s just too big and too obvious—the benefits are huge, and the world’s dependent on it in a major way for its progress—for two intelligent countries to do something extremely foolish….So it is a win-win situation.”  

Note: David G. Dietze, JD, CFA, CFP™ is President and Chief Investment Strategist of Point View Wealth Management, Inc., a registered investment advisor at 382 Springfield Avenue, Summit. 

For over 25 years, Point View Wealth Management, Inc. has been working with families in Summit and beyond, providing customized portfolio management services and comprehensive financial planning, to develop and achieve their financial goals.  Click here to contact David Dietze, John Petrides, Claire Toth, Donna St.Amant, and Elaine Phipps, or call 908-598-1717 to learn more about Point View Wealth Management, Inc. and how we can help you and your family meet your financial objectives. To sign up for our complementary commentaries and newsletters, e-mail us at firm@ptview.com.

CNBC has named Point View one of the Top 100 fee-only wealth managers in America.

 

 

 

 

 

 

 

The opinions expressed herein are the writer's alone, and do not reflect the opinions of TAPinto.net or anyone who works for TAPinto.net. TAPinto.net is not responsible for the accuracy of any of the information supplied by the writer.

TAP Into Another Town's News:

You May Also Be Interested In

Sign Up for E-News

Chatham

A Week at the Library of The Chathams Monday, June 18 – Sunday, June 24, 2018

Please note that the library will be closed on Sundays now through Labor Day weekend

PROGRAMS AND EVENTS

By Galina Natenzon

This week we are wrapping up our first session of ESL classes.  Stay tuned, we are planning a fall session to start in September.  New students are welcome to enroll!  This is the last week of calm and quiet at the library before our summer reading ...

Angie's Owners Want to Thank Their Chatham Customers

June 14, 2018

To the Editor:

We want to thank our customers and the entire community for their support and devotion to our business. Our last day of business will be July 31.

rWe will miss all the friends that we have developed over the past 26 years. Wishing everyone much success and happiness in the future.

Sincerely,

Louiza and Jimmy Poulimenos

P.S. "Until we meet ...

AtlantiCast

AtlantiCast: Episode 16

Summer is in the air, and the latest episode of AtlantiCast is ready to help you enjoy some fun outdoors while staying safe! This week’s episode opens with tips for sunscreen usage from Atlantic Health System’s Chief Medical and Academic Officer, Dr. Jan Schwarz-Miller. You’ll also learn about how Atlantic Health System is advancing the future of health care through ...

Chatham Students Graduate from Gettysburg College

June 18, 2018

GETTYSBURG, PA - Of the 608 students who graduated from Gettysburg College on May 20, 2018, the following were Chatham students: Danielle Boyland, Kaitlyn Helmstetter, Nicholas Hill, Andrew Milone and Jacob Zeliff.

Cool Ways to Save Money This Summer

As the summer temperatures rise, home cooling costs rise as well. But there are ways to help save money without sweating the heat:

To increase your cooling system’s efficiency by as much as 20%, get it checked out for summer.  A technician will clean the condenser, make sure you have the optimal amount of refrigerant, and ensure the airflow over the coil is ...