‘Pass the Ketchup!’: Why Food Stocks Should Not Be Overlooked (Nasdaq)
If you read The Snowball, the biography of Warren Buffet — and a great read, I might add — his diet provides a remarkably good divining rod for productive investments. In case you don’t know, Warren Buffett is a greater disciple of hamburgers than Wimpy (if you’re too young to know who that is, check out J. Wellington Wimpy on Wikipedia). When Buffett toured China with buddy Bill Gates, he suffered mightily in the hinterlands of that country and beat a path to McDonald’s Corporation (NYSE:MCD) as soon as he got back to Beijing. When Buffett announced he would acquire food company H.J. Heinz Company (NYSE:HNZ) with 3G Capital for $72.50 per share in a sweetheart of a deal on February 14 (wink), it sent food stocks soaring. Remember, Berkshire (NYSE:BRK.A) is not just a financial buyer. It is a strategic one as well. The price of $72.50 was an important data point. It meant the company felt the market missed something. Specifically, that even at a 20% premium, Berkshire could make money forever.
Berkshire Hathaway Inc. (BRK.A): The Bond Bubble Will Explode (InsiderMonkey)
Conservative investors often seek safety by putting their money into U.S. Treasuries. But that move might be the equivalent of financial suicide. Here’s why. The Simple Argument To quote Berkshire Hathaway Inc. (NYSE:BRK.A)’s Warren Buffett, “Investing is forgoing consumption now in order to have the ability to consume more at a later date.” Now, a 1.75% 10 year bond might seem risk-free. Its yield certainly is, and the US Treasury will certainly print a cashable check when your bond comes due — but the government will determine the true value of your principal in the end. Should it decide to inflate its currency, the future consumption power of your future dollars will be far far less than it is now.
Fund manager likely wishes he’d heeded Buffett on gold (AzStarNet)
Investors including hedge-fund manager John Paulson faced losses this week as gold suffered its biggest rout in three decades. Warren Buffett told them there were better places to put their money. The billionaire chairman of Berkshire Hathaway Inc. (NYSE:BRK.A) cautioned against investing in the metal in February 2012, when an ounce sold for more than $1,700, because it’s not productive like a farm or a company. Gold fell 14 percent to $1,348.21 in the two trading days through April 15, the biggest decline since 1983, and wiped out almost $1 billion in Paulson’s wealth. “What motivates most gold purchasers is their belief that the ranks of the fearful will grow,” Buffett wrote last year in a letter to shareholders. “As ‘bandwagon’ investors join any party, they create their own truth – for a while.”
