"The difficulty is not in the new ideas, but in escaping the old ones." - John Maynard Keynes
Warren Buffett is famous for not investing in technology. He is also famous for avoiding international shares. He also has been known to avoid railroads. But things change. Buffett announced this morning on CNBC, he has bought upwards of $10 billion worth of IBM stock. Although investing in a technology company marks new territory for Buffett, he did not come to the decision quickly. He reports he's been reading IBM annual reports for 50 years and finally decided to pull the trigger.
Buffett, has also invested in internationally and in railroads. Recent years have marked and expansion of Buffett's willingness to invest in areas he traditionally hasn't. This is likely less a divergence from his core investment principles than it is an expansion of his investment circle of competence. Perhaps this will also be an boost to Berkshire Hathway's stock. Time will tell.
The embedded video is of Buffett's appearance on CNBC today. (LINK)
You can buy one of the greatest collections of businesses [Berkshire Hathaway] run by one of the greatest investors [Warren Buffett]—if not the greatest investor—of all time at a 35 percent discount to intrinsic value. - Whitney Tilson
Disclosure: At the time of this writing, I and the clients of Brick Financial Management, LLC owned shares of Berkshire Hathaway (BRK-B). But positions can change at any time.
I'm sometimes asked by people who know I'm in "some sort of finance", "What do you do?" Usually the person asking wants to make what I do, since it is "some sort of finance" and most folks have an irrational aversion to numbers, seem more difficult than it really is. What I do ain't rocket science, trust me. Warren Buffett is fond of saying investing requires the math skills of a 5th grader. So I usually answer with as simple an explanation as I can muster. "I help people invest in stocks and funds," is the line I offer by rote.
Recently someone followed up with, "I mean, what do you do day to day? How do you help people invest?" Again, what I do is not that complex or exciting. My answer was, "I read." I wasn’t being flippant. It is just really the answer. I read anything I can and have time for about the companies of interest to me, philosophies on investing to philosophies about other disciplines that might help my approach to investing. Charlie Munger, the long-time partner of Buffett calls this a latticework of mental models. This is what I am trying to create with my reading.
In the past, I have talked about how my process, which is influenced by Buffett, Munger, Benjamin Graham and many less well-known investment managers, leads to superior results. That process includes:
A commitment to a long-term investment philosophy.
Owning a concentrated portfolio of easy to understand companies that generate high degrees cash and generate high returns on capital/equity.
Adherence to a value-oriented approach to investing.
Not deviating into non-profitable areas of the market or areas where competitive advantages are hard to come by (i.e. gold, shorting, or commodity trading).
As the chart points out, our Core Portfolio has beaten the market in most calendar years and is ahead of the market so far this year. From the time of inception the portfolio’s annualized total return has been more the double that of the market’s total return (Core: 12.3% vs. S&P 500 Index: 5.1%). Over a typical working lifetime of about 40 years, 12.3% will turn a one-time $10,000 investment into $1,000,000 while a 5.1% investment will become $70,000.
A Day In The Life
The following is an example of how my day transpires. No day is typical. It depends on the season, if school is in, if quarterly earnings are imminent. But this gives a good representation.
6:00am: Open emailed version of Wall Street Journal and New York Times and read articles pertinent to the positions in the portfolio. Read any other article that sparks an interest – not necessarily finance related.
7:00am – 8:00am: Get daughters ready for and dropped off to school.
8:00am: Continue reading articles and any alerts emailed to me regarding our current positions.
9:30am: Market opens. Check portfolio to see how our positions opened. Take any action if necessary (which rarely happens).
11:00am (bulk of the day): Turn on the financial news, primarily for the ticker. Watch any videos on the web that pique my interest. Google/Twitter search for news relevant to our investments or investments I have my eye on. Listen to recorded quarterly conference call or read financial statements or write a blog post, etc. Hop on the train to the New York and drop in on an investment conference, especially if its free or low cost. Read or watch anything I can find by investment managers who share a value oriented approach.
3:00pm: Pick up girls from school.
4:00pm: Market closes. See how portfolio shaped up for the day. Check if any positions currently on our watchlist look like buys.
4:30pm – 8:30pm: Spend time with family. Help girls with homework.
9:00pm: Listen to recorded quarterly conference call or read financial statements or write a blog post, etc.
or,
Just shut it down for the day and spend that time with family or fun.
The process is not sexy and may be boring but it gets results. There is no secret formula.
The Pew Study reports a stark contrast in the wealth of households by racial group. The median wealth of white households is 20 times that of black households. The study very quickly points to differences in home ownership (non-investment real estate) as the main culprit in explaining the differences in wealth. (Because blacks and Hispanics have very similar financial characteristics and those characteristics highly contrast those of whites and Asians, I will use the stats from the black and white populations for these illustrations.) For instance:
Only 46% of black households owned their own home, while
Among white households, 74% owned a home.
So right off we can see black households far behind in the primary asset that contributes to wealth – a home. Owning a home is a pervasive and deep seeded American dream. It has been promoted as the sure way to wealth, by our government, our financial advisors, our ministers and any number of late night infomercials. And the above statistic seems to support this idea. Own a home, get rich.
But I am here to say this idea is misguided. It represents one of the biggest fallacies of wealth accumulation in existence. Home ownership is not a panacea. In fact, if pursued to the exclusion of other assets, especially financial assets, it can be an albatross.
To explain what I mean, let’s look deeper into the stats and include those from wealthy households regardless of race. For blacks and whites alike, home equity made up the lion’s share of net worth. For blacks however, owning this asset (or not owning it), proved much more contributory to the rise, fall or existence of net worth. For example:
For black households that owned a home, home equity made up 56% of its net worth.
For white households that owned a home, home equity made up 38% of its net worth.
White households tend to be more diversified than black households. Thus they were able to better withstand the downturn in the real estate market experienced of the last few years. In fact, many black households bought at the peak of the real estate bubble during the days of 110% financing and easy credit. Another study conducted by Pew tells us that 35% of black home owners are under water on their mortgage, meaning they owe more on their mortgage than their home is worth. “Only” 18% of white home owners are in this situation.
Of households in the top 5 percent of wealth (usually $1.5 million or more in net worth), 98% own their own home, however, home equity makes up only 15% of their net worth.
Blacks who are financially upwardly mobile, for lack of a better term, have caught on that home ownership is a great tool for wealth accumulation. But somehow, the forest was missed for the trees. Home ownership if all goes well can be a financial benefit, but in comparison to other assets available in the marketplace, real estate falls way way short on delivering functional (read: spendable) wealth. That usually comes in the form of stock, bonds, cash and business ownership. I will explore those differences in a later post. The next post however, I will look at the differences among racial groups in unsecured debts and ownership of other tangible assets like cars.
Paying a few billion dollars in taxes that it isn't required to would allow General Electric, and any other company that follows suit, to do what most Fortune 500 firms haven't been able to do since the 1990s: claim the moral high ground. Just as a self-taxing Buffett would, a self-taxing company would garner a huge amount of publicity and positive reputation-building.
"I ain't talking 'bout rich, I'm talking 'bout wealth. Wealth is passed down from generation to generation. You can't get rid of wealth. Rich is some shit you can lose with a crazy summer and a drug habit." - Chris Rock
On Aug. 5, 2011, Standard & Poor's Ratings Services lowered its long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA'. The outlook on the long-term rating is negative.
...the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges...
S&P downgrades the credit rating of the United States (link).
David Beers, Standard & Poor's Global Head of Sovereign Ratings, and John Chambers, Chairman of the Sovereign Ratings Committee, explain our rationale for lowering the rating. (video: 18:23 minutes)
Market:
"Buffett: US Rating Still AAA, No Matter What S&P Says" by Becky Quick; CNBC (link)
Warren Buffett says there's no question that the United States' debt is still AAA and that he's not changing his mind about Treasurys based on Standard & Poor's downgrade. "If anything, it may change my opinion on S&P," the legendary investor said.
"How will the fallout of the U.S. downgrade affect you?" by Greg Gardner; Detroit Free Press (link)
"Standard & Poor's Defends Lowering U.S. Credit Rating" by David Kerley and Dan Arnall; ABC News (link & video)
Portfolio:
'Leucadia National Corporation Stock Downgraded (LUK)" by The Street Wire (link)
"Coach Reports Robust Results" by Zacks Equity Research (link)
Life:
"Fatherless to Fatherhood" documentary spot on CNN.com (video)
One financial tenet I try to follow on my personal quest to become wealthy is to “do what money does.” What that means to me is to follow and mimic the behaviors, as best as I can decipher them, of people who have become wealthy themselves. Overwhelmingly, the research shows people who are wealthy or likely to become wealthy to be very economical with the dollars they’ve earned – read frugal.
According to Thomas Stanley, in his book Stop Acting Rich, the wealthy and those who are likely to become so spend very few of their dollars on “the impediments to building wealth: income taxes, homes, clothing and accessories, motor vehicles, interest or personal loans, club dues and vacations”, wine and spirits, and entertainment. They also do not practice what Stanley calls “economic outpatient care” which is financially supporting other able bodied adults which includes, children, parents, girlfriends, long lost cousins and war buddies down on their luck. In other words, they make junior get his own place after college on his own dime.
The wealthy and those that are likely to be do however allocate a large portion of their money to the “foundation stones of accumulating wealth, including investments, pension or annuity contributions, and fees for professional advice and asset-management services.” Millionaires are also typically generous with allocating money to their grandchildren’s education, charities meaningful to them and on events that enhance the time they spend with loved ones. It is not until after they’ve put themselves on stable financial ground that they begin to spend on “the frivolities of life.”
The above shopping lists of items of where the wealthy do and do not spend their money puts in perspective the “wealth mindset”. The wealthy are not penny-pinchers or Scrooges. They are not penny wise and pound foolish. They are not risk averse but know how to take prudent risks. In fact, millionaires spend heavily on things that return monetary value to them and avoid spending on things that do not.
This includes investments. Two years ago, when the economic sky was falling, most of America took whatever money they had in the stock market and put it into cash. Or worse, they spent their money on personal items – “the frivolities of life”. In other words, most people put their money under the proverbial mattress. However, this is not what people who possess this wealth mindset did. In fact one of the wealthiest in the world, Warren Buffet, told us what we should do with our investments in a New York Times Op-Ed piece in October 2008: (Continue reading more)
This past January, about the time of Obama's inauguration, Warren Buffett gave an interview to PBS corresspondent, Susie Gharib. In the interview Buffett was asked to give his greatest and most important business lesson. He responded:
The most important investment lesson is to look at a stock as a piece of business not just some thing that jiggles up and down or that people recommend or people talk about earnings being up next quarter, something like that, but to look at it as a business and evaluate it as a business. If you don't know enough to evaluate it as a business you don't know enough to buy it. And if you do know enough to evaluate it as a business and its selling cheap, you buy.
When thinking of stocks as more than just pieces of paper, but actual representations of underlying businesses, the investor is led to a more sensible approach. If as an investor you were considering buying a business that you would own, operate and would provide the majority of your income, it is likely you would not contemplate selling that business within seconds of purchasing it. Just as you would not think of buying a home in the morning and selling it in the evening, if your intent was to live in it.
A great example is Google (GOOG). Google is the dominant player in the search engine world commanding more than 64% of internet searches and is rapidly becoming a threat to longtime tech behemoth, Microsoft (MSFT). Google also produces and obnoxious amount of free cash flow and seems to grow that cash at will (see chart).
With market dominating performance and consistent operating results, it is safe to assume Google's business value is stable and steadily growing. But if you were to look at the stock price, you'd never know it. In the past 52 weeks, Google's shares have gone from a high of $510 to a low of $247 and now sit at around $430. Do these wild fluctuations make any sense given Google's performance? Nope. But for those of us who are more concerned with the underlying business, we can just sit still and only move when to buy when the market greatly undervalues our business and sell when they overvalue them. This is why I don't trade very often and prefer the "lazy" approach to investing.
Disclosure: I and the clients of Brick Financial Management, LLC owned shares of Google at the time of this writing but positions may change at any time.
10 Signs Your Financial Advisor Is Stealing Your Money (Part 2)
Source: Reuters
Today Warren Buffet appeared on CNBC for 3 hours answering a multitude of questions from Becky Quick, Joe Kernen
and a slew of emailers. One emailer from Cincinatti asked "How do we know that you are not another Bernie Madoff?" In response Buffett said:
"Well, that's a good question. I would say this. I--it is a problem with investment advisers. I mean, it--there are going to be a certain number of crooks in the world. And sometimes they're smooth-talking, and the best ones are the ones that kind of don't look like crooks... it is a problem who you put your trust in."
He then later agreed with Joe Kernen that an investor cannot rely totally on government regulation to catch these crooks. So what is an investor trying to protect herself to do?
I wrote a post (Part 1) back in September of last year with the intention of answering this question. This was before the Bernie Madoff or the R. Allen Stanford stories broke. In the post I promised 10 red flags which might alert an investor that his advisor is not on the up and up. I'm finally getting around to listing them. Today I'll do just a couple and get to the rest at a later date.
As a side note, The Wall Street Journalreports that the client list of Bernie Madoff became available to the public. The list contains well known and not so well known folks running the wealth spectrum. The one thing they all have in common is they are all considered sophisticated investors. The list should once and for all prove that "sophisticated" means little in the investment world and underscores my personal pet peeve with the restrictive accredited investor law. I digress.
1. Returns that (nearly) always go up:
If your advisor is reporting returns that always seem to go up, then you should regard his numbers with great skepticism. The markets are controlled by unpredictable human emotion and its movements simply can't be predicted. Madoff's firm produced returns of positive 1% to 2% in gains per month with only five negative months covering a period of 12 years. These types of returns are so improbable that an investor can almost stop here and safely speculate that they've encountered a ponzi scheme or at least an investment manager that is not telling the truth about his returns. But we'll go on.
2. Complex strategies that cannot be duplicated:
When and an advisor has to start using greek letters in formulas to explain his investment strategy, it's time to be concerned. Madoff used an investment strategy consisting of purchasing blue-chip stocks and then taking options contracts on them - a split-strike conversion or a collar. The strategy itself is not complicated. In fact, it's pretty plain vanilla. What was extraordinary are returns Madoff reportedly received with the strategy.
A few individuals attempted to perform due diligence but were unable to replicate the Madoff's past returns. Harry Markopolos was among those that tried. In an interview with 60 Minutes he said:
"As we know, markets go up and down, and his only went up. He had very few down months. Only four percent of the months were down months. And that would be equivalent to a baseball player in the major leagues batting .960 for a year. Clearly impossible. You would suspect cheating immediately... No one's that good."
The above represents a stark contrast to the investment approach employed by Mr. Buffett - value investing. Unlike the method employed by Mr. Madoff, it is niether complex nor does it produce returns that are always favorable. In fact, sometimes years go by without positive results. That's why it is so important to have a long term view as Buffett reiterated today in his interview with CNBC.
BECKY: Yeah. And on a serious note, there are people who look at the stock market and wonder how do they know the whole thing's not a Ponzi scheme?
BUFFETT: Well, the whole thing's not a Ponzi scheme.
BECKY: What--how do they know who to trust?
BUFFETT: We're talking about, you know--we're talking about American businesses that employ, just the ones on the stock market, tens and tens and tens of millions of people. They're real companies... in the 20th century, the Dow went from 66 to 11,000, you know, 400. And we had all kinds of problems during that period. Business works overall. It doesn't work every day or every week or every month, and sometimes it really gets gummed up. And then you need government invention sometimes to get the machines back working smoothly. But the machine works.
JOE: Warren...
BUFFETT: And equities, over time, are the way to do it.
Last month I posted and videoed about whether or not we were in a bull market based on five market indicators. I said that one way to tell if we’re in the beginning of a bull market is to try to ascertain whether or not we had seen a bottom. I concluded that we had seen a bottom in the market (November 20th, 752 level in the S&P 500) and that we’re in a new bull market trend. Today I’d like to look at another three:
1. Worst GDP decline in 25 years
On January 30, 2009, the BEA reported that GDP shrank 3.8% in the 4th quarter of 2008 (chart below). This was the worst showing in 25 years. The last time the economy shrank this severely was the 1st quarter of 1982. What did the market do the day these figures came out? It declined 2.2%, falling from 845.1 to 825.9. Not much of a move considering the news.
2. Job losses skyrocketing and unemployment trending toward double digits
February 5, 2009, the Labor Department reported 598,000 were lost bringing the total since the beginning of 2008 to 3.6 million. The unemployment rate went up to 7.6% making it the highest it’s been in decades. What did the market do that day? It went up 2.7% from 845.9 to 868.8.
3. Market price to GDP ratio
Back in 2001, in a Fortune magazine article Warren Buffett presented a chart comparing the total market value of U.S. based business as a percentage of GNP. An update of that chart is presented below. In the article Buffett said, “If the percentage relationship falls to the 70% to 80% area, buying stocks is likely to work very well for you." Currently this ratio sits below 75%.
I compared the market value of U.S. equities using the Wilshire 5000 index which comprises all stocks traded on the major exchanges in the U.S. I then compared it to GDP, a decent proxy for GNP. At the November 20th low, the percentage relationship between the two figures was 64% (Wilshire 5000 = 7.4 trillion and GDP = 11.7 trillion) and by the end of December remained below 80%.
Even if the market breaks through the 800 level, which who knows, it might, I am still on the side of this being a new bull market.
Disclosure: I and the clients of Brick Financial Management, LLC are own shares of iShares S&P 500 Index ETF but positions can change at anytime.
Two weeks ago I posted a video on YouTube declaring that I thought we were in the midst of a new bull market. I went on to say, in order to tell if we have entered a new bull market it is best to try and determine if we have seen a market bottom. November 20, 2008 was the day the S&P 500 reached 752. As of January 6, 2009 when the S&P 500 reached 934.7, it represented a 24% advance from the November 20th low. Technically, once an advance of 20% or more is underway that is a new bull market. But in an effort to be thorough, I went through five criteria I look at to determine if we were in fact in a new bull market.
Truthfully, I stole the criteria from Benjamin Graham’s The Intelligent Investor. In the book, Chapter 8, “The Investor and Market Fluctuations”, Graham explains how to recognize market tops. He gives five criteria. I simply turned those criteria on their head and replaced one with another I think is more relevant (at least to me). The criteria were:
1. A significantly low price in the market index.
From Oct. 9, 2007 through Nov. 20, 2008, the S&P 500 declined 52%, making it the third-worst bear market since the 1929-32 crash which saw a decline of 54%. The only other decline more significant than the ones just mentioned was 89% during the Great Depression. Additionally, the calendar year decline of 39% was only surpassed two other times in (1931 and 1937) in over 180 years. In other words the severity of the decline indicates that we are at a significantly low price.
2. A significantly low P/E on the market
At the 752 level, the S&P 500 was trading at a P/E ratio on trailing operating earnings per share of 11.5x. This is equal to the lowest operating P/E ratio in the 20 years that S&P has been tracking operating results and significantly lower than the average operating P/E ratio of 19.3x since 1988.
Another P/E measure is the Graham P/E (named for Benjamin Graham) which uses an inflation adjusted 10-year average for earnings. For the nine previous bear market bottoms the Graham P/E averaged 14.4x. At the 752 level in the S&P 500 the Graham P/E clocked in at 12.3x. This was lower than even markedly low P/Es.
3. High Stock market dividend yields versus relative to long-term bond yields
Dividends paid by Standard & Poor’s 500 Index companies in the 12 months prior to December of 2008 amounted to 3.5% of the benchmark’s closing value yesterday. In early December, the 10-year yield fell as low as 3.4%. Intuitively, stocks should yield more than bonds as they represent the more volatile investment. However since 1958, 10-year notes have yielded on average 3.7% more than stock dividends. The present condition, dividend yields higher than bond yields, serves as an indicator stocks are priced the lowest they have been relative to bonds in 50 years.
4. Low Level of margin accounts
Margin is commonly used in a speculative manner. When the market is rising, buying stocks with borrowed money can and does juice returns. But in a declining market, they can be a death certificate. Margin accounts declined 47% from July of 2007 to November of 2008.
5. High volatility in the market
The best measure of volatility we have today is the CBOE VIX. The VIX, is also called the fear index. When it is high it indicates there is a plethora of panic selling in the market driving prices down. Market prices and the level of the VIX move in opposite directions. Historically, a VIX above 20-25 meant there was a lot of selling. Since the high of October 2007 to date, the VIX has averaged almost 32 and even reached an intraday high approaching 90. Warren Buffett himself even indicated he had never sell panic like this in all his years of investing. Panic selling usually means market bottoms.
Although we have seen the market pull back from the 934 price it reached on January 6th, it has not dipped below 800 since then. If history is any indicator, we are in the first few days of a new bull market.
Disclosure: I and the clients of Brick Financial Management, LLC are own shares of iShares S&P 500 Index ETF but positions can change at anytime.
"The Third Pig" On Reuters, Yahoo Finance and Others
Articles that appear on The Third Pig occasionally appear on the Seeking Alpha website and are regularly picked up by the general financial media outlets including Yahoo Finance, Reuters and other financial blogs. I have listed some of the latest entries and other locations they can be found:
If you would like to share some of the above articles with your friends, family or associates just click any one of the icons below for the various websites including ShareThis, Digg.com and Facebook. Here is to a wonderful 2009 in the market.
5 Things To Be Thankful For In This Market (Part 1)
With the Thanksgiving holiday coming up and people somewhat depressed about the market and the economy, I tried to find some things to be thankful for in a tough environment like this. I thought I’d list a few, at least five, leading up to the holiday. The following is #1:
Benjamin Graham is perhaps best known today from frequent references made to him by billionaire investor Warren Buffett. Besides giving us Security Analysis in 1934 and his 1949 classic, The Intelligent Investor, he gave us short but meaningful quips about keeping our collective heads as investors in any market, let alone a bear market where we have seen a 52% drop. Some of my favorites are:
“Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.”
“Price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to…the operating results of his companies.”
“…in the short run, the market is a voting machine but in the long run it is a weighing machine.”
Joe-The-Dentist earns over $600,000 per year. Although he earns a high income from his dental practice he also earns a good bit of income from capital gains from his stock holdings of publicly traded companies. Most of Joe’s holdings are in consumer oriented businesses. His largest holding is Walmart stock.
Unfortunately, Joe has seen his passive income from stock holdings decrease during the Bush administration – a period of low tax rates. Gone were the days of the Clinton era bull market – a period of high taxes. So Joe hasn’t paid much in capital gains as of late, because Joe’s passive income hasn’t been much to brag about.
Joe has an epiphany. Obama’s tax plan is very Clintonesque and middle-class oriented while the McCain plan is an aggressive version of the Bush tax policy which heavily favors the wealthiest Americans.
Joe contemplates if the middle-class had more income to spend, they might spend it at Walmart. Which means Walmart’s revenues would go up, which would increase the value of the stock, which would in turn allow Joe to have more passive income. Joe also realizes the even though he might pay a higher tax rate under an Obama/Clinton tax policy, it would mean little as his take-home-income would be at its peak. Under the McCain/Bush plan, middle-class incomes would be relatively lower, not allowing them to spend as much thus stalling the economic recovery, depressing Joe’s stock holdings.
Joe-The-Dentist as well as the average American need only look back at the last 16 years. Paying lower taxes will not necessarily, as smart people like Warren Buffett have pointed out, hurt economic decision making. Thus an Obama/Clinton tax policy will help all Americans by helping the middle-class. The following chart shows how the stock market performed during the Clinton administration (from the time of the election in 1992) to how it performed during the Bush administration. Under Clinton, the stock market nearly quadrupled while under Bush the market stood still. [Click chart for larger view.]
Implications for the National Debt
Much of the argument from the John McCain camp against voting for Barack Obama is that Obama will raise taxes. The truth of the matter is Obama simply wishes to return to the modified Clinton administration tax policy. Under such a plan very few of us will see a rise in our overall tax rate and most will see an increase in their take-home-income.
According to the Tax Policy Center (TPC), the wealthiest among us, the top 1% of households with incomes of $600,000 per year or more, would see their after-tax income decrease under the Obama/Clinton plan by about $19,000 representing a mere 1.5% decrease in after-tax income. The next 4% of households would see their after-tax incomes remain about the same. Most Americans, about 95% of households, would see their after-tax income increase by about $2,200 per year.
McCain espouses a Bush-like “trickle down” tax plan which aims to cut taxes across the board. His plan leaves most American with an increase in after-tax income of about $1,400. But his plan most favorable to the wealthiest Americans. The top 1% under the McCain plan would see their after-tax incomes rise by $125,000, according to TPC. [Click chart for larger view.]
Each of the candidates’ tax plans has implications for national debt. It can certainly be argued the McCain/Bush tax plan will cost the nation more in the long run. According to the Tax Policy Institute (TPC),
“The main differences are two: first, McCain’s plans would reduce revenues by significantly more than Obama’s; and second, McCain’s would be substantially less progressive, especially among very high income taxpayers.”
The McCain/Bush policies would cost (reduce tax revenue) $4.2 trillion over 10 years while the Obama/Clinton plan would cost $2.9 trillion during that time. If interest costs are included, McCain’s plan would boost the national debt by $5.1 trillion and Obama’s would increase it by $3.6 trillion.
However, as the above anecdote suggests income for everyone, even the government, will potentially be higher under an Obama/Clinton tax policy. Even though both candidates’ tax plans will be expensive, the Obama/Clinton plan has relatively more upside for the economy than the McCain/Bush plan. Basically, under the Obama/Clinton plan, all boats will rise.
Buffett’s Detractors Warren Buffett has had his share of detractors since his New York Times Op-Ed piece in which he announced he would be buying American stocks in his personal account. According to Buffett, “…fears regarding the long-term prosperity of the nation’s many sound companies make no sense… But most major companies will be setting new profit records 5, 10 and 20 years from now.”
The crux of the detracting argument is Buffett’s call is untimely, he is too rich to worry about asset allocation or time horizons and you, we are not him. Dianne Francis of Canada’s National Post sums up this viewpoint:
"…guys like Warren Buffett also operate in a parallel universe of Cash-Rich, Long-Term, Value Investing. He’s making big bets on American stocks. We should not for lots of reasons. He's just plain wrong and I wrote about that yesterday. The stock markets are not capable of being a valid pricing mechanism for anyone for some time. Besides that every day brings more bad news, and new developments.”
Seems to me the detractors have cherry-picked certain lines from Buffett’s piece. Buffett in no way suggested the near term picture would be pretty. In the near term, markets are likely to continue their record breaking volatility and investors may suffer yet more loses. Buffett wrote,
“In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.”
“To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions.”
“…businesses will indeed suffer earnings hiccups, as they always have.”
“Let me be clear on one point: I can’t predict the short-term movements of the stock market.”
But Buffett’s qualifying statements are beside the point. His overall point was clearly missed or ignored - due to the widespread fear in the marketplace, stocks of strong businesses are cheap. And, in the long term, these businesses are likely to grow through economic booms and busts. Since, in the long term, stock prices are highly correlative to the performance of businesses, it makes sense to buy when the prices of stocks are below the value of the underlying businesses. That time, according to Buffett, is now.
The Typical Investor Buys High and Sells Low Buffett goes on to point out the resiliency of the market. He also emphasizes most investors’ uncanny ability to miss out on those gains because of their tendency to buy when they are comfortable (at market tops) and sell when they are fearful (at market bottoms). To underscore Buffett’s point, consider the following:
Research conducted by DALBAR, Inc shows for the 20-year period ending December 31, 2007, the typical mutual fund investor failed to capture the returns of the market. Although the average mutual fund trailed the market by about 2.5%, during this 20-year period, the typical mutual fund investor received a return of 4.48% while the market returned 11.82%. In fact, the investors’ returns were barely above the rate of inflation which clocked in at 3.04% during the period.
The disappointing results received by equity investors is totally due to the manic depressive buying and selling described by Buffett. As the chart below demonstrates, investors sell their mutual fund shares [demonstrated by the downward blue bars] just when market performance deteriorates [demonstrated by the orange line in negative territory].
When Ms. Francis suggests the market is a “valid pricing mechanism” she demonstrates, as do her fellow Buffett detractors, she does not understand that price and value are not the same. In the short term, stocks markets are never valid pricing mechanisms. Investors who believe otherwise allow their emotions to dictate their investment timing, a sure way to diminish investment results as the chart/table above demonstrate.
Investors Make Easy Things Difficult Buffett has given the world one of his golden rules to investing: Be greedy when others are fearful and fearful when others are greedy. In fact, one might say this is the definition of value investing. However, as Buffett noted in his 1984 essay “The Superinvestors of Graham-and-Doddsville” there are not likely to be many converts to the practice. He writes,
“Adding many converts to the value approach will perforce narrow the spreads between price and value. I can only tell you that the secret has been out for 50 years [now over 75 years], ever since Ben Graham and David Dodd wrote Security Analysis, yet I have seen no trend toward value investing in the 35 years I have practiced it. There seems some perverse human characteristic that likes to make easy things difficult… There will continue to be discrepancies between price and value in the marketplace, and those who read their Graham and Dodd will continue to prosper.”
It’s a little amusing to me how much attention Jim Cramer’s comments about pulling your “5-Year-Money” out of the market and sitting it in a safe place like cash or bonds garnered over the past few days. I for one, having given similar advice, didn’t find it that controversial. An investor, especially an individual investor, should never put their near term money at risk in the stock market.
There are deals in the stock market that can be had right now that will likely not be seen again for quite sometime. A few are:
Berkshire Hathaway (BRK-A, BRK-B): If there was ever a time to invest in Buffett’s company it’s now. For years the firm held $50 billion in cash searching for investments to make. This year alone, Buffett has invested $40 billion. He received warrants on both the GE and Goldman Sachs deals and though both are currently out of the money, they stand to be highly profitable investments. Berkshire’s A shares are likely worth $150,000 to $160,000 before accounting for how the company’s new investments will impact the business. Shares ended the day at around $113,000 per share, representing a 25% to 30% discount.
Perini (PCR): Perini, a construction and general contracting concern has been trading well below the value of their backlog of sales and orders waiting to be filled. The company also recently announced $248 million in new contracts in Florida and Virginia. The stock gained almost 20% today skyrocketing at the end of the day to $17.64, but still trades near cash on the balance sheet of $15.55 per share.
Delia’s (DLIA): Recently Foot Locker (FL) offered to buy this clothing retailers direct marketing business CCS for $102 million. The enterprise value (market cap + debt – cash) for the entire firm is only $66 million. The market hasn’t responded yet as the stock continues to hover around $2 per share although it gained almost 10% today. The selling in the market is pervasive and there just aren’t any buyers right now. But there will be for this company which is likely trading at less than half it’s true worth.
Perhaps you have been startled by what has been going on in the stock market this year, and in the last few days in particular. It is understandable if you have been. This is an unusual time. There’s a lot of uncertainty in the financial sector. Bear Stearns and Lehman have failed, Fannie Mae and Freddie Mac have been taken over by the government, AIG had to take accept an $85 billion loan from the government with steep terms, Morgan Stanley and Goldman Sachs converted to conventional banks, the FDIC stepped in to save Wachovia and Washington Mutual, and the Treasury Department is asking Congress to pass a $700 billion bailout of the financial system.
If you watched any news program or read any paper yesterday you know that Congress did not pass the plan proposed by the Treasury. The stock market reacted. Yesterday, the S&P 500 fell 8.9%. As a relative measure, the day the market opened after the tragedy of September 11, 2001, the S&P fell 4.9% on September 17, 2001. It was the biggest one day drop since Black Monday in October of 1987 when the market fell more than 20% in one day.
All of this turmoil is likely to leave most investors in the market biting their nails and pulling their hair out. These folks, not knowing what to do, will do nothing. Others might react by immediately selling all their investments, pulling their money out of their bank, and burying everything they own under the shed in their backyard. I understand both reactions, as both are simply human. But neither is what should be done.
As you have heard (or read) me say time and time again, it is best to act in the way Warren Buffett would. In Berkshire Hathaway’s 2004 Letter to Shareholders, he shares:
“Over the 35 years, American business has delivered terrific results. It should therefore have been easy for investors to earn juicy returns: All they had to do was piggyback Corporate America in a diversified, low-expense way. An index fund that they never touched would have done the job. Instead many investors have had experiences ranging from mediocre to disastrous.
There have been three primary causes: first, high costs, usually because investors traded excessively or spent far too much on investment management; second, portfolio decisions based on tips and fads rather than on thoughtful, quantified evaluation of businesses; and third, a start-and-stop approach to the market marked by untimely entries (after an advance has been long underway) and exits (after periods of stagnation or decline). Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful.”
Recently, Buffett invested $5 billion in Goldman Sachs on very favorable terms. He did so in the midst of all the turmoil in the financial sector of the market. In essence, he followed his own advice.
This method of buying into fear has proven fruitful over time. How does an investor know when others are fearful?
The Chicago Board Options Exchange (CBOE) manages a volatility index called the VIX. The VIX is an excellent indicator of the sentiment, bearish (fearful) or bullish (greedy), in the stock market. It captures the level of uncertainty reflected in option contract premiums. These contracts allow fund managers to insure themselves against sudden share price movements. A high VIX reading indicates investors are fearful and are willing to pay more for this downside protection.
History has shown that when the VIX reaches levels above 25 – 30 (above the red line), it has been a good time to buy. Yesterday the VIX reached nearly 50 and for the last 18 months has regularly reached levels above 25. [Click here for a larger image.]
Additionally, we are in a bear market for stocks. The likelihood of precipitous declines from these levels is somewhat low (though not impossible). Given current valuations, U.S. stocks may be the safest place to put money right now. The S&P 500 now trades at 14x earnings estimates for 2008 EPS. This is well below historical PE levels. Another thing to keep in mind is earnings may be somewhat depressed due to a harsh economy. In other words, when earnings return to normal, prices may prove to be even cheaper than it is currently estimated.
High volatility begets cheaper stocks which begets high returns for those who are greedy when others are fearful.
So what should you do now?
For money you need within 5 years: Keep those funds in an interest bearing account at your bank of choice. Even with all that is going on, the bank is still the best option for your cash funds. If those deposits are below $100,000 ($200,000 in a joint account), they are insured by the FDIC. And the news today is the FDIC is applying to increase those limits. I speculate they will increase them to at least $250,000.
For money you need beyond 5 years: Invest or keep your money in a diversified (at least 20, no more than 30) portfolio of stocks of low leverage (companies that don’t make use of debt), high return on capital companies. If you have cash available, you should consider adding to your portfolio. Years from now, you will wish you did.
Write your congressman: Write your congressman a letter urging him or her to pass the legislation to infuse $700 billion in the banking system.
An interesting documentary called “I.O.U.S.A.” premiered August 22nd in a few cities around the country. According to the filmmakers, the country is on the brink of a financial meltdown. I.O.U.S.A. examines the national debt and its consequences for the United States and its citizens. The subject of America’s financial woes is a subject Warren Buffett, who is featured in the movie, has tackled in the past.
Although I have not seen the movie, I will definitely check it out. In the meantime the folks at The Peter G. Peterson Foundation offer some advice on how to handle your personal financial deficit:
Establish a personal budget
Create a financial plan that considers your long-term financial objectives, major milestones in your life and what you will need in retirement.
Value investors worry that they might be wrong. So they add a belt in addition to suspenders. Drawing on the point that prices are different than values, value investors insist on as large a favorable margin of difference between price and value as possible. Doing so produces a margin-of-safety against judgment of error.
Value investors invest only in the stock of companies known to be faithful stewards of investor capital. They seek proven track records of good judgment and fair treatment by management.
Few companies live up to the requirements of value investors when the philosophy is strictly applied. Thus few companies make it into the portfolios of value investors. It is far safer to make the error of omission than to make the error of inclusion.
Value investors view themselves as owners of a business, not simply owners of a stock. It requires a long-term view and means avoiding the rapid-fire buying and selling characteristic of the vast majority of investors.
At this year’s Berkshire Hathaway annual meeting, as in all years, there was the usual business talk. But there was also plenty of entertainment. Actress Susan Lucci of “All My Children” fame and the woman who has brought character Erica Kane to life for so many years it seems contemplated a career change. She was, according to her, to take over chairman duties from Warren Buffett, effective immediately. Finally, the identity of Buffett’s eventual successor had finally been unveiled.
Lucci promised many changes, most of which you would have never seen under Buffett’s tenure as chairman. She promised Berkshire would pay a dividend and give its directors raises. Well, Buffett could take no more and advised that Lucci should keep her day job.
Today, the roles were reversed. Buffett made his second appearance (his first was in 1992) on the daytime soap “All My Children”. On the episode he help’s Lucci’s character, Erica Kane, deal with a little insider trading trouble. I was pleasantly surprised by Buffett’s acting “abilities”. But like Lucci, I hope he keeps his day job.
A few years ago the Center on Wealth and Philanthropy conducted a study examining trends on wealth and wealth transfer within the African-American community. What CWP found was not astonishing – African-Americans are generous with their money. This finding in right in line with a 2003 study reported in the Chronicle of Philanthropy that African Americans typically donate up to 25% more of their discretionary income than do whites.
CWP turned up some other some other not-so-surprising but all-to-disappointing statistics as well – African Americans have less money to go around than other racial groups. According to the study (2001 figures), African Americans made up 13.2 million U.S. households, about 12.4% of all households. Yet they only earned 7.1% of aggregate household income and only owned 2.5% of household wealth.
It’s a little self defeating to give more when you have less to give. Altruism has its place. But so does rational selfishness. I am not saying one should not be generous. What I’m saying is charity should start at home. Most millionaires agree. I am in wholehearted agreement with Warren Buffett who said:
“…I always had the idea that philanthropy was important today, but would be equally important in one year, ten years, 20 years, and the future generally. And someone who was compounding money at a high rate, I thought, was the better party to be taking care of the philanthropy that was to be done 20 years out, while the people compounding at a lower rate should logically take care of the current philanthropy.”
The African American community should take note. Invest for the long term in the stock market, accumulate wealth and then give it away. There’ll be more of it to give in the end.
In a recent interview with CNBC, "Money Honey" Maria Bartiromo asked Barack Obama, "How do you plan to change the tax code when it comes to capital gains? How high will that 15 percent rate go?" Obama answered with the following:
"Well, you know, I haven't given a firm number. Here's my belief, that we can't go back to some of the, you know, confiscatory rates that existed in the past that distorted sound economics. And I certainly would not go above what existed under Bill Clinton, which was the 28 percent. I would — and my guess would be it would be significantly lower than that. I think that we can have a capital gains rate that is higher than 15 percent. If it — and if it, you know — when I talk to people like Warren Buffet or others and I ask them, you know, what's — how much of a difference is it going to be if it's 20 or 25 percent, they say, look, if it's within that range then it's not going to distort, I think, economic decision making.
On the other hand, what it will also do is first of all help out the federal treasury, which is running a credit card up with the bank of China and other countries. What it will also do, I think, is allow us to make investments in basic scientific research, in infrastructure, in broadband lines, in green energy and will allow us to give us — give some relief to middle class and working class families who have been driving this economy as consumers but have been doing it through credit cards and home equity loans. They're not going to be able to do that. And if we want the economy to continue to go strong, then we've got to make sure that they're getting a little relief as well."
Obama went on to further state that he'd be open to some sort of exemption for people making under a certain amount of money. I'm sure the Republican party will shout, "Obama will raise your taxes!" But at least Obama is listening to the right advisor.
"We believe that according the name 'investors' to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a 'romantic."
"Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac's talents didn't extend to investing: He lost a bundle in the South Sea Bubble, explaining later, 'I can calculate the movement of the stars, but not the madness of men.' If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases."
"[Value investing] ideas seem so simple and commonplace. It seems like a waste of time to go to school and get a PhD in economics. It's a little like spending eight years in divinity school and having someone tell you the ten commandments are all that matter."
"Charlie [Munger] and I have absolutely no complaints about these taxes. We work in a market-based economy that rewards our efforts far more bountifully than it does the efforts of other whose output is of equal or greater benefit to society. Taxation should, and does, partially redress this inequity. But we remain extraordinarily well treated."
[Fortune] Even so, you and Susie (Buffett) set up the Buffett Foundation way back in the 1960s, which means you obviously expected to be giving away money sometime. What was your thinking back then?
[Warren E. Buffett] Well, when we got married in 1952, I told Susie I was going to be rich. That wasn't going to be because of any special virtues of mine or even because of hard work, but simply because I was born with the right skills in the right place at the right time.
I was wired at birth to allocate capital and was lucky enough to have people around me early on - my parents and teachers and Susie - who helped me to make the most of that.
In any case, Susie didn't get very excited when I told her we were going to get rich. She either didn't care or didn't believe me - probably both, in fact. But to the extent we did amass wealth, we were totally in sync about what to do with it - and that was to give it back to society.
In that, we agreed with Andrew Carnegie, who said that huge fortunes that flow in large part from society should in large part be returned to society. In my case, the ability to allocate capital would have had little utility unless I lived in a rich, populous country in which enormous quantities of marketable securities were traded and were sometimes ridiculously mispriced. And fortunately for me, that describes the U.S. in the second half of the last century.
Certainly neither Susie nor I ever thought we should pass huge amounts of money along to our children. Our kids are great. But I would argue that when your kids have all the advantages anyway, in terms of how they grow up and the opportunities they have for education, including what they learn at home - I would say it's neither right nor rational to be flooding them with money.
In effect, they've had a gigantic headstart in a society that aspires to be a meritocracy. Dynastic mega-wealth would further tilt the playing field that we ought to be trying instead to level.
Town suggests that the way to adhere to Buffett’s first rule is to look at five different things about a company. They are:
return on invested capital (ROIC),
revenue (sales) growth,
earnings per share (EPS) growth,
equity (or book value) growth, and
free-cash-flow (FCF) growth.
He says that we should be looking for companies with at least 10 years of history, and except no less than 10% per year in each of the growth figures. We should also look for companies with an ROIC of at least 10%.
I decided that the first two companies I’d look at would be Wal-Mart (WMT) and Target (TGT). These are two of the major players in the retail industry.
Unless you’re Paris Hilton, you’ve heard of Wal-Mart. Wal-Mart interests me because so much of the value investing community has become enamored with the company. Wal-Mart concentrates its products for very price sensitive consumers, usually in rural and “non-urban” areas. Although recently, the company has made great efforts to expand its operations into more “city-fied” areas. Target on the other hand, caters to a more urban, fashion conscious consumer. Usually, their consumers are a little higher up on the disposable income scale and are less price sensitive.
Full disclosure: Although I (and the clients of Brick Financial) do not own either company, both are on my watch list. My current outfit however consists of socks, underwear and a belt from Wal-Mart and jeans, a shirt and a watch from Target.
Each seeing the other as a threat, they have recently (in the last few years) found themselves competing more and more with one another. Selling products and services designed to poach the others customer base. Will either be successful? Of course, only time will tell.
As we can see, over the last 5 years, Target has returned over 40% while Wal-Mart has lost market value. To peer into the reasons why this happened, we need to look at how each company has performed operationally over the last few years. Here is where Town’s Rule #1 criteria may help us. For each company, we collected the figures using MSN Money and listed them in the table below. [For most of the multi-year figures, we used a geometric growth rather than an average growth.]
You should note that if I were doing this analysis for actual investment, I would use each company’s actual financial statements. But in order to keep it simple, and to try and follow Town’s book as closely as possible, I just used MSN.
You should take note of two more things. For the free-cash-flow (FCF) figures, I used the more traditional calculation of cash from operations minus capital expenditures. MSN also subtracts out dividends. Additionally, I included Warren Buffett’s calculation of “owner earnings” which is net income plus depreciation and amortization minus capital expenditures. This is his definition of free-cash-flow. These figures are from the latest annual financials statements. [Click on the image for a larger view.]
After looking at these figures, and grading them against Town’s criteria, I would say that each company probably gets a passing grade on the level of a B- or C+.
Wal-Mart averages over 10% in growth for most of the figures except for FCF and owner earnings. These two figures have declined over the last few years. And nearly all of the growth figures have trended downward.
On the plus side, Target’s EPS an equity growth are much higher than Wal-Mart’s and far exceeds Town’s minimums. But its sales growth and ROIC haven’t consistently beaten Town’s 10% floor. Whereas Wal-Mart’s FCF has been declining ever so slightly, Target’s FCF took an astronomical leap in the last year. But I wouldn’t get too excited about that since the previous year’s FCF was so low. (Gotta watch those base year figures.) For the 5 year period, Target only had one year where the company had a positive FCF or owner earnings figure. But the trend in FCF and owner earnings is good, as Target is growing its cash at a faster rate than its capital expenditures are increasing.
From the operational figures, neither Wal-Mart nor Target distinguishes itself from the other (using Rule #1) criteria. Thus, I don’t think these figures give us any insight into why Target’s stock may have performed better over the last 5 years. My guess, without the benefit of looking back, would be that Wal-Mart’s stock was richly valued 5 years ago relative to Target. Or it could be that investors think that Target has a brighter future. Or perhaps, everyone is crazy.
What I also want to know is, at this point, which would be the better investment. I want to know the value investors I admires are raving about Wal-Mart and Target...not so much. This is where the ever important valuation of the companies comes in.
A friend passed a book on to me this past weekend. Phil Town’sRule #1. For the uninitiated, “Rule #1” is a reference to Warren Buffett’s first rule of investing which is “Don’t lose money”. Using Buffett’s rule (and investment process) Town transformed himself from a beef jerky eating, river canoeing, rattle snake wrestling adventure tour guide to a book writing, public speaking, millionaire blogger. I’ll reserve comment on whether or not I think the book is a read since I just sort of skimmed it. But I was able to ferret out the punch line – following Buffett’s Rule #1 will lead to superior returns.
Town suggests that the way to adhere to Buffett’s first rule is to look at five different things about a company. They are:
return on invested capital (ROIC),
revenue growth,
earnings per share (EPS) growth,
equity (or book value) growth, and
free cash flow growth.
He says that we should be looking for companies with at least 10 years of history, and except no less than 10% per year in each of the growth figures. We should also look for companies with an ROIC of at least 10% as well.
Sounds reasonable. I thought it’d be interesting to take a few companies on our watch list (perhaps some in our portfolios) through the Rule #1 paces. So I’ll be doing that over the next few days and posting the results here. Stay tuned.
"When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact. "
A friend of mine was shopping at a local garage sale and came across a book for 25¢. She picked up the book and after reading the title, “The Money Masters”, quickly determined that she wouldn’t have much interest in it. A gift-giver by nature, she thought that at 25¢ she didn’t have much to loose by purchasing it and further thought that she might offer it as a grab-bag gift for the upcoming Christmas season. [It was only July. She does her Christmas shopping early.] After plucking her quarter down, she shoved the book in her bag and made her way to the neighborhood Starbucks for her daily chai tea.
One highly probable event she was likely to experience during her visit to Starbucks was that she would run into me. [My usual is the grande mild coffee.] When she arrived I noticed the tattered book sticking out of the top of her bag. After our usual salutation, I gloated. I told her that I was happy that I had had an influential role in her reading choices.
A little background is in order. My friend and I, during our many java induced conversations, have often talked about money. Everything from the evils of it, to the lack of it, to the pursuit of it, to the role of it, to the love of it, to the need of it. To be fair, she is much less interested in “money” as subject matter than I am. In any regard, I took most of the credit for her excellent book choice. [And undervalued no less. A used copy on Amazon.com will cost $11.65. She found her copy for 25¢ representing a 98% discount to intrinsic value!] But I had the suspicion that she did not realize what a gem she had stumbled upon.
In an attempt to show her the usefulness of the book I recalled one conversation we had about the genius it took to be a good investor. Her view was that most people were not “smart” enough to be investors. To counter her belief I paraphrased Warren Buffett, arguably the world’s greatest investor, by stating that successful investing requires a rational approach and fettered emotions, not a high IQ. My friend seemed slightly moved by my (and Mr. Buffett’s) stance but openly pondered, “What is meant by a rational approach?” I pointed out that one of the great benefits of possessing “The Money Masters” is that it more clearly spells out Buffett’s (as well as other great investors) approach and core beliefs better than I ever could. In the case of what makes a good investor Buffett lists six qualities in the book:
"You must be animated by controlled greed, and fascinated by the investment process. You must have patience. You must think independently. You must have the security and self-confidence that comes from knowledge, without being rash or headstrong. Accept it when you don’t know something. Be flexible as the types of businesses you buy, but never pay more than the business is worth."
Anyone can possess these qualities. It doesn’t take a high IQ to be a good investor. If you find that you do not possess these qualities however you should find a financial advisor or investment manager that does.
Oh yes, I’m happy to report my friend will be holding onto her garage sale gem. She’ll be shopping for used neckties for her grab-bag gift instead.
Brick Financial Management, LLC specializes in providing investment management services to individuals, families, organizations and institutions. We implement highly focused stock, bond, and balanced portfolios using an investment approach commonly referred to as value investing. Disclosure
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