A Quick Summary of Warren Buffett’s Berkshire Hathaway Annual Meeting

by Fred Fuld III

In case you missed watching Warren Buffett’s Berkshire Hathaway (BRK-A) (BRK-B) Annual Meeting, or if you don’t feel like watching the four and a half hour rerun, it may be easier to see a quick Cliff Notes-like list of important points from the meeting.

Here is a quick summary of the meeting that was held online yesterday, May 2, at 4 pm ET, 1 pm PT.

Buffett started out with a PowerPoint presentation about the history of the United States. He was born during the 1930 depression.

The Depression

Warren Buffett was born August 30, 1930. The day before, the Dow Jones Industrial Average was 240.42, which was up 20% from the 1929 low. On September 1o, 1930, the DJUA reached a high of 245. No one realized that the country was  in a Depression yet. On July 8, 1932, the DJIA dropped to 41.22. In other words, $1,000 became $170 in less than 2 years.

The FDIC

If we had the FDIC 10 years earlier, it would have been a much different experience. It was tne good thing that came out of Depression, as over 4000 banks failed. The FDIC has not cost the American taxpayer a dime. It is paid for by bank assessments.

Getting Back to Even

It was January 4, 1951 before the stock market got back to 240.85, more than 20 years to get back to even.

In 1954, the Dow went from 280 to 400 at the end of the year

The stock market provided a 100 to 1 return from 1954 (the year he graduated from college) to today.

Berkshire Business Segments

In regards to Berkshire’s business segments, insurance profit margins have improved due to a reduced number of accidents. Railroad and utilities revenues are down.

Buybacks

Buybacks are good, “when conditions are right.” “It’s a way of distributing cash to shareholders.”

Occidental Petroleum

Admitted mistake in buying Occidental Petroleum. “It doesn’t work at $20 a barrel.” “Production is going to go down in the next few years.”

Airline Stocks

Buffett announced that Berkshire sold all airlines in the portfolio and they were sold at a loss.

Splitting the A Shares

A question was asked about the possibility of splitting the A shares because, the questioner gave an example of needing $60,000 for his retirement, having to sell one share for $300,000 with a cost basis of $100,000, and having to pay a huge capital gains. Buffett explained that it is not an issue as  A shares can easily be converted to B shares at any time [assuming without tax consequences, but check with your accountant].

Berkshire’s Past Performance

Buffett said that investing in an S&P ETF is the best way to invest for the long term, and doesn’t recommend buying individual stocks or short term trading. However, one questioner asked why Berkshire has been underperforming the SPY for 15, 10, and 5 years, and even year-to-date. Buffett admitted to the underperformance, and said that no one will work harder than himself and his staff to provide the best performance.

Credit Cards

He said to pay off credit cards; don’t invest until you pay them off. It is the best way to earn 18%. You shouldn’t even be paying 12%.

US Debt Defaults

The US will never default on its debt as long as the debt is issued in US dollars, as it can always print more money.

Government Bailouts

None of the Berkshire businesses have received any government bailouts.

There was a lot more but these were some of the major topics.

If you want to see a list of the Berkshire Hathaway stocks, before the sale of the airline stocks, see the article on What Warren Buffett has Been Selling.

Happy investing.

Disclosure: Author didn’t own any of the above at the time the article was written.

What Warren Buffett has been Selling

by Fred Fuld III & Nkem Iregbulem

As the fourth-wealthiest person in the world, Warren Buffett is widely regarded as an investment guru. His investment philosophy is based on the concept of value investing. He is the chairman, CEO, and largest shareholder of Berkshire Hathaway, the world’s 10th largest company by revenue. As of 2018, Buffett is estimated to be worth about $89 billion. He is not only an investor but also a dedicated philanthropist. In fact, he has promised to give 99% of his fortune to charitable causes.

Due to his success, Buffett’s stock purchases and sales are closely followed by many other investors. Buffett’s Berkshire Hathaway (BRKA) (BRKB) recently sold 13 million shares of Delta Air Lines (DAL) and 2.3 million shares of Southwest Airlines (LUV), lightening the exposure to the airline industry.

If you want to see a list of all of Warren Buffett’s Berkshire Hathaway Holdings, click HERE.

Hopefully, one of the richest men in the world can give you some profitable investment ideas.

Disclosure: Author didn’t own any of the above at the time the article was written.

Stocks Going Ex Dividend in May 2020

The following is a short list of some of the many stocks going ex dividend during the next month.

Many traders and investors use the stock trading technique called ‘Buying Dividends,’ also commonly referred to as ‘Dividend Capture.’ This is the strategy of buying stocks before the ex dividend date and selling the stock shortly after the ex date at about the same price, yet still being entitled to the dividend.

TOP DIVIDEND STOCKS

This technique generally works in bull markets and flat or choppy markets, but you need to avoid the strategy during bear markets. In order to be entitled to the dividend, you have to buy the stock before the ex-dividend date, and you can’t sell the stock until after the ex date.

The actual dividend may not be paid for another few weeks. WallStreetNewsNetwork.com has compiled a downloadable and sortable list of the stocks going ex dividend in the near future. The list contains many dividend paying companies, lots with market caps over $500 million, and many with yields over 2%. Here are a few examples showing the stock symbol, the ex-dividend date, the periodic dividend amount.

Intel Corporation (INTC) 5/6/2020 0.33 2.24%
Walmart Inc. (WMT) 5/7/2020 0.54 1.67%
Consolidated Edison Inc (ED) 5/12/2020 0.765 3.70%
Target Corporation (TGT) 5/19/2020 0.66 2.45%
Johnson & Johnson (JNJ) 5/22/2020 1.01 2.61%
Goldman Sachs Group, Inc. (GS) 5/29/2020 1.25 2.82%

The additional ex-dividend stocks can be found HERE . (If you have been to the page before, and the latest link doesn’t show up, you may have to empty your cache.) If you like dividend stocks, you should check out some of the other high yield stock lists HERE . Most of the lists are free.

Dividend definitions:

Declaration date: the day that the company declares that there is going to be an upcoming dividend.

Ex-dividend date: the day on which if you buy the stock, you would not be entitled to that particular dividend; or the first day on which a shareholder can sell the shares and still be entitled to the dividend.

Record date: the day when you must be on the company’s books as a shareholder to receive the dividend. The ex-dividend date is normally set for stocks at two business days before the record date.

Payment date: the day on which the dividend payment is actually made, which can be as long at two months after the ex date.

TOP DIVIDEND STOCKS

Don’t forget to reconfirm the ex-dividend date with the company before implementing this technique.

Disclosure: Author did not own any of the above at the time the article was written, and affiliate links.

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What is a SPAC and Why Should You Care?

by Fred Fuld III

If you haven’t heard the term, SPAC, as an investor, you should at least be aware of what it is. SPAC stands for Special-Purpose Acquisition Company, which is a company created specifically to pool funds in order to finance a merger or acquisition opportunity within a set timeframe, usually two years.

SPACs are sometimes referred to as corporate shells or blank-check companies. They have no operations but go public with the intention of merging with or acquiring a company with the proceeds that were raised from the SPAC’s initial public offering. The SPACs are currently sold in $10 units which includes of one share of common stock and one or more out of the money warrants or a fraction of a warrant. The units, stocks, and warrants usually start trading on either the NYSE or NASDAQ.

Probably the most famous SPAC (which no one remembers the original name of but most remember the new name after the merger) was Social Capital Hedosophia (former symbol: IPOA). This is the company that merged with Richard Branson’s Virgin Galactic (SPCE), the space travel company.

The most recent SPAC transaction hitting the news is the merger of the SPAC called Diamond Eagle Acquisition Corp. (DEAC) with DraftKings (DKNG), one of the world’s largest daily fantasy sports contest and sports betting provider.

Here are a list of SPACs that have announced mergers:

SPAC Symbol Buying Business
8i Enterprises Acquisition Corp. JFK Diginex blockchain
Act II Global Acquisition Corp. ACTT Merisant sugar substitute
Arya Science Acquisition Corp. ARYA Immatics cancer immunotherapies
Diamond Eagle Acquisition Corp. DEAC DraftKings fantasy sports
Far Point Acquisition Corporation FPAC Global Blue airport sales tax refund kiosks
Gordon Pointe Acquisition Corp. GPAQ HOF Village Pro Football Hall of Fame
KBL Merger Co. IV KBLM CannBioRx Life Sciences biotech
Legacy Acquisition Corp. LGC Blue Valor digital marketing
Leisure Acquisition Corp. LACQ Gateway Casinos gambling
Monocle Acquisition Corporation MNCL AerSale Aviation Aftermarket
Mudrick Capital Acquisition Corporation MUDS Hycroft Mining gold & silver
Nebula Acquisition Corp. NEBU Open Lending automotive finance
Proficient Alpha Acquisition Corp. PAAC Lion Financial Group financial services
Pure Acquisition Corp. PACQ HighPeak Energy oil & gas
VectoIQ Acquisition Corp. VTIQ Nikola zero emissions trucks
Wealthbridge Acquisition Limited HHHH Scienjoy China streaming video

Although the SPACs are a way of getting an early investment in currently private companies, they do carry risk.

Happy investing!

Disclosure: Author didn’t own any of the above at the time the article was written.

Books About Investment Scams

Now that you don’t have to commute during the shelter-in-place, you can use some of that freed up time to do a little reading. Here are a few books about investment scams that are both entertaining and educational.

Wolf Books

The Wolf of Wall Street
by Jordan Belfort
This is the autobiographical story about the guy who made hundreds of millions of dollars by pumping and dumping low priced and penny stocks. The book is filled with sex and drugs and every other kind of decadence.  A Martin Scorsese movie starring Leonardo DiCaprio was made from this story. Be forewarned: the chapter that took place in the hospital gave me nightmares for a couple weeks.

Catching the Wolf of Wall Street: More Incredible True Stories of Fortunes, Schemes, Parties, and Prison
by Jordan Belfort
This is the followup to the previous book. What happens when Belfort is arrested, how a case was built against him, and what happens after prison.

Madoff Books

No One Would Listen: A True Financial Thriller
by Harry Markopolos
A New York Times bestseller about how Markopolos uncovered Madoff’s scam.

The Wizard of Lies: Bernie Madoff and the Death of Trust
by Diana B. Henriques
All about how Madoff pulled off the biggest Ponzi scheme in history. Over 130 five star ratings on Amazon.

The End of Normal: A Wife’s Anguish, A Widow’s New Life
by Stephanie Madoff Mack
An inside look at the Madoff family written by the widow of Mark Madoff and the daughter-in-law of Bernard Madoff.Over 200 five star ratings.

Betrayal: The Life and Lies of Bernie Madoff
by Andrew Kirtzman
An in-depth look at Madoff and his victims.

Theranos Books

Bad Blood: Secrets and Lies in a Silicon Valley Startup
by John Carreyrou
Named one of the best books of the year by NPR, The New York Times Book Review, Time, Wall Street Journal, and the Washington Post. An in-depth look at Theranos and Elizabeth Holmes. Over 2,600 five star ratings.

Billion Dollar Facade: The Rise And Fall Of Theranos And Elizabeth Holmes
by Phil C. Senior
Short 140 page summary of the Theranos scam.

Books about Scams

Scam Me If You Can: Simple Strategies to Outsmart Today’s Rip-off Artists
by Frank W. Abagnale
Abagnale was the guy who wrote the book on scamming, Catch Me If You Can, which was made into a major motion picture.

How to Smell a Rat: The Five Signs of Financial Fraud
by Ken Fisher
How investment fraudsters operate and how to avoid them. Written my billionaire money manager and former long time Forbes columnist Ken Fisher.

Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and the World
by Tom Wright & Bradley Hope
Named a Best Book of 2018 by the Financial Times and Fortune, it is about the man who swindles $5 billion with the help of Goldman Sachs.

Happy reading!

 

 

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Why I Won’t Review Your Book

by Fred Fuld III
Every month, I get many emails from authors, publicists, and publishers, asking if I would like to review their book. On some days, I get as many as two or three requests. Back in 2006, when I first started blogging, and received my first review request, I thought “Great, I get a free book.” Now, I’m just overwhelmed and I turn down a huge percentage of the requests.

I have books stacked up all over the place. On my nightstand, I have three piles of books, each stacked up over two feet high. I have books on the floor next to my bed, the coffee table in the family room has three piles of books stacked up, and all the bookshelves are two rows of books deep with books stacked on top of the rows.

So besides lack of space, there are a lot of reasons why I might not review your book.

1. The book has nothing to do with business or investments
I’ve been asked to review all kinds of books, everything from cookbooks to children’s books. They may be great books but not a fit for Wall Street News Network.

2. The book is outside my area of expertise
Occasionally, I get a request to review an investment book that I have little knowledge of, for example commodities trading, which I feel I couldn’t give a fair evaluation due to my lack of familiarity.

3. The book is a blatant sales pitch
Many authors have a business or website that they are involved in, and they mention it in the book. I see no problem with this as I mention my web sites in a couple of my books. However, when a book puts at the end of each and every chapter, “Please call us at our 800 number to set up an appointment to discuss your financial situation,” then that is going way overboard. I actually received a book that did just that, so I didn’t even waste my time to review it. It’s too bad because the content of the book was pretty good.

4. The book is just too basic
I sometimes receive a book about finances and investing that is really simplistic. In other words, they include such recommendations as “Pay off your credit cards at the end of each month,” “Set aside some of your paycheck into an investing program,” etc. There is nothing wrong with this information, but the market for this type of advice is not the same audience that reads this blog.

5. The book is not my cup of tea
Every once in a while, I will read a book that I just don’t like. The book may not necessarily be bad, it’s just not for me, and it could be for one of many reasons. Others may really enjoy it. I just don’t want to write a bad review. As an author of a few books, I know the incredible time and energy that goes into writing a book. So instead of criticizing the book, I just won’t write anything, since I don’t want to deter another reader who may find the book to be just what they are looking for.

6. The book’s trading technique is too simplistic and not backed up with long term research
I received a stock trading book years ago, and it arrived a few months after the 2008 market crash. The book must have been published right around the peak of the the market. The technique could be boiled down to one sentence. Buy a good stock and sell it as soon as you have a slight profit. The rest of the book was filled with extraneous information about the stock market in general, which although somewhat interesting, did not relate to the trading technique. That wasn’t a major issue as many other books do that.
However, although a claim was made that the technique could be used in any market, the author used the results of a personal portfolio going back just two and a half years and ending just before the market crash. Looking at the current ‘holds’ in the portfolio at the end of the ‘study’ and comparing them to current stock prices at the time I finally read the book, it looked like the author would be holding most of those stocks for a long, long time (and it did take years for some to recover). A couple  of the stocks went out of business, wiping out most of the trading profits that the author had made for the last couple of years.
I think that if an author claims that a trading technique can be used in any type of stock market, the research must be done over periods that include bear markets, and definitely longer than two and a half years ending at a market top.

7. I just don’t have the time
At this time, I have many books that I agreed to review, that I still need to get around to. Who knows when I will get through the list. So if I respond that I just don’t have the time to review it at this time, I mean it.

One other thing relating to Advanced Reader Copies.

I receive over 100 books a year for review, and since I don’t have the space to keep all of them, I gift, give away, and use as contest prizes the lightly-read books in conjunction with the blog.

Unfortunately, an Advanced Reader Copy or an Advance Uncorrected Proof is awkward to give away as a gift and really isn’t the real book. Often, they have missing page numbers in the Table of Contents and Index, many typos, and other errors and misinformation. .

Even my library system won’t accept a donation of ARC books.

Therefore, in order to cut down on the number of submissions and to receive a book that can be offered to my readers, I will no longer be accepting books if the review copy designation is printed on the cover or stamped in the book. Any such books will be discarded, unread, and unreviewed.

This policy is similar to other major reviewers such as Midwest Book Review.

Anyway, I’ve written many book reviews during the last few months, and hopefully you will find one of them interesting. And if you’ve written a book, maybe it will meet all my criteria and hopefully I will have time to read it.

Why Were Cruise Lines Even Under Consideration for a Bailout?

Last month, there was a lot of discussion about which American companies were suffering the most, and which ones should receive a bailout. One industry that was mentioned was the cruise line industry. Why?

Royal CaribbeanCruises (RCL) is a Liberian company. Its ships are. registered in the Bahamas and Malta. Oh yeah, and the company doesn’t pay Federal corporate income taxes.

Carnival (CCL) is a Panama company. The company’s ships are registered in the Bahamas and Panama. No Federal income taxes.

Norwegian Cruise Line (NCLH) os a Bermuda company with its ships registered in the Bahamas.

So why were these companies even under consideration for bailout loans? Was the U.S. Government going to bailout every major company around the world? Was the American taxpayer going to bailout Deutsche Bank (DB)? Alibaba (BABA)? Tata Motors (TTM)? Or how about Lloyds Bank (LYG)?

Anyway, the government came to its senses and has decided not to force the American taxpayer to bail out the floating petri dishes.

Disclosure: Author has option positions in RCL and CCL.

My Concerns About the Coronavirus

by Fred Fuld III

Your email account has probably been pelted with COVID-19 letters from every company you have ever done business with, or for that matter, every company you have ever interacted with. They all say the same thing, “extraordinary times,” “crazy times,” “historic challenges,” “our commitment to you,” etc. Plus they all tell you to wash your hands. I think we all get the picture.

However, for the next several months and possibly the next couple years, there will be a new normal. I am concerned about some short term and medium term risks associated with the coronavirus, not just economic risks but societal risks. Here they are:

No Immunity

With everyone sheltering in place, and not interacting with anyone else, individuals won’t be exposing themselves to viruses and bacteria that they usually would under normal circumstances. This would prevent them from building up immunity to infectious agents, making them more susceptible to illness during the flu season this fall. 

Baby Boom

In nine months, there will be a baby boom caused by the quarantining at home. This means that hospitals will be flooded with pregnant women during the December and January time frame, right during the peak of the influenza period. Will there be enough hospital beds? I realize that there can be more births at home and birthing centers but there will always be a need for hospitals to handle the C-section and difficult births.

Relapse

Will there be a relapse for those who  caught the coronavirus? According to a recent article in Newsweek dated April 13, South Korea is seeing a rise in ‘Reactivated’ Coronavirus patients.

Restaurants

How willing will people be to go out to eat at restaurants again? How long will social distancing in restaurants last even after the quarantine is over? Will restaurants reduce their number of tables by 50% and sit people at every other booth, thereby reducing their capacity and revenues?

Bankruptcies

Once one major company declares bankruptcy, such as a retailer or a cruise line, will it create a snowball effect? Will these corporations go bankrupt AFTER they receive the bailout money?

Inflation

The U.S. national debt is now over $24 trillion. The Federal Reserve Board has flooded the economy with trillions of dollars recently. Will the U.S. eventually have runaway inflation like Zimbabwe?

Nosebleed P/E Ratios

Price to earnings ratios are trading at extremely high levels, and infinite levels in some cases. The stock market can still go higher, but with many stocks trading at such inflated prices, not even taking into consideration the reduction in earnings during March and April, the market is due for a downturn.

Beneficiaries

Of course, there will be a few companies and their employees that will benefit from this pandemic. The corporations that provide online shopping, online entertainment, and online meeting and video conferencing will be the big beneficiaries.

Stay healthy everyone.

The Science of the Deal: The DNA of Multifamily & Commercial Real Estate Investing

by Fred Fuld III

If you are a real estate investor, or are considering investing in real estate, you definitely need to read The Science of the Deal by Shravan Parsi. He takes you through his experience starting out buying, renting, and selling single family homes to eventually investing in commercial real estate.

The book starts out describing the five critical keys to success. He then covers the various steps and milestones to become successful in commercial and multifamily real estate.

I found the most interesting and important chapter to be Chapter 5: The Potential of Downsides, which covers what to do in the event of failures and threats.

If you are looking to be a successful real estate investor, I highly recommend  The Science of the Deal.

 

 

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The Forever Transaction: How to Build a Subscription Model So Compelling, Your Customers Will Never Want to Leave

by Fred Fuld III

If you own or run a business, and you aren’t utilizing a subscription model, also known as a membership model, you need to read the book, The Forever Transaction by Robbie Kellman Baxter.

Have you ever ordered an item on Amazon, for example toothpaste, and you are given the option to save 5%, 10%, or even 15% on your purchase if you choose Subscribe & Save? This is an example of the subscription model.

The author goes into detail about how you can put this same model in place at your business for almost any type of product, and even services. She takes you step by step through the entire process from launching, to scaling, to maintaining your customers.

If you want to expand your business and keep your customers over the long term, I recommend that you read The Forever Transaction.

 

 

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