I’m a long-time Berkshire Hathaway shareholder. Some clients own positions as well. I’ve traveled to Omaha three times for Berkshire’s annual meeting. Berkshire’s shareholder letter was released this past Saturday. While there were some good points, I admit that this year’s version was a little disappointing. Shorter than usual and not as quotable. The first story shared this week links to Berkshire’s annual letter. If you have time, please share your take by dropping me an email.
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Here are the links to this week’s articles as well as a brief description of each:
1. Berkshire Hathaway Annual Letter[i]. Each year on a Saturday morning in late February, many investors wake up early to read Berkshire Hathaway’s annual shareholder letter. In this year's letter, Warren Buffett shared his thoughts on the company’s results and offered a few investing pearls of wisdom. The letter was somewhat shorter than usual. In my view, the tone was also more somber. I appreciated Buffett’s discussion about corporate boards of directors. He talked about how they are ill-qualified to oversee companies. He also noted that their incentives can keep them from challenging executives. My favorite quotes from this year’s letter follow:
· 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.
· Nevertheless, many of these good souls (board members) are people whom I would never have chosen to handle money or business matters. It simply was not their game.
2. I Don’t Know. Admitting you don’t know something can be hard. When asked a question, we want to answer. Answering with “I don’t know” or “I’m not sure” can be viewed as being vague or unhelpful. When I covered oil and gas stocks as an analyst, I frequently appeared on networks such as CNBC and Bloomberg. After I realized that saying “I don’t know” was better than making up an answer, I became more relaxed. I also treated the experience as an opportunity. I would research the subject and learn something new. That way I would have an answer if the question came up again.
3. 5 Common Blind Spots on Social Security. It’s not easy to know all the ins and outs of Social Security. Only one of 300 people taking a five-question survey answered all the questions correctly. Not knowing the correct answers can cost you thousands of dollars a year in income. The first question: Claiming at which age maximizes your monthly Social Security benefit? Only 42% of quiz takers knew the correct answer.
4. Talk Less Listen More. Here’s How. Listening is an important skill. Listening to others can make them more willing to listen to you. To be a good listener, you should talk less. When someone else is talking try not to think about what you’ll say next or jump in and offer your opinion. Instead, try asking good questions. This article provides a great anecdote. It shows how turning your question into an invitation instead of asking a leading question can help.
5. Should You Pay off Your Mortgage Early With Rates so Low? The average current 30-year fixed-rate mortgage is just under 3.5%. For 15 years, it’s around 3%. I often get asked which makes more sense: paying extra principal when you pay your mortgage or investing the excess instead. The article shares some of the factors to consider when considering your options.
[i]Shares of Berkshire Hathaway are currently held in some client accounts.
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