73 Reds

I read somewhere that a larger percentage of people have car loans than home loans. In Florida most real estate purchases require no financing. Just a further illustration of the haves vs. the have nots.

Also don't need insurance to buy a home or see a doctor. Not opining on the wisdom of that but just saying. Evidently the guy had been threatened recently.

@Viking, not to belabor the point but ANY new money flowing into laggards is a plus so IMO the weakest stocks in an index are the greatest beneficiaries of the strongest (highest quality) stocks. Conceptually not so different than a weak position player on a championship sports team - every player gets the same ring and the position player derives the most benefit from being on the team.

Seems to me that being in an index would help the laggard (worst) stocks of the index the most from forced buying of shares by the index as it [the index] appreciates in price.

A more productive way to frame this issue is how to best spend your time to accumulate the most wealth. For some, a W-2 income from a job they like makes the most sense. For others, starting a business is optimal. For me, businesses, real estate and long term equity holdings provided the answer. My guess is most people would be miserable pouring over financial statements and screens day in and day out.

Its a widely hated industry so valuations will always remain on the low side but that, together with a recession-proof business provides a lot of downside protection.

No one is entering this market so chances are very good that PM, MO, BTI etc.. will be very good performers for a long time to come - particularly when looking for bond substitutes in low interest rate environments. Monopolistic tendencies for companies that sell products that aren't going away for decades or more makes for a perfect set-it-and-forget-it investment.

+1. @Viking, if you ever wanted a job with your favorite company just send Prem a copy of your last few years' worth of analysis. He'd be crazy not to hire you.

+1

Like money management?

I take issue with one part of Warren's letter, that you must share you Will with all *mature children* and get their input. Wills can be changed as often, and as necessary as you want during your lifetime. You never know when you have prepared your final Last Will and Testament. Your situation changes, so does that of your intended beneficiaries. There is also the question of what is meant by a "mature child". Buffett's children were undoubtedly fully grown and financially independent when his last Will was drawn. Not everyone is so lucky. Most of us know mature 20 year olds and very immature 60 somethings. If like many, you have children with varying levels of maturity, discussing your Will with any, but not all of of them can be a problem. Finally, regardless of maturity, sharing your post-death intentions with children/beneficiaries ahead of time can create a legally unenforceable expectation by such beneficiaries (unenforceable should you change your mind and your Will). You would neither want your children to live their lives with an expectation of an inheritance nor would you want to have to explain to them why you yourself changed your mind. The one area where it is absolutely imperative to discuss your wishes in advance is in choosing a fiduciary (personal representative) to ensure that whoever you choose agrees, and is able to serve. Even more important is when designating surrogates/powers of attorney for health or financial matters. You should always obtain their consent and willingness to serve before designating anyone in such an important role.

I think it is all relative and his kids were not poor to begin with. Chances are the $10 million would not affect their lives in any way.

Thanks for posting. There's a lot there under the surface.

What would you have Israel do? If terrorist organizations were murdering and raping your wife and kids, stealing you blind, operating lawlessly in your neighborhood, and openly calling for your destruction, just how would you respond? For anyone who doesn't understand history, when push comes to shove, Israel could care less what anyone thinks and will fight to the death to preserve itself and its values even though fighting is always a last resort.

Momentum investing, options, recommendations from newsletters I subscribed to, Value line (the information was good, recommendations not so much), trading for short term gains (sort of like day-trading before the concept was even coined). Buffett's words hit me over the head like a good dose of common sense. I tried to find something to argue or disagree with, but simply could not. And when I came across MO, the lights went on - that's a stock I want to own. Cheap product to make with high profit margins, a near monopoly, an industry endorsed by government with one of the strongest political lobbys ever, great advertising (everywhere!) with cool spokespersons, recession-proof, and very shareholder-friendly management. What could go wrong, LOL?

Yep. For me way back in the day the two stocks were Berkshire and MO. Before discovering these stocks, and even for years after I tried all kinds of different investment strategies. None of them worked and BRK and MO came to make perfect sense to me as ideal investments. Later, MO lost its luster for legal issues and distrust in management but the characteristics I seek in owning such stocks back then remain the same today.

There is no one right way to succeed in investing. The beauty of this board is that many here do well with vastly different, and even opposing viewpoints. A prime example for me is cryptocurrencies., After considerable time reading some of the suggestions posted here by BTC proponents and also reading other materials, my views on Crypto being a greater fools bet has not changed. That said, I can't argue against the enormous success achieved by early BTC buyers who saw something that I am not programmed to see. One common denominator to successful investing is recognizing what does, in fact work for you. Once you find a method, system, or area of interest that consistently produces desirable results, you've essentially hit the investing lottery. The best advice I ever received was to ignore most everything that professional money managers tell you if such advice doesn't jive with what clicks for you. Owning dozens and dozens of stocks, annual rebalancing, selling winners, etc.., are just some of the widely accepted "principles" that serve to put money in the pockets of money managers but don't work for me. There is only one reason to go it alone - the belief that you can do better than money managers and/or near no cost index funds. The fact that so many posters here appear to do better in so many different ways proves the point that it is not what you invest in that matters, but rather your understanding and ability to manage the investments that you own.

@Castanza you and your wife are inspiring examples of what can come from a little sacrifice early on. Reminiscent of some of the subjects of one of the best books I've ever read - The Millionaire Next Door.

Yes, and higher inflation breeds higher interest rates. Having been through a few of these cycles the party will end - quite badly if you are heavily positioned in more speculative investments.

Sure but doesn't the risk have to be identifiable in advance? Otherwise how does an insurance company price its insurance for unidentifiable risks?

I'm of a different view, likely to occur even during Trump's term. I think indices will go much lower. Not sure when - could be months, could be 1, 2 or more years away. Unless and until we figure out a way to reign in govt. spending and begin to bring down debt, there has to be a reckoning sooner or later. There is no political will on either side to do it. We can't grow our way out of debt. Its not debt itself that is the problem, its the amount and never-ending increase of debt that is the issue. Forget about trying to pay it down, who is going to service it and how? The next generation? Many of whom don't even want to leave their homes and go to an office to work? And its not even debt that will trigger the downturn, but some exogenous event or series of events that will cause folks to wake up and realize that paying 25+ times earnings for the average mature public company just makes no inherent sense, along with all the other speculation that works until it doesn't.

@Viking What, if anything does that tell you about 2025 and beyond? FWIW, here's what it tells me: There is a lot of speculation in the public markets. How long it continues is anyone's guess - makes little difference to me though. But one day the masses are going to wake up and come to realize that just like any number of times in the past, prices don't go up indefinitely. Enjoy the ride for now. Companies like Fairfax and Berkshire will be your friend and ally when the sh-t eventually hits the proverbial fan.

And my guess is he learned the importance of a properly crafted insurance contract leaving no ambiguity for an insured event and an exclusion. How can an insurance company properly account for any risk that cannot be contemplated in advance? Answer: It has to be excluded from coverage.

Old news. The ICC is a joke. The US does not even recognize it.

For me the issue of concentration comes down to control. When you have no control over each of your investments, diversification is sensible. OTOH, when you pour your life savings into your own business, diversification makes no sense and in any event is not even feasible.