1.
When you know you're the best, you can afford to tell it like it is. Buffett says: "Our insurance business had an excellent year... that party is over. It's a certainty that insurance-industry profit margins, including ours, will fall significantly in 2008. So be prepared for lower insurance earnings during the next few years."
2.
Only four things really count when making an investment (or buying whole companies if, like Buffett, you have $141bn to spend) - "a business you understand, favourable long-term economics, able and trustworthy management, and a sensible price tag". That's investment, everything else is speculation.
3.
Invest this way and you don't need to constantly look for the next "new" thing, with all the risk that necessarily entails.
Buffett's biggest investments (companies he doesn't own in their entirety) include American Express, Wells Fargo, Procter & Gamble and Coca-Cola.
These four businesses, he notes, were founded in 1850, 1852, 1837 and 1886 respectively. "Start-ups are not our game".
4.
Businesses are run by people and the best people are not necessarily the ones with the flashiest CVs. Buffett singles out Susan Jacques, chief executive of his jewellery retailer Borsheims. "Susan came to Borsheims 25 years ago as a $4-an-hour saleswoman. She's smart, she loves the business and she loves her associates. That beats having an MBA degree any time."
5.
Even for a super-long-term investor like Buffett, there's always a time to sell. Berkshire Hathaway bought 1.3pc of PetroChina in 2002 and 2003 for $488m, valuing the Chinese oil company at $37bn when Buffett thought it was probably worth $100bn.
When the China share bubble took its value to $275bn last year, way above its fundamental value, Buffett cashed in his holding for $4bn, an eightfold rise in five years.
6.
Buffett believes incentivisation of managers on the basis of earnings per share encourages disingenuous, if not downright dishonest, behaviour.
Take the assumptions about future investment returns in corporate pension schemes. The average in America is 8pc, despite the fact that a quarter of pension funds are in bonds and cash (for which a 5pc return would be a reasonable expectation) and the rest in equities, which rose by just 5.3pc a year on average over the 20th century as a whole (a remarkable period of growth for the US economy).
Managers don't really believe they'll get 8pc, but pretending they will means they can contribute less and so boost their reported profits. "If they are wrong, the chickens won't come home to roost until long after they retire."
7.
Between 2002 and 2007, Buffett notes, the euro appreciated from 95 cents to $1.37, yet the US's trade deficit with Germany widened from $36bn to $45bn, the reverse of what should have happened.
As long as these imbalances continue, foreigners will continue to buy up America on the cheap. "This is our doing, not some nefarious plot by foreign governments."
8.
Buffett has not lost his eye for witty one-liners which, as usual, make his letters a joy to read. Here he quotes John Stumpf, chief executive of Wells Fargo, on the behaviour of lenders: "It is interesting that the industry has invented new ways to lose money when the old ways seemed to work just fine."
9.
He can see the joke, but Buffett also knows that there is something profoundly wrong at the heart of corporate America.
"As house prices fall, a huge amount of financial folly is being exposed. You only learn who has been swimming naked when the tide goes out - and what we are witnessing at some of our largest financial institutions is an ugly sight."
10.
Investors should be realists but the best are optimists too. Buffett has taken premiums worth $4.5bn from investors buying insurance from him against four major stock markets being lower in 15 to 20 years than they are today.
He's confident he'll hold on to those premiums and in the meantime he'll use the cash to make another small fortune. What a man.
Online trading: Step by Step Guide
If you’re new to shares or need a little help, Money's step-by-step guide prepared by Maria Bekiaris tells you how the internet can make investing easier and cheaper.The internet has changed the way many of us go about our day-to-day lives. For investors it’s made it easier, and cheaper, to invest in shares and funds. There are about 20 online brokers in Australia. Commsec and E*Trade are two of the biggest, now controlling close to 80% of the online broking market, but some of the smaller brokers still have a lot to offer investors. When it comes to choosing an online broker there are a number of issues you need to consider.
Website usability
Let’s start with the website – is it easy to navigate, can you find the things you need quickly?
What it costs
The fees are based on the size of the trades and are usually tiered. Mark Johnston, director of Investment Trends, says it’s important to look at the base price rather than the discount price when comparing brokers. Another thing to look out for is whether a monthly access or subscription fee is charged on top of the brokerage fee. If you think you may need to make trades over the phone, make sure you find out about the price for that too as it tends to cost more.
Trading products
Most brokers let you buy and sell shares listed on the ASX, but it’s worth finding out what other products you can trade. This may include managed funds, options, warrants and international shares.
Trading tools
Find out what tools the online broker has that can help you manage your portfolio and monitor market movements.
Doing your homework
Before making any investment decisions it’s important to do your homework. The more research available on the site, the better off you’re likely to be. You’ll generally get access to news services, ASX announcements, market commentary and regular newsletters. You may even get access to buy/sell recommendations. Some brokers even have regular seminars their clients can attend.
Account requirements
No matter which broker you choose, you’ll need a bank account to settle your trades. Some brokers will require you to set up an account with a particular institution, while others let you use your normal account. Also find out whether you need to make a minimum initial deposit or maintain a minimum balance. It might be tempting to go for a broker with the most bells and whistles, but if this costs more you really should weigh up whether you really need all the extras.
Looking forward
Over the next few months and years we’re likely to see the online broking industry continue to grow and change. “All of the online brokers will be seeking to match one another’s offers,” says National’s Maddock. “Consequently, we can expect increased evidence of CFDs, short selling and retail managed funds appearing as part of online offers.”Infochoice’s Orrock says we can expect continued consolidation, as evidenced by the news in early June that E*Trade had taken over HSBC Stockbroking. Johnston agrees, saying that although there’s already been a fair bit of consolidation in the industry, we’re likely to see more in the future.
Website usability
Let’s start with the website – is it easy to navigate, can you find the things you need quickly?
What it costs
The fees are based on the size of the trades and are usually tiered. Mark Johnston, director of Investment Trends, says it’s important to look at the base price rather than the discount price when comparing brokers. Another thing to look out for is whether a monthly access or subscription fee is charged on top of the brokerage fee. If you think you may need to make trades over the phone, make sure you find out about the price for that too as it tends to cost more.
Trading products
Most brokers let you buy and sell shares listed on the ASX, but it’s worth finding out what other products you can trade. This may include managed funds, options, warrants and international shares.
Trading tools
Find out what tools the online broker has that can help you manage your portfolio and monitor market movements.
Doing your homework
Before making any investment decisions it’s important to do your homework. The more research available on the site, the better off you’re likely to be. You’ll generally get access to news services, ASX announcements, market commentary and regular newsletters. You may even get access to buy/sell recommendations. Some brokers even have regular seminars their clients can attend.
Account requirements
No matter which broker you choose, you’ll need a bank account to settle your trades. Some brokers will require you to set up an account with a particular institution, while others let you use your normal account. Also find out whether you need to make a minimum initial deposit or maintain a minimum balance. It might be tempting to go for a broker with the most bells and whistles, but if this costs more you really should weigh up whether you really need all the extras.
Looking forward
Over the next few months and years we’re likely to see the online broking industry continue to grow and change. “All of the online brokers will be seeking to match one another’s offers,” says National’s Maddock. “Consequently, we can expect increased evidence of CFDs, short selling and retail managed funds appearing as part of online offers.”Infochoice’s Orrock says we can expect continued consolidation, as evidenced by the news in early June that E*Trade had taken over HSBC Stockbroking. Johnston agrees, saying that although there’s already been a fair bit of consolidation in the industry, we’re likely to see more in the future.
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Determine Your Financial Future
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To provide you with all the free information and financial advice, so that you can learn to invest profitably in stocks and be able to successfully manage your financial future.
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1. With the Online Investing Education and the Investing, Stock Market and Financial Planning Tutorial and guide:
To provide you with all the free information and financial advice, so that you can learn to invest profitably in stocks and be able to successfully manage your financial future.
2. With the Investment Guide:
To help you easily acquire many new profitable investing skills and expand your economic, savings, financial, investing and stock market knowledge.
3. With the Stock Market Guide to Profitable Investments Book:
To present a clear, easy and safe investment e-Book and educational method by which you will be able to invest profitably in the stock market.
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A Guide to High-Yield, High-Risk Stocks
The classic image of the stock market is that of a place where fortunes are made and lost throughout the course of the day, and where those who take the biggest risks are rewarded by a hefty payout when all is said and done. Of course, this is the movie version of the market… no matter how thrilling the day-to-day dramas of investment trading become, they'll never compete with the images of the stock market that have been created for the silver screen.
There is a small grain of truth to those images from the movies, however… those individuals who choose to deal in high-risk stocks can make a lot of money if they handle the risks correctly. If they don't, however, then there's a good chance that they could lose their entire investment. Below you'll find more information on the world of high-risk (and high-yield) investments, including ways to help insure yourself against major losses when dealing with higher levels of investment risk.
Defining High-Risk Investments The first thing that needs to be covered when talking about investing in high-yield, high-risk stocks is exactly what is meant by the terms “high-risk” and “high-yield.” The risk of the investment is usually due to the very fickle nature of that particular stock… though it may be growing in value rather quickly, it's obvious that the growth is going to stop soon and a very rapid and severe descent is going to begin. The yield of the investment, on the other hand, refers to the money that could potentially be made by buying stocks early on in the increase in price, and then selling just before the value starts to plummet. Fortunes have been both made and lost (sometimes in the same day) with high-risk trading; the key is knowing exactly when to start buying or selling.
How to Trade High-Risk Stocks When trading high-risk stocks, it's almost essential that you have access to your brokerage account and that you'll be able to buy or sell shares as soon as the price begins to fluctuate in one direction or the other. This can be done online, via the telephone, or in person if you don't use an online brokerage firm. You can also usually set up hold orders which will start buying the stock when the price reaches a certain level (up to the amount that you've specified) and that will begin selling shares as soon as the price drops below a certain point. Many online brokers allow these types of hold orders, and they can allow you to go about your regular day without having to watch the market ticker the entire time.
Guarding Against Loss Of course, even with hold orders or a dedicated broker you can still end up losing money when dealing with high-risk stocks… that's how they earned their name. In order to minimize this potential for loss it's important to have a well-diversified stock portfolio to fall back on. If your high-risk investments begin to fall in price too quickly and you end up losing money by the time the shares have been sold, the relatively stable value of some of your core portfolio stocks and indexes will help to even out your losses. The fall of the higher-risk stocks might even stimulate some other portions of the market, causing an increase in other stocks in your portfolio. This will help take some of the sting out of your loss, and may end up giving you a greater long-term gain than you might have had from your short-term investment that went sour.
There is a small grain of truth to those images from the movies, however… those individuals who choose to deal in high-risk stocks can make a lot of money if they handle the risks correctly. If they don't, however, then there's a good chance that they could lose their entire investment. Below you'll find more information on the world of high-risk (and high-yield) investments, including ways to help insure yourself against major losses when dealing with higher levels of investment risk.
Defining High-Risk Investments The first thing that needs to be covered when talking about investing in high-yield, high-risk stocks is exactly what is meant by the terms “high-risk” and “high-yield.” The risk of the investment is usually due to the very fickle nature of that particular stock… though it may be growing in value rather quickly, it's obvious that the growth is going to stop soon and a very rapid and severe descent is going to begin. The yield of the investment, on the other hand, refers to the money that could potentially be made by buying stocks early on in the increase in price, and then selling just before the value starts to plummet. Fortunes have been both made and lost (sometimes in the same day) with high-risk trading; the key is knowing exactly when to start buying or selling.
How to Trade High-Risk Stocks When trading high-risk stocks, it's almost essential that you have access to your brokerage account and that you'll be able to buy or sell shares as soon as the price begins to fluctuate in one direction or the other. This can be done online, via the telephone, or in person if you don't use an online brokerage firm. You can also usually set up hold orders which will start buying the stock when the price reaches a certain level (up to the amount that you've specified) and that will begin selling shares as soon as the price drops below a certain point. Many online brokers allow these types of hold orders, and they can allow you to go about your regular day without having to watch the market ticker the entire time.
Guarding Against Loss Of course, even with hold orders or a dedicated broker you can still end up losing money when dealing with high-risk stocks… that's how they earned their name. In order to minimize this potential for loss it's important to have a well-diversified stock portfolio to fall back on. If your high-risk investments begin to fall in price too quickly and you end up losing money by the time the shares have been sold, the relatively stable value of some of your core portfolio stocks and indexes will help to even out your losses. The fall of the higher-risk stocks might even stimulate some other portions of the market, causing an increase in other stocks in your portfolio. This will help take some of the sting out of your loss, and may end up giving you a greater long-term gain than you might have had from your short-term investment that went sour.
Stock Pick: Embarq
Embarq showed strong Q1 resultThe company announced its quarterly result for the first quarter of 2008, including record earnings and cash flow. The company reported total revenues of $1.57 billion, operating income of $434 million, diluted earnings per share of $1.38 and cash flow before dividends of $286 million.The company paid a dividend of $0.6875 per share in the first quarter, and
Stock Pick – Tiffany And Co
TIFFANY AND COOn Monday Tiffany & Co posted higher than expected quarterly result. The company has reported increased sales overseas and at the same the newly opened stores has helped to counterbalance the effects of a slowing US economy as that has put a strain on consumer spending.The company reported that its net sales increased 15% in the fiscal year ended January 31, 2008 and rose 10% in the
Current stock market behavior – best opportunity to learn
Since last couple of months, the Wall Street has been behaving more weirdly. But on the other hand, it has given a very good opportunity for newbie stock traders and stock investors to learn more about how the stock market works.The stock market has shown • How wildly it can behave• How the negative sentiment can affect the investor’s pocket• How the traders can easily burn their hands if they do
Omnicell Ind - Fundamentally Looks Good
Omnicell, Inc. is a leading provider of various medication control and patient safety solutions for acute care health facilities.The company's healthcare automation solutions enable healthcare facilities to acquire, manage, dispense, and administer medications and medical-surgical supplies. It offers medication-use product line for use in acute care nursing departments, central pharmacy
One more painful day on Wall Street
The stock market is certainly witnessing lot of pain. Investors are worried and maximum of stock traders are avoiding to take any buy call on painful and helpless stock market. The credit market is crunching, housing market is plummeting and entering of recession in US economy is almost dreading the investor.The Dow Jones is almost at it strong support level of 12,000. Though the market is
Economics worries make the Dow Jones to fall 300+
Wall Street saw one more bloodbath day on Friday. The bloodbath day was more with the concern of economic worries. It seems like the Wall Street has granted that the recession is almost entered or at the door of the US economy. If for time being we grant that the recession has almost entered and it is affecting the US economy then we should also conclude that this market will lack investor. If
Stock pick - Universal Health Services Inc
Universal Health Services Inc (UHS) posted a descent quarterly result on Thursday 28 Feb, 2008. The USH Inc Posted 17% increase in 4th quarter profit on back of higher revenue from its acute care and behavioral health facilities.Universal health earned $40 million, or 75% per share, compared with $34.2 million, or 63 cents per share, for the same quarter in 2006.Revenue for the quarter rose 12%
Make Investment through Fisher Investment Company
This blog helps you to find good Money Management Company. The company will assist you to make effective investment of your money with high returns in short and long term basis.If you are worried about your financial future! If you have money and don’t know where to and how to invest it, then Fisher Investment Company can be good destination to get to the bottom of your concern.Fisher Investments
Stock Pick - Zebra Technologies Corp
Zebra Technologies Corp (ZBRA) posted a higher than street expected fourth-quarter profit on Monday. The company’s net profit rose to $30.8 million or 45 cents a share from $21.4 million, or 30 cents a share, a year earlier. Company’s revenue increased 11.3% to $233.6 million from $209.9 million. Wall Street analysts had expected earnings of 43 cents a share on revenue of $226 million.The company
Stock Pick - Williams Companies Inc.
Williams Companies Inc. (WMB)Williams Companies Inc through its subsidiaries engages in the production, gathering, processing, and transportation of natural gas.The ongoing rise in energy prices has significantly boosted the company’s revenue. The company announced its quarterly result on Thursday. The company reported healthy 53% jump in its fourth-quarter profit.Many of the research firm has
Wall Street Finished Higher After Early Losses
Wall Street saw a dramatic stock trading day on Wednesday, just the opposite that happened Tuesday. Strong recovery was seen in major indices in later session of market after a sharp fall in the stock market opening session. A good pullback in hard-hit stocks of financial companies helped fuel the session's turnaround, while an upbeat forecast from Hewlett Packard Co. pulled technology issues
Stock Pick-Hewlett-Packard
February 20, 2008In the midst of trouble economy of US, Hewlett-Packard has reported a strong set of quarterly numbers above Wall Street's expectations. The company announced its quarterly result yesterday. The company reported a strong healthy jump in net revenue of 13% to $28.5 billion, ahead of the $27.6 billion Wall Street expectation for its first quarter, which ended in January. The
Wall Street end Mixed Amid Inflation Fears
February 20, 2008The major indices on Wall Street opened sharply higher on Tuesday and gave up a big early advance and closed mixed with modest losses due to weakness in financials and tech. Stock investors were concerned after the oil prices closed above $100 for the first time and put fuel on fears that inflation will baffle on already troubled economy. The rising inflation fear might make the
Stock pick - Credicorp
February 09, 2008The technical as well as fundamental story of Credicrop (NYSE: BAP) looks quite strong. Credicrop seems to outperform the overall stock market, and can be a good stock pick at present situation from stock trading as well as stock investing perspective.Since the starting of year 2008, the Dow Jones and NASDAQ are showing poor performance. Maximum of the index stocks are beaten
Service Sector Weakness plunges the Wall Street stocks
February 06, 2008Wall Street saw another stock trading day of disaster as report came unexpected tightening in the service sector as confirmation the US economy is dipping into recession.Heavy sell off seen at Wall Street plunged the Dow Jones industrials down 370 points. It was the Dow's biggest percentage drop in almost a year. The report from the Institute for Supply Management washed out the
Stock Idea - Anheuser-Busch Companies Inc
Stock trading as well as stock investing point of view I think Anheuser-Busch Companies Inc looks quite promising. The fundamental story of this stock looks quite good. At current situation when heavy carnage is going on Wall Street, this stock seems more a like of defensive stock and holding this stock is quite profitable. It looks like there is very low downward risk and upward move looks quite
Ascending Tops and Ascending Bottoms
Ascending tops and ascending bottoms plays a very important role as a technical analysis in selling and buying of stock for stock investing as well as for stock trading.Ascending tops and ascending bottoms are technical indicators shown in stock chart pattern. They clearly demonstrate the performance of a given stock over a period of time. Ascending tops is applied to gauge the development of
Wall Street Crash by Worse Credit Fears
Sunday, January 13, 2008Friday was again a worse day for stock trading session on Wall Street, in the midst of fears that the financial sector's trouble with worse credit won't soon end. It is having said that some consumers are collapsing under the influence of a slowdown in economy.Stock investors are worried about how banks and brokerages will turn out in this quarter after suffering losses
Online stock broker
Online stockbroker is one of the most important aspects of your online stock trading business. Trading stocks without the help of stock broker is entirely impossible but one should also understand that choosing the best stock broker is also that essentially important. There are tons of online stockbrokers who provides you the platform for executing online stock trading but not all are good
Stock Chart - Technical Analysis Tool
A stock chart is a string plotted on a graph for stock prices versus specific time frame. Once you are familiar with technical analysis, a concept used in identifying stock movements, then you could find the technical stock chart a more useful tool used in technical analysis, in-fact chart formation is most important aspect of technical analysis.If you want to make stock investing, or to do day
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