Warren Buffett’s Latest Investment Warren Buffett invests $5 billion in Bank of America and earns $1.3 billion in one day. The 25% first-day return — is not real money of course, only paper money unless he sells his shares and as Buffett is a long-term investor it is unlikely he will be selling his shares [...]

Warren Buffett’s Latest Investment

Warren Buffett invests $5 billion in Bank of America and earns $1.3 billion in one day.

The 25% first-day return — is not real money of course, only paper money unless he sells his shares and as Buffett is a long-term investor it is unlikely he will be selling his shares anytime soon. Nevertheless this shows how much Bank of America CEO Brian T. Moynihan was willing to pay to attract Buffett as an investor. As Berkshire’s CEO, Buffett has gained a reputation as one of the world’s best investors, with shareholder returns over the past decade that are more than double those of the Standard & Poor’s 500 Index.

Under the terms of the deal, Omaha, Nebraska-based Berkshire will invest $5 billion in Bank of America, the Charlotte, North Carolina-based bank said today in a statement.

Preferred Dividend

In exchange, Berkshire will receive 50,000 perpetual preferred shares with a liquidation value of $100,000 each, according to the statement. The preferred shares pay a dividend of 6 percent per year, and are redeemable at any time by Bank of America at a 5 percent premium. The dividends are cumulative, meaning Bank of America would have to catch up if it skipped any payments.

Berkshire also will get warrants — a type of options — to buy 700 million common shares at a strike price of $7.14 each. Investors who value warrants weigh a company’s stock price, share volatility and the expiration date.

For words of wisdom from Warren Buffett see – Warren Buffett Quotes

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David Sokol not So Kool In a strange turn of events David Sokol has resigned from Berkshire Hathaway shortly after it was revealed he had purchased 96,000 shares in Lubrizol just before suggesting to Warren Buffett that Lubrizol might be a good company for Berkshire Hathaway to get involved in. Both Warren Buffett and David [...]

David Sokol not So Kool

In a strange turn of events David Sokol has resigned from Berkshire Hathaway shortly after it was revealed he had purchased 96,000 shares in Lubrizol just before suggesting to Warren Buffett that Lubrizol might be a good company for Berkshire Hathaway to get involved in.

Both Warren Buffett and David Sokol stress that Sokol did nothing illegal, but the timing of the resignation is very odd particularly as Sokol was widely considered to be one of the favorities to take over Buffett’s job at Berkshire Hathaway. The timing of the share purchase was also odd and many investing professionals are questioning Sokol’s behavior in this affair and his judgment.

Sokol had offered his resignation to Buffett twice before already but both times it had been refused – so third time lucky !

Sokol has said to CNBC that he doesn’t think he did anything wrong, he bought shares in Lubrizol for the 2nd time in early January, he spoke to Warren Buffett about Lubrizol for the first time on Jan. 14, he did not think Warren Buffett seemed very interested in Lubrizol, Warren Buffett did not react at all when he was informed of the quantities of the shares purchased, the timing of his resignation has nothing to do with the share purchase.

The CNBC questioning was polite but insistent yesterday and today Joe Kernan pointed out that Sokol had taken money away from the people who sold him the shares, as they did not have acess to the same information that Sokol himself did. Sokol made $3 from the deal and he bought the shares around $1 whereas his employer Berkshire Hathaway had to pay $1.30 – a fact which also raised eyebrows.

Most of the professionals who talk about the matter on TV and in the newspapers seem to believe that Sokol’s actions cannot be defended and most expect the SEC to take a closer look.

Certainly it is strange that his resignation should follow on so soon from the deal with Lubrizol being announced.

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Warren Buffett to get Medal of Honor Warren Buffett recently thanked Uncle Sam for his low tax rate and suggested the top 400 richest in the US should be paying more taxes. He is also lined up to receive the medal of honor from President Obama. Want to invest like Warren Buffett ? Check out [...]

Warren Buffett to get Medal of Honor

Warren Buffett recently thanked Uncle Sam for his low tax rate and suggested the top 400 richest in the US should be paying more taxes. He is also lined up to receive the medal of honor from President Obama.

Want to invest like Warren Buffett ? Check out his latest stock trades here – Warren Buffett Stock Holdings

One thing Warren Buffett doesn’t need is a remortgage. But for the rest of us a remortgage might seem like a good idea.

ING are offering a remortgage rate fixed at 3.69% for five years. An excellent remortgage rate and no I don’t get a comission, but still a lot higher than the rates for the cheapest SVR and tracker loans.

Refinancing is something home owners face at some point and with interest rates so low it may seem like a good idea. Rates may start rising up again soon so now may be the right time to be locking in a cheap fixed rate.

The C&G and Nationwide have variable rates of 2.5%, well below ING’s remortgage rate. But this could change if rates start to rise . If a higher mortgage rate is likely to cause you problems then a fixed rate would be a good idea.

Whether a fixed rate remortgage or a SVR is good for you depends on when interest rates start going up. If your current rate is low then you will want to stay with it as long as possible.

John Charcol mortgage brokers say a good idea is to read the last few paragraphs of the minutes of meetings of the BoE’s monetary policy committee, as these generally contain indications about future rates. They also tell clients when fixing rates would be a good idea, and they haven’t done that yet.

For good free advice mortgages and remortgaging then check out the free mortgage guides at moneysavingexpert.com/mortgages/best-mortgages-cashback#step1 for further information on the stock market and remortgage deals check out – remortgage deals

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Warren Buffett Quotes Warren Buffett is famous for making money, drinking Cherry Cokes all day long and also his quotes. He likes to come across as a folksy sort of guy full of good ole time wisdom ! He is in fact a witty guy and likes to combine his wisdom and wit in good [...]

Warren Buffett Quotes

Warren Buffett is famous for making money, drinking Cherry Cokes all day long and also his quotes. He likes to come across as a folksy sort of guy full of good ole time wisdom ! He is in fact a witty guy and likes to combine his wisdom and wit in good one liner quotes.

Warren Buffett on Death

I’ve reluctantly discarded the notion of my continuing to manage the portfolio after my death – abandoning my hope to give new meaning to the term ‘thinking outside the box.’

Warren Buffett on Fashion

I buy expensive suits. They just look cheap on me.

Warren Buffett on Gold

Gold gets dug up out of the ground someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.

Warren Buffett on Crooks

You only find out who is swimming naked when the tide goes out.

Warren Buffett on Company Directors

I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.

The managers at fault periodically report on the lesson they have learned from the latest disappointment. They then usually seek out future lessons

Warren Buffett on Sir Isaac Newton

If he had not been traumatized by his loss in the South Sea Bubble, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases.

Warren Buffett on Stock Trading

We’ve long felt that the only value of stock forecasters is to make fortune tellers look good.

I like to go for cinches. I like to shoot fish in a barrel. But I like to do it after the water has run out.

Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.

On acquiring bad companies for cheap prices: “In my early days as a manager I, too, dated a few toads. They were cheap dates – I’ve never been much of a sport – but my results matched those of acquirers who courted higher-price toads. I kissed and they croaked.

Diversification is a protection against ignorance. It makes very little sense for those who know what they’re doing

It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

Rule No.1: Never lose money. Rule No.2: Never forget rule No.1

Our favorite holding period is forever.

If you don’t feel comfortable owning something for 10 years, then don’t own it for 10 minutes.

The Stock Market is designed to transfer money from the Active to the Patient

I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.

In the business world, the rearview mirror is always clearer than the windshield

It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price

Warren Buffettt on Integrity

It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.

Warren Buffettt on Wall Street

Wall Street is the only place that people ride to work in a Rolls Royce to get advice from those who take the subway.

First, many in Wall Street – a community in which quality control is not prized – will sell investors anything they will buy.

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Warren Buffett Wins Big on the World Cup Warren Buffett is against gambling but his insurance company is not averse to insuring a bet. He won his bet against France when they were eliminated by South Africa. Berkshire Hathaway Inc. had sold insurance under which the company to pay a client if France won the [...]

Warren Buffett Wins Big on the World Cup

Warren Buffett is against gambling but his insurance company is not averse to insuring a bet. He won his bet against France when they were eliminated by South Africa.

Berkshire Hathaway Inc. had sold insurance under which the company to pay a client if France won the tournament, Buffett told CNBC in March.

“I think we’re going to lose 30 million bucks or something like that” if France wins, Buffett, Berkshire’s 79-year-old chief executive officer, said at the time. He didn’t say who purchased the coverage. An assistant to Buffett had no comment.

Ajit Jain, who runs one of Berkshire’s insurance units, sold the contract, Buffett told the business news channel in March. Berkshire has previously guaranteed against the potential cancellation of a college basketball tournament and a possible payout of $1 billion in a contest sponsored by PepsiCo Inc. The firm also sells coverage on natural disasters.

Jain “is known as the man to call when something both very large and unusual needs to be insured,” Buffett said in his annual letter to shareholders released Feb. 27.

“The odds of any one team out of 32 winning is very small, so you could determine the odds and see what the payoff would be,” said Gerald Martin, a finance professor at American University’s Kogod School of Business in Washington. “From a numerical standpoint, it was probably in his favor to take this bet. I’m sure he’ll smile when he sees the results.”

Warren Buffett is a wily old goat claiming to be against gambling yet taking large bets in the form of insurance which is probably easier than trying to make money on the stock market although Warren Buffett

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How to Beat the Markets – the Joel Greenblatt Way Joel Greenblatt, investor, professor at the Columbia Business School and founder of Gotham Capital, a hedge fund firm, wrote his best-selling investing book “The Little Book That Beats the Market” with the intention of teaching novice investors how to beat the markets. Greenblatt says of [...]

How to Beat the Markets – the Joel Greenblatt Way

Joel Greenblatt, investor, professor at the Columbia Business School and founder of Gotham Capital, a hedge fund firm, wrote his best-selling investing book “The Little Book That Beats the Market” with the intention of teaching novice investors how to beat the markets. Greenblatt says of the book that he wanted to tell investors how to make money in terms that his kids could understand : “I figured if I could teach them how to make money for themselves, then I would be giving them a great gift.”

Joel Greenblatt says he has developed a formula that will let you beat the stock market  provided you have the faith and the patience to stick with it. Greenblatt’s formula is not unlike the “Warren Buffett way” i.e. “Invest in good companies when they are cheap.”

According to Greenblatt his formula has beaten the market for almost 20 years, from 1988 to 2004, with annual returns of nearly 23% from high-return/low-price stocks.

The formula investing is very simple “If you just stick to buying good companies (ones that have a high return on capital) and …. only at bargain prices (at prices that give you a high earnings yield), you can achieve investment returns that beat the pants off even the best investment professionals.” and Greenblatt added “In a nutshell, the formula is buying good companies cheaply. A good company is one that earns a well above average return on capital. If you can buy a portfolio of “good” companies at below average prices, you will have a successful investment strategy.”

This sounds like excellent returns if you can find the right stocks to invest in. What is even better is that Joel Greenblatt puts up all the information for free on his website www.magicformulainvesting.com you just need to register and you can see which 30 or 50 companies his formula recommends! Joel Greenblatt advises buying a range of 20 or 30 top stocks over one year and that you should turn them over according to a specific schedule and depending on their performance.

This investing formula is long-term if you try to apply it to shorter periods the formula may not work. So you may need to wait up to 5 years to benefit from the effects of the formula.

To really understand the formula you will need to read the book or visit the website.

If you can’t be bothered putting in the necessary effort then Mr Greenblatt will do the work for you at his other website – www.formulainvesting.com – but you will need a minimum of $25k to open an account.

There are six easy steps to the formula

1. Stocks are classified each day using 2 criteria: Earnings Yield and Return on Capital which are used together to draw up a list of top-ranked stocks.

2. Stocks in utilities, financial services and smaller companies, are usually removed as are companies for which the data are incomplete.

3. A portfolio of a minimum of 20 stocks must be bought.

4. The portfolio is held for around 1 year to allow for certain after-tax returns considerations. If there are any losses these should be taken just before the 1 year anniversary, gains on the other hand are taken right after the 1 year anniversary.

5. The whole portfolio is sold after 1 year and a new portfolio is purchased.

6. Data show that if you apply this formula for at least 3 years this will allow it to work correctly irrespective of market fluctuations.

For investors with available and time Joel Greenblatt’s formula investing certainly seems worth a closer.

About the Author
Over 20 years experience trading stocks and investing – for further information on long-term investing check out Warren Buffett or for information on stock trading for beginners see Stock Charts for Beginners

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Wise Words for Making Money from Warren Buffet Warren Buffett is known for his quick one-liners and homely wisdom. Here are some words of wisdom on how to get rich. Have a Margin of safety A margin of safety means buy stocks at a price far below your best estimate for its intrinsic value. In [...]

Wise Words for Making Money from Warren Buffet

Warren Buffett is known for his quick one-liners and homely wisdom. Here are some words of wisdom on how to get rich.

Have a Margin of safety

A margin of safety means buy stocks at a price far below your best estimate for its intrinsic value.

In other words, when stock market trading don’t just buy great companies that make plenty of money, buy them when they are selling at a good or great price.

You Need “Focus” or “Intensity”
Both Warren Buffett and Bill Gates rate this as the most important key to their success.

Buffett not only has a brilliant business mind, he also has focus. He analyzes stocks for hours each day and has done for decades. Whatever you try to do you won’t get far without focus.

According to Buffett beginner investors should buy and hold index funds and ETFs, unless they are prepared to dedicate lots of time to individual stock picking. Even so, indexing should be the core of most portfolios.

Be fearful when others are greedy. Be greedy when others are fearful.

As Kipling says you need to “keep your head when all about you are losing theirs”(literally and metaphorically). This can lead to outsize returns as the markets swing back and forth.

Leverage is the only way a smart guy can go broke
Debt is dangerous. Have large amounts of cash set aside for when you might need it.
For ordinary investors, buying stocks on margin is risky. Just say no!

The “moat”
Buffett likes companies with “moats” i.e. durable competitive advantages. Coca-Cola’s moat is so strong Buffett believes a ham sandwich could run it.

Other companies Berkshire Hathaway likes that have large moats are :- Johnson & Johnson, Procter & Gamble, GEICO, and Wells Fargo.

The Snowball
This is the title of Buffett’s biography, because it sums up his life in two words. Buffett believes in the power of compounding over time. That means starting as early as possible, avoiding short-term risks (rule No. 1: never lose money), and letting investing returns build upon itself. The power of compound interest. He likes to take dividends in the form of more stocks too.

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Warren Buffett Investing Tips In his annual letter Warren Buffett gives some very interesting investing tips and as he is the 3rd richest man in the world with $47 billion it might be worthwhile listening to him. 1. Always have plenty of cash Don’t put yourself in a position where you have to rely on [...]

Warren Buffett Investing Tips

In his annual letter Warren Buffett gives some very interesting investing tips and as he is the 3rd richest man in the world with $47 billion it might be worthwhile listening to him.

1. Always have plenty of cash

Don’t put yourself in a position where you have to rely on the kindness of strangers. arrange your affairs so that any conceivable cash requirements can be dwarfed by your own liquidity.

High returns on high risks aren’t everything, cash provides low returns but is also low risk. So make sure you build a nice healthy cash pile.

2. Fear is your friend
Warren Buffett likes to say be greedy when others are fearful and fearful when others are greedy. It’s good old market commons sense

Another of his sayings is “When it’s raining gold, reach for a bucket, not a thimble”, which is what he did back in October 2008 and so far he’s been proved right.

Buy in bear markets not when the stock market is roaring away in a bull market.

3. Don’t believe the headline news

Warren Buffett is apparently a CNBC addict, but he always looks beyond the headlines:

In his annual letter for example he said “We are certain, that the economy will be in shambles throughout 2009 – and probably well beyond – but that conclusion does not tell us whether the market will rise or fall.”

News organizations however only quoted the first part of the sentence and totally ignored the end.

Warren Buffett sees this as terrible journalism, he wasn’t predicting at all what would happen to the stock market.

The financial media has one purpose – to entertain or terrify you to get you to watch so they can charge more for advertising (hell that’s what people do with blogs!).

4. You will make mistakes

You will never get everything right:

Don’t waste time blaming others just try to learn from your mistakes.

5. Appreciate your good fortune

Some people who try to get wealthy become bitter about others who have already made it, or judgemental about the poor.

Warren Buffett says he has been very lucky – he was born in America; had wonderful parents who gave him a good education; has had a great family and health; and has a “business” gene that lets him prosper in a disproportionate manner to many people who contribute just as much or more to society.

If you want to be like Warren Buffet, then count your blessings, do something you like that pays well and invest for the long-term.

As for the stock market today it is now up around 68% since the bottom in March 2009, Warren Buffett didn’t get the bottom exactly right but he has done well enough with his simple philosophy.

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How to Beat the Stock Market – Formula Investing Joel Greenblatt, wrote a book called “The Little Book That Beats the Market” in order to teach novice investors how to beat the markets. Greenblatt says he wanted to tell investors how to make money in terms even his kids could understand : “I figured if [...]

How to Beat the Stock Market – Formula Investing

Joel Greenblatt, wrote a book called “The Little Book That Beats the Market” in order to teach novice investors how to beat the markets. Greenblatt says he wanted to tell investors how to make money in terms even his kids could understand : “I figured if I could teach them how to make money for themselves, then I would be giving them a great gift.”

Joel Greenblatt has devevloped a formula that it is claimed will let you beat the stock market if you stick with it. Greenblatt’s formula is not unlike the “Warren Buffett way” i.e. “Invest in good companies when they are cheap.”

According to Greenblatt his formula has beaten the market for almost 20 years, from 1988 to 2004, with annual returns of nearly 23% from high-return/low-price stocks.

There are six easy steps to the formula and sucessful online trading

1. Stocks are classified each day using 2 criteria: Earnings Yield and Return on Capital which are used together to draw up a list of top-ranked stocks.

2. Stocks in utilities, financial services and smaller companies, are usually removed as are companies for which the data are incomplete.

3. A portfolio of a minimum of 20 stocks must be bought.

4. The portfolio is held for around 1 year to allow for certain after-tax returns considerations. If there are any losses these should be taken just before the 1 year anniversary, gains on the other hand are taken right after the 1 year anniversary.

5. The whole portfolio is sold after 1 year and a new portfolio is purchased.

6. Data show that if you apply this formula for at least 3 years this will allow it to work correctly irrespective of market fluctuations.

If you want to know more check out – www.magicformulainvesting.com  or www.formulainvesting.com

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Warren Buffett Does it Again One of Warren Buffett ‘s favorite phrases is to “buy when others are fearful and be fearful when others are buying”. This is what he did back in October when he started buying shares again. At the time there were plenty of people who once again said that Warren Buffett [...]

Warren Buffett Does it Again

One of Warren Buffett ‘s favorite phrases is to “buy when others are fearful and be fearful when others are buying”. This is what he did back in October when he started buying shares again. At the time there were plenty of people who once again said that Warren Buffett had lost the plot, but once again he proved them wrong.

He didn’t get it absolutely right, as the market didn’t hit bottom till March 2009 but all the same his investments are now back in profit and rising and the Berkshire Hathaway share price is also rising again.

Berkshire Hathaway returned to profit in Q2 of this year, as a result of gains on derivatives and stocks such as Goldman Sachs and GEC that Warren Buffett bought back in October .

Berkshire Hathaway reported a $1.5bn loss for the first three months of the year – its first loss since 2001 – in the second quarter however it showed a $3.3bn profit investment gains offset falling earnings.

Last year, Berkshire, reported a $2.9bn profit.

Berkshire Hathaway reported a $1.5bn gain on its derivative portfolio, more than twice the levels in Q2 of 2008.

Berkshire said its spending in the middle of the crash was very good, as distressed companies sold shares to raise cash.

Warren Buffett used his large cash pile to persuade companies to sell him preferred shares which pay high annual dividends, he was simply taking advantage of the financial crisis to buy at attractive prices.

Berkshire Hathway did however report a 22% year-on-year fall in operating earnings to $1.8bn.

Many people would like to emulate Warren Buffett and if they know nothing about the stock market they often woner how it works – if you are such a person check out this video  how does the stock market work 

Warren Buffett has also started a cartoon series to teach kids how to manage their money and how to invest it wisely – see Secret Millionaires Club

You should also learn about charting – stock market charts

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