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Why You Shouldn't Try to Invest Like Warren Buffett

By , Chief Investment Strategist, Money Map Report -

S&P 500 ETF

Many "experts" say that they can help you invest like the legendary Warren Buffett.

Most, unfortunately, have no clue how he actually does it.

Even those few who do understand his deep-value investing style are holding something back from you. They'll tell you how you can invest like Warren Buffett while omitting a key detail:

You shouldn't try to.

I know that's heresy in an era when the Oracle of Omaha is rightfully lauded as one of the world's greatest, but simply mirroring what he does will not get you where you want to go. Chances are, it won't produce the returns he gets either.

Here are three reasons you shouldn't try to invest like Warren Buffett...

Invest Like Warren Buffett: Check Out His Latest Buying Target

By , Contributing Writer, Money Morning -

warren buffett

Legendary investor Warren Buffett has been busy buying stocks on the market dips - and he's also placed a big bet on one specific industry...

Amid Wednesday's stock market sell-off, which left the Dow Jones Industrial Average, the S&P 500, and the Nasdaq down 1.4%, 1.3%, and 1.59% respectively on heavy volume (the fifth heaviest of any session this year), the Oracle of Omaha went shopping.

Speaking on CNBC Thursday morning, the billionaire investor declined to share what stocks he bought. But, he did say they are "names you'd recognize."

But here’s one industry we know he’s after: auto dealers…

Warren Buffett on Stocks, QE3 and the Deciding Factor in Election 2012

By , Money Morning -

Legendary investor Warren Buffett appeared on CNBC's Squawk Box Wednesday morning to answer the biggest questions regarding the global economy, stocks, Election 2012, and more.

The CEO of Berkshire Hathaway (NYSE: BRK.A, BRK.B) remains confident that the U.S. is in better shape than other regions and he still believes the stock market is the best place for your money.

But with so much global uncertainty still swirling around, Buffett isn't ready to go on a buying spree.

Asked what investors should do, here's what Buffett had to say.



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Warren Buffett's Berkshire Hathaway Holdings Show Major Selling

By , Money Morning -

For those who want to model their investments after the famed Berkshire Hathaway holdings, this is your week.

Berkshire CEO Warren Buffett along with other iconic investors such as George Soros this week revealed their second-quarter stock moves - and you may be a little more than surprised to see what they've been up to.

The two billionaire investors disclosed their most recent investments in 13F filings, which are released by the U.S. Securities and Exchange Commission 45 days after the close of a quarter.

While Buffett has stepped back a bit from the business as he anticipates retirement, the Berkshire Hathaway holdings show he's still the driving force behind the firm's investing success.

"Buffett continues to hold sway over a meaningful amount of the equity portfolio--something we don't anticipate changing too significantly in the near to medium term," wrote Morningstar analyst Greggory Warren.



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Warren Buffett Stocks: Where the Oracle of Omaha Puts his Money

By , Contributing Writer, Money Morning -

Berkshire Hathaway (NYSE: BRK.A, BRK.B) has been on a buying spree, adding a plethora of positions to its storied portfolio of "Warren Buffett stocks."

Last Wednesday the conglomerate released its stock holdings. Mutual funds and retail investors closely watch the picks to dissect the selections for hints about the company's tactics. Other simply want to mimic Buffett's moves.

This quarter Berkshire disclosed new stakes in General Motors (NYSE: GM) and Viacom (Nasdaq: VIAB), larger positions in Wells Fargo (NYSE: WFC) and Wal-Mart Stores (NYSE: WMT), and a small increased position in International Business Machines (NYSE: IBM).

Declining stakes were noted in Kraft Foods (NYSE: KFT) and Procter & Gamble (NYSE: PG).

The Berkshire portfolio ballooned to $89.1 billion on March 31 from $77 billion at the end of 2011. The firm is the largest shareholder in Coca-Cola (NYSE: KO), Wells Fargo and American Express (NYSE: AXP).

The additions come as Buffett and Berkshire Vice Chairman Charlie Munger have tasked former hedge fund managers Todd Combs and Ted Weschler with more investing duties. The two were brought into Berkshire to help oversee investments, as Buffett, Berkshire's CEO and chairman, transitions the company for his ultimate departure.

The 81-year-old sage acknowledged that he makes Berkshire's larger bets, while his team of stock pickers is responsible for smaller wagers.

In his widely read shareholder letter in February, Buffett penned, "When our quarterly filings report relatively small holdings, these are not likely to be buys I made but rather holdings denoting purchases by Todd or Ted. They have the brains, judgments and character" to do the job.

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Warren Buffett Stocks: The Oracle of Omaha Sees Something in Avon

By , Contributing Writer, Money Morning -

Just one month after Coty Inc. got the big kiss-off from Avon Products (NYSE: AVP) following a $10 billion offer for the company, Coty called again - and name-dropped in a gussied up proposal.

On Thursday, privately held Coty came courting Avon once more with a beautified bid of $10.7 billion and the backing of none other than iconic investment guru Warren Buffett.

In a letter to Avon's board, Coty listed Buffett's Berkshire Hathaway (NYSE: BRK.A, BRK.B) as a new equity financing provider, along with German conglomerate Joh A. Benckiser and other anonymous clients of BDT Capital Partners.

Buffett and other financiers helped push up Coty's newest offer from $23.25 a share to $24.75 a share, a 36% premium to Avon's share price before the original offer was publicly disclosed.

Coty has made it quite clear how much it wants Avon, and adding Buffett to sweeten the deal could be what finally works.

"I don't think there's any better way to get Avon's attention than to say, "I've got the smartest investor in the world, with the deepest pockets in the world behind me, listen up,'" Jeff Matthews, author of "Secrets in Plain Sight: Business & Investing Secrets of Warren Buffett," told Bloomberg News.

Buffett's Rare Move

The Buffett move is a rare change for the deal maker who customarily shies away from hostile bids, and who is usually an outright buyer instead of financier.

But Buffett was won over by BDT's founder, Byron D. Trott, Berkshire's favorite banker.

"He understands Berkshire far better than any investment banker with whom we have talked and - it hurts me to say this - earns his fee," Mr. Buffett wrote in his 2003 letter to shareholders.

Buffett's previous financing ventures include helping Mars Inc.'s $23 billion takeover of the Wm. Wrigley Jr. Company in 2008, and providing about $3 billion in equity financing to Dow Chemical Co.'s (NYSE: DOW) $15.4 billion takeover of fellow chemical maker Rohm & Haas.

The Coty letter said the new deal would "provide compelling value to Avon's shareholders" compared with Avon's other option, "a difficult and uncertain multi-year turnaround on a stand-alone basis."

"Given the challenges facing your business, we believe the premium is even higher when considering your potential stock price in the absence of a possible transaction," Coty chairman Bart Becht wrote to Avon.

Avon appeared not to be threatened, and said it would consider the letter in due course.

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Berkshire’s Annual Meeting: Warren Buffett Talks Stocks and Successors

By , Contributing Writer, Money Morning -

Billionaire investor Warren Buffett held court this weekend at Berkshire's annual meeting, fielding dozens of pressing questions about the company, investing strategies, and a new CEO.

Some 40,000 gathered to hear what the leader of the storied Berkshire Hathaway (NYSE: BRK A, BRK B) had to say about the state of the company and its fate following Buffett's recent diagnosis with prostate cancer. The Oracle of Omaha triggers such an enthusiastic investing response the event ends up more like a festival than a shareholders' meeting.

Buffett dismissed the health news as a mere non-event, barely touching on the subject.

The investing legend instead focused on the money.

Buffett on Berkshire

Berkshire posted first-quarter earnings Friday after the close that doubled compared to the same period a year ago, fueled by gains in its insurance, manufacturing, service and retail businesses.

The company reported earnings of $3.25 billion for first quarter 2012, translating to $1,966 per Class A share, versus $1.51 billon in the first quarter of 2011.

Operating income came in light at $1,615 a share. Analysts surveyed by Thomas Reuters had forecast $1,780.

The company also posted gains from its derivates holdings - investments that Buffett once referred to as "financial weapons of mass destruction."

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Election 2012: The Real Reason President Obama Wants the Buffett Rule

By , Money Morning -

A new report from the White House today argues that making America's richest (those making over $1 million) pay a tax rate of at least 30% is more a basic issue of "tax fairness" than a way to generate lots of new revenue to the debt-saddled U.S. government.

The tax proposal is dubbed the Buffett Rule, named for its main backer, billionaire Warren Buffett, who says it is unfair that he pays a lower effective tax rate than his secretary. The Buffett Rule ensures millionaires and billionaires do not pay lower percentages of their income than middle-class citizens.

U.S. President Barack Obama, on a campaign fund raising trip, spoke in favor of the Buffett Rule yesterday (Tuesday) in Florida. Democrats are now working on a bill that would incorporate the Buffett Rule into the current tax code, with support from the White House.

The proposal is set for a vote next week in the Senate, and the president has made it a principal element of his plan for deficit reduction.

The White House says the Buffett Rule would make it more difficult for the nation's wealthiest to lower their tax bills and would ultimately make the tax code fairer for everyone.

Critics, however, say it is nothing more than a political ploy in the months leading up to the 2012 presidential election.

The Buffett Rule: Key Campaign Tool in Election 2012

The Buffett Rule is a key theme in President Obama's re-election campaign.

Republicans object to the Buffet Rule as a punitive tax hike on rich that will have little impact on the federal deficit. If the GOP succeeds in blocking passage of the Buffett Rule, the president can paint the Republicans as advocates of an unfair tax policy that benefits only the country's most prosperous citizens.

White House officials acknowledged Monday that the controversial Buffett Rule would yield just $47 billion in additional tax revenue over a decade. That amounts to a paltry 0.6% of the $7 trillion in federal deficits projected for that 10-year period.

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Warren Buffett's Takeover Targets: Grab Shares Now...Get Rich When Berkshire Buys

By , Money Morning -

Iconic investor and Chairman and Chief Executive Officer of Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) Warren Buffett announced that his company was eyeing acquisition targets, sending many "follow the guru" investors on a search for the next big takeover.

Berkshire's cash rose to a three-year high of $38.2 billion and Buffett said the firm was on the prowl for new buyouts.

"We will need more good performance from our current businesses and more major acquisitions," wrote Buffett. "We're prepared. Our elephant gun has been reloaded, and my trigger finger is itchy."

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The Stocks Warren Buffett is Buying

By , Money Morning -

Warren Buffett has gotten a lot of headlines recently for his critical assessment of the U.S. tax code.

But don't forget that Buffett became one of the world's wealthiest men through his career as an investor - not a political pundit.

For that reason, Buffett's Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) is one of the most successful and widely followed companies in the world.

In fact, a 2007 study by two university professors entitled "Imitation is the Sincerest Form of Flattery" showed that buying what Buffett buys - even a month after his purchases - is a pathway to superior returns.

"The market ... appears to under-react to the news of a Berkshire stock investment since a hypothetical portfolio that mimics Berkshire's investments created the month after they are publicly disclosed earns positive abnormal returns of 14.26% per year," the study said.

And right now Berkshire is making big moves.



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President Obama’s 2013 Budget: Five Things You Should Know

By , Associate Editor, Money Morning • @DavidGZeiler -

U.S. President Barack Obama's 2013 budget proposal will give Republicans and Democrats plenty to fight about.

The $3.8 trillion budget proposal, submitted to Congress, essentially follows the blueprint President Obama outlined in his State of the Union address.

That means fewer spending cuts and more taxes than Republicans will like.

So if you thought last summer's wrangling over the raising of the debt ceiling was nasty, watch the rhetorical Armageddon when those battles get re-fought in an election year.

President Obama's 2013 budget sets much of the agenda for the stormy election season ahead. These points will help you make sense of the chaos.

What You Should Know About President Obama's 2013 Budget

  1. Congress Sets the Budget: The fact is Congress, not the president, ultimately controls the federal purse strings. While much hoopla will accompany President Obama's 2013 budget, presidential budget proposals often serve more as a political billboard than a framework for how money is collected and spent by the government.

    2. So President Obama's budget will provide talking points for his 2012 re-election campaign and targets for the Republicans who seek to defeat him.

    "Every budget proposal is partly a serious policy document and partly a political statement,"Stan Collender, a former staffer for both the House and Senate Budget Committees, told msnbc.com.

  1. No Budget, No Problem: Not only can Congress reject the president's budget,

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Why Warren Buffett Is Buying - And You Should Be Too

By , Chief Investment Strategist, Money Map Report -

Legendary investor Warren Buffett recently made news with his purchase of International Business Machines Corp. (NYSE: IBM), though I can't say I'm surprised.

Despite criticism that he's buying into a top-heavy market, that IBM is at a premium, and that he's losing his touch, chances are Buffett knows exactly what he's doing.

And guess what, it's exactly what I've been counseling investors to do since this crisis began - bolster defenses by putting money to work in companies that are backed by trillions of dollars in tailwinds, and have solid defensible businesses (Buffett calls these "moats").

According to a Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) filing made Monday but dated Sept. 30, 2011, Buffett also waded into General Dynamics Corp. (NYSE: GD), DirecTV (Nasdaq: DTV), CVS Caremark Corp. (NYSE: CVS), Intel Corp. (Nasdaq: INTC) and Visa Inc. (NYSE: V).

In the third quarter, Buffett funneled $10 billion into Berkshire's IBM stake, which now stands at 5.5%. Of course, Berkshire maintains a $13.5 billion stake in The Coca-Cola Co. (NYSE: KO) that remains the firm's largest.

Buffett Pulls the Trigger

As a long time Buffett watcher, I am somewhat surprised that he picked up Intel and IBM, if only because the Oracle of Omaha has a well-documented aversion to tech.

Still, I can see the logic. Both companies are global giants poised to profit from the whirlwind of growth set to take place thousands of miles from our shores in the decades ahead.

There are technical similarities, too.

For instance, IBM's price has risen more than 29% this year. As a result, at least five analysts have removed their buy recommendations because they believe the stock may have run its course, according to Bloomberg News and YahooFinance . At the moment, less than 50% of the analysts who cover IBM recommend buying the stock.

Back in 1988, it was much the same situation. Coke had more than doubled in size and analysts had much the same reaction when it came to doubts about further growth. Many openly bashed the stock's prospects and completely ignored the global growth potential that today is Coke's mainstay.

Coke is up tenfold since then. Enough said.

Here's what I think Buffett sees:



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Warren Buffett is Taking Berkshire Hathaway Inc. (NYSE: BRK.A , BRK.B ) on the Hunt for Takeover Targets

By , Associate Editor, Money Morning -

Iconic investor and Chairman and Chief Executive Officer of Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) Warren Buffett announced on Feb. 26 in his annual shareholder letter that his company was eyeing acquisition targets in 2011, sending many "follow the guru" investors on a search for the next big takeover.

Berkshire's cash rose to a three-year high of $38.2 billion and Buffett said the firm was on the prowl for new buyouts.

"We will need more good performance from our current businesses and more major acquisitions," wrote Buffett. "We're prepared. Our elephant gun has been reloaded, and my trigger finger is itchy."

Berkshire Hathaway generated almost $1 billion a month in free cashflow last year. It also completed its biggest purchase, spending $26.5 billion for rail company Burlington Northern Santa Fe Corp.

Many analysts view the defense industry and agriculture sectors as the most appealing sectors.

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