Wednesday Reading List – Warren Buffett Edition
Stuff worth sharing from the past week
But first, the markets have been volatile this week.
Worried about your portfolio, please take the time to watch this video or read the transcript – Volatility is Here to Stay. Here’s What to Do.
Here’s the best article I’ve read about the Coronavirus from a health standpoint. Please check it out and this piece for the impact on your portfolio.
The G.O.A.T. returns. This week marked the release of Warren Buffett’s annual letter to Berkshire Hathaway shareholders (link below). Buffett has written these letters for decades and they are a master class in business, investing, financial planning, and so much more. I strongly encourage anyone interested in this blog’s key theme – taking your personal finances to the next level – to learn more about Buffett and from him.
For those unfamiliar with the big guy, here are a few different ways to get started…
Videos
Two options. HBO did a nice job with the 2017 documentary on the left. It’s available to HBO subscribers and for rent from various outlets, including Amazon Prime and iTunes. The BBC documentary on the right is free on YouTube.
Books
There are numerous books about Buffett and every aspect of his investment career. The two best in my humble opinion are:
Buffett: The Making of an American Capitalist by Roger Lowenstein
The Snowball: Warren Buffett and the Business of Life by Alice Schroeder
Articles
How did Warren Buffett get started in business? by Brent Radcliffe
Valuation: How Warren Buffett built Berkshire Hathaway—and what might happen when he leaves by Adam Seessel
And with that preamble out of the way, let’s get to the 2020 letter!
Berkshire Hathaway 2020 Shareholder letter by Warren Buffett (aka the G.O.A.T.)
“Forecasting interest rates has never been our game, and Charlie and I have no idea what rates will average over the next year, or ten or thirty years. Our perhaps jaundiced view is that the pundits who opine on these subjects reveal, by that very behavior, far more about themselves than they reveal about the future. What we can say is that if something close to current rates should prevail over the coming decades and if corporate tax rates also remain near the low level businesses now enjoy, it is almost certain that equities will over time perform far better than long-term, fixed-rate debt instruments. That rosy prediction comes with a warning: Anything can happen to stock prices tomorrow. Occasionally, there will be major drops in the market, perhaps of 50% magnitude or even greater. But the combination of The American Tailwind, about which I wrote last year, and the compounding wonders described by Mr. Smith, will make equities the much better long-term choice for the individual who does not use borrowed money and who can control his or her emotions. Others? Beware!”
Previous year’s letters are available through this link.
You Can Now Make IRA Contributions at Any Age. But Should You? by Christine Benz
The SECURE Act now allows Traditional IRA contributions past the age of 70.5. This article highlights some relevant factors to consider before taking advantage of the new rule.
The Passive Aggressive Agg, Revisited by Peter Chiappinelli
Okay, this one is a bit longer than usual and more technical, but the article makes important points for bond investors:
Indexing is extremely popular these days, and not only with stock market investors.
Bond indexing is not the same as stock indexing and has different risks. Most bond indexes are market cap weighted, which results in borrowers with a lot more debt having a larger weight in the index than those with less debt. (More here).
The most popular U.S. Bond index (the Agg referenced in the title) has a lot of lower quality bonds in it late in the economic cycle and owns long-term bonds that aren’t paying you enough to take the risk of owning them.
Read this and review your bond portfolio if you manage your money yourself or have a discussion with your advisor. To learn more about how to invest with us click here.
Jayson Tatum Is Everything the Celtics Need Him to Be by Rob Mahoney
For Boston Advisor readers who are also Boston Celtics fans a good update on Tatum’s surge this year.
Book Recommendation
And a Bottle of Rum, Revised and Updated: A History of the New World in Ten Cocktails by Wayne Curtis
I absolutely loved this history of rum and the Americas wrapped into one great book.