MyPrivateBanking Blog
Daily Comments on the World of Wealth Management

Archive for the ‘Value Investment’ Category

Buffett and Jay-Z On Success And Giving

Tuesday, October 5th, 2010

Highly recommended!

 

What Fund Fees Can Do To You

Thursday, September 30th, 2010

There is an interesting article on the fatal impact of fund fees on investment performance in the UK’s Telegraph. Especially the calculation on Buffett’s performance had he taken the usual 2+20 hedge fund fees is awesome. The result is shocking:

As you are aware, Warren Buffett has produced a stellar investment performance over the past 45 years, compounding returns at 20.46 per cent per annum. If you had invested $1,000 in the shares of Berkshire Hathaway when Buffett began running it in 1965, by the end of 2009 your investment would have been worth $4.8m.

“However, if instead of running Berkshire Hathaway as a company in which he co-invests with you, Buffett had set it up as a hedge fund and charged 2 per cent of the value of the funds as an annual fee plus 20 per cent of any gains, of that $4.8m, $4.4m would belong to him as manager and only $400,000 would belong to you, the investor. And this is the result you would get if your hedge fund manager had equalled Warren Buffett’s performance. Believe me, he or she won’t.

Hat tip to W.G.

 

“No human or strategy can consistently beat the market”

Monday, August 9th, 2010

James Altucher is one of the least arogant and most knowledgeable hedge fund managers I have come across. He is a great investor but has also started some great businesses like stockpickr.com. In addition, James has written several books on investing. The Kirk Report has just run a long interview with James:

“The only three things that are important are discipline, persistence, and psychology. Without those three things there isn’t a strategy in the world that will work for you. With those three things, just about any strategy will work.(…)No human or strategy can consistently beat the market. The best traders I know are some of the most humble guys out there and have no arrogance on their market opinions at all. They are able to switch opinions and strategies very quickly. I would say that over the years any arrogance I had about any strategy has probably disappeared and now I’m appreciative of just about any strategy out there as long as it comes with persistence, discipline, and positive psychology.”

Very  wise words, indeed.

 
 

US $2,626,311.00

Tuesday, June 15th, 2010

An anonymous person bid a record $2.6 million to have lunch with Warren Buffett, the billionaire investor who runs Berkshire Hathaway (BRKA). That is up from last year’s $1.7 million and the previous high water mark of $2.1 million, set in 2008.

I am not sure if this investment will bring a large enough return as Warren Buffett never hands out any stock market tipps. But the steaks should be excellent at Smith & Wollensky in Manhattan, where Buffett will host the bidder and seven of his friends. The proceeds of the auction go to the Glide foundation, a charity in San Francisco.

 

Why Warren Did It

Friday, November 6th, 2009

There has been loads of speculation why Warren Buffett has acquired the rail operator Burlington Northern (including to make a play on coal or to make it easier for his successor to run Berkshire Hathaway).

Yet in my opinion, the best analysis is that Burlington Northern is just undervalued - and at the end of the day will be worth a lot more than its stock market price reflects. Just like the old saying goes: Price is what you pay, value is what you get.

 

Is Buy & Hold Dead?

Tuesday, October 6th, 2009

Looking at the last 10 years the stock market has not made a lot of progress - despite big swings up and down. In conclusion “buy-and-hold” strategies are very much out of fashion right now and many wealth advisers recommend active market timing strategies (buy low - sell high, trade a lot) . But according to Wells Capital we might just enter a new period when a buy and hold strategy could become very attractive again (see page 12 of the linked document). It is striking how people have alsways felt positive about market-timing-strategies when it really made sense to buy and hold equities.

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USD 148,035.49

Wednesday, September 23rd, 2009

That is the amount a 22 year old college graduate in the US will have to pay over his lifespan for the 2008/09 government bank bailout. The calculation seems quite reasonable, the results are very unpleasant. From an economic point of view it’s much better to be old these days…

 

UBS Settlement: What It Really Means

Wednesday, August 19th, 2009

Read our comment on the disclosure of  details of the UBS settlement here.

 

Links for Pessimists, Optimists and Realists

Monday, August 17th, 2009

For Pessimists: Royal Bank of Scotland’s super-bear Bob Janjuah predicts new stock market lows in the coming fall. I am just wondering why these bankers with the cristal balls still have to work for a salary in a bank instead of making tons of money on their own predictions?

For Optimists: The Economist analyzes the astonishing rebound of the Asian economies and what it means for the developed countries.

For Realists: The Atlantic has a long piece on Warren Buffett and value investing: “What would Warren do?” Great introduction and outlook to the stock market for longterm investors.

 
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