Most of what Warren Buffett writes is a must-read for any long term investor. His op-ed piece in the October 17 New York Times is no exception.
The focus of his article is that American companies are cheap and not only is he buying, but if things continue his personal (non-Berkshire) net worth will soon be invested 100% in US equities. It is significant to note that he states that previously he owned nothing but US government bonds in his personal portfolio.
I printed a copy of the article for my library and highlighted several statements, including a restatement of one of my favorite Buffett-isms: "Be fearful when others are greedy, and be greedy when others are fearful."
Some other pearls: In referencing the historic upturn of the stock market well before either public sentiment or the economy - "So if you wait for the robins, spring will be over." On his outlook for the next year - "Let me be clear on one point: I can't predict the short-term movement of the stock market. I haven't the faintest idea as to whether stocks will be higher or lower a month - or a year - from now." On being out of the market right now - "Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value."
This article's ten paragraphs are worthwhile reading to provide balance to the daily see-saw of the recent market.
Tuesday, November 18, 2008
Monday, November 3, 2008
Control the Controllables - consumer driven health care
As I tell the girls on the freshman basketball team I coach, we can only exert influence on a limited number of things - like how we play defense, boxing out for rebounds, running our offense - so it doesn't make sense to spend energy on things we can't control, especially the quality or fairness of the officiating. I call it 'controlling the controllables'.
One of the biggest financial 'controllable' issues in America today is limiting health care costs and providing access to health care for everyone. Socialized health care has been proven throughout the world to be ineffective and would be both a health care and economic disaster if it finds it's way into our country any more than it already has - and it's also the single largest reason that I will not be voting for Obama tomorrow. Not that McCain's solution is the right one, but it's clearly less wrong than expecting more government control to improve a system that's already damaged by excessive bureaucracy and lack of fiscal control.
One very interesting alternative was presented in an article by John Torinus in yesterday's Milwaukee Journal Sentinel. It contrasted the Burger Boat company's consumer-driven plan which limited cost increases to 1.5% over the past four years (as well as a first year savings of 12% which was passed on to employees in the form of raises) to the Milwaukee Public Schools plan which is costing MPS $20,000 per year per active employee.
The article contends that the coverage under the plans is similar but that the 'GetMOR' plan at Burger Boat gives employees a $3000 debit card with which to pay deductibles and expenses (and let's them keep any excess that's not spent in a form of retirement/savings account called a VEBA) while the MPS plan has very low deductibles and co-pays. The difference being that the GetMOR participants get to make economic decisions about their health care and realize benefits if they make better choices, where the MPS participants have no incentive to use the most fiscally efficient choices.
The articles cites a study by an insurance brokerage group which claims that consumer-driven plans can save up to 25% in health care costs. While having an insurance brokerage run an insurance study is hardly impartial, if even some portion of that estimated savings were true this could be a first step in improving both the quality and the cost of our health care system.
One of the biggest financial 'controllable' issues in America today is limiting health care costs and providing access to health care for everyone. Socialized health care has been proven throughout the world to be ineffective and would be both a health care and economic disaster if it finds it's way into our country any more than it already has - and it's also the single largest reason that I will not be voting for Obama tomorrow. Not that McCain's solution is the right one, but it's clearly less wrong than expecting more government control to improve a system that's already damaged by excessive bureaucracy and lack of fiscal control.
One very interesting alternative was presented in an article by John Torinus in yesterday's Milwaukee Journal Sentinel. It contrasted the Burger Boat company's consumer-driven plan which limited cost increases to 1.5% over the past four years (as well as a first year savings of 12% which was passed on to employees in the form of raises) to the Milwaukee Public Schools plan which is costing MPS $20,000 per year per active employee.
The article contends that the coverage under the plans is similar but that the 'GetMOR' plan at Burger Boat gives employees a $3000 debit card with which to pay deductibles and expenses (and let's them keep any excess that's not spent in a form of retirement/savings account called a VEBA) while the MPS plan has very low deductibles and co-pays. The difference being that the GetMOR participants get to make economic decisions about their health care and realize benefits if they make better choices, where the MPS participants have no incentive to use the most fiscally efficient choices.
The articles cites a study by an insurance brokerage group which claims that consumer-driven plans can save up to 25% in health care costs. While having an insurance brokerage run an insurance study is hardly impartial, if even some portion of that estimated savings were true this could be a first step in improving both the quality and the cost of our health care system.
Saturday, November 1, 2008
Think perspective, not chatter
As an addition to my newsletter "Cents & Sensibility" which comes out periodically with holistic topics on life planning rather than focusing on financial matters alone, this marks the beginning of my financial blog which will address various personal financial planning issues in a less formal and more interactive fashion. I hope that you will share your thoughts and help make the whole of the Trinity Financial Planning community greater than the sum of its parts.
I've been fielding calls from various journalists over the past few months asking for commentary about 'what to do now' as the stock market continues its wild ride. It can be difficult to come up with new ways to tell the overriding truth: that people with a thoughtful, prudent plan will achieve success by sticking to the plan and not letting temporary declines - no matter how sudden, severe, and scary - overshadow the permanent advances that are inherent in capital markets.
One of the ways that I analyze current events is not by reading mainstream daily or monthly commentary and trying to decipher the white-noise chatter of 'what happened yesterday' journalism, but by reading books and periodicals looking for perspective to help keep our eyes on the forest, not the trees. An author whose insight I value, Nick Murray, has graciously allowed me to share his article "Of Fires That Burn Out" with our readers. I hope you find his analogy of the current market situation in comparison to the great Yellowstone forest fire helpful.
While the market comeback of this past week certainly helps dampen the raging fire, don't be surprised if we see more flames burning brightly before the year is done. But the rains are indeed coming. Maybe not this week, maybe not this month, maybe not yet this year. But they are coming, just as sure as spring follows winter. Keep those slickers handy.
I've been fielding calls from various journalists over the past few months asking for commentary about 'what to do now' as the stock market continues its wild ride. It can be difficult to come up with new ways to tell the overriding truth: that people with a thoughtful, prudent plan will achieve success by sticking to the plan and not letting temporary declines - no matter how sudden, severe, and scary - overshadow the permanent advances that are inherent in capital markets.
One of the ways that I analyze current events is not by reading mainstream daily or monthly commentary and trying to decipher the white-noise chatter of 'what happened yesterday' journalism, but by reading books and periodicals looking for perspective to help keep our eyes on the forest, not the trees. An author whose insight I value, Nick Murray, has graciously allowed me to share his article "Of Fires That Burn Out" with our readers. I hope you find his analogy of the current market situation in comparison to the great Yellowstone forest fire helpful.
While the market comeback of this past week certainly helps dampen the raging fire, don't be surprised if we see more flames burning brightly before the year is done. But the rains are indeed coming. Maybe not this week, maybe not this month, maybe not yet this year. But they are coming, just as sure as spring follows winter. Keep those slickers handy.
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