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  • Warren Buffett’s Annual Report

    The annual meeting of Berkshire Hathaway is being held this weekend in Omaha (cnn article). Recently the 2004 Berkshire Hathaway Annual Report (by Warren Buffett) was published. The report is excellent reading for anyone interested in investing. Some quotes from the annual report:

    • In one respect, 2004 was a remarkable year for the stock market, a fact buried in the maze of numbers on page 2. If you examine the 35 years since the 1960s ended, you will find that an investor’s return, including dividends, from owning the S&P has averaged 11.2% annually (well above what we expect future returns to be – [bold added]). But if you look for years with returns anywhere close to that 11.2% – say, between 8% and 14% – you will find only one before 2004. – page 3

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  • 10 Stocks for 10 Years

    I decided to look at selecting a portfolio of stocks I would be comfortable putting into an IRA for 10 years. My main criteria was companies with a history of large positive cash flow (that seemed likely to continue that trend).

    The 10 stocks I came up with are (closing price on 22 April 2005 – % of portfolio invested):

    • Templeton Dragon Fund (TDF – 16.40 – 16%) – a closed end mutual fund investing in China, Hong Kong, Taiwan, Singapore… This one doesn’t fit the criteria but does a great job of filling out the portfolio in my opinion.
    • Dell (DELL – 36.43 – 12%)
    • Toyota (TM – 72.42 – 12%)
    • Google (GOOG – 215.81 – 12%)
    • Pfizer (PFE – 27.22 – 8%)
    • Amazon (AMZN – 33.04 – 8%) They are only just starting to generate cash but I like their prospects.
    • Intel (INTC – 23.24 – 8%)
    • Petro China (PTR – 61.68 – 8%) Investing in PTR is based on the potential for China, the prospects for oil over the next 10-20 years and Warren Buffet’s ownership of the stock.
    • Cisco (CSCO – 17.43 – 8%)
    • First Data (FDC – 37.48 – 8%)

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  • Beginning of the End of Housing Bubble?

    re: Beginning of the End of Housing Bubble? – Dan Gilmor blog post

    I doubt we are at the end of the bubble. However, financial bubbles are very difficult to time. My guess is the bubble will continue for over a year for most, if not all locations in the USA. And unless the bubble continues and prices reach levels much higher than they are now, the end of the bubble will not be dramatic decline of prices (say an drop in prices of over 25%) in most locations.

    Manhattan (with historically very volatile prices) and certain other locations will likely have dramatic declines. But overall the real estate market will slow down (fewer sales) greatly and may experience say a 5 year period where prices decline slightly (or increase slightly). Real Estate normally does not behave the same way the stock market does when a bubble breaks, but we will see what actually happens.
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