Buffett Erred In Buying IBM, Should Have Bought Xerox Or HP (SeekingAlpha)
Legendary value investor Warren Buffett may be hot about IBM (IBM), but in my view, the business service provider is nothing more than a stable premium bank account. It serves the point of storing cash and has attractively grown the premium. Yet, like most low-beta (ie. low risk) stocks, the upside is fairly low. By contrast, Xerox (XRX) and Hewlett-Packard (HPQ), which are respectively known for printing and computer hardware, provide business process outsourcing (ie. BPO) and are significantly undervalued. Unlike IBM, they lack the brand name that they once had – admittedly due to operational challenges and poor managerial decisions – and have become significantly discounted as a result.
Warren Buffett lauds work of BofA’s Brian Moynihan (BizJournals)
Warren Buffett says Bank of America CEO Brian Moynihan is making the right moves to address the bank’s problems. But he also makes it clear that his heart lies with Wells Fargo, where his Berkshire Hathaway company is the largest shareholder with more than 400 million shares. “Brian has been doing exactly the right things in terms of correcting problems, exactly what I would be doing,” Buffett said in an appearance on Bloomberg Television. “He’s done a terrific job. He has gotten rid of one thing after another that was a problem. He’s getting it back to basic banking.”
How Safe Are Your Muni Bonds? Not Very, Warns Warren Buffett (DailyFinance)
Does the prospect of earning 0.1% on a bank savings account leave you … unenthused? Do the 0.2% interest rates that the U.S. government is paying on two-year Treasuries stick in your craw? Maybe you’re thinking it’s smarter to buy a nice, safe 10-year municipal bond, paying 1.8%, and tax-free to boot? Think again. A couple of years ago, when testifying in Washington, D.C., about the state of the U.S. economy, billionaire super-investor Warren Buffett warned Congress of a looming “terrible problem” with U.S. municipal bonds
Buffett’s Berkshire Seen As Best Housing Pick: Chart Of The Day (Bloomberg)
Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) is the best investment for anyone seeking to benefit from a housing-market rebound, according to Joshua Brown, a vice president at Fusion Analytics Research Partners LLC. The CHART OF THE DAY tracks Berkshire’s Class B stock, which Brown owns for clients of his New York-based firm. He cited the holding in a posting on his Reformed Broker website yesterday, when the Commerce Department reported that new U.S. homes were started at the fastest pace in about four years.
Be Like Warren Buffett: Sell Put Options (Forbes)
How would you like to go into the insurance business, collecting premiums for insuring people against catastrophes? The product in question is crash insurance, which pays out if stocks take a dive. Your potential buyers are worried bulls—people who want to be in the market but don’t want all the risk that goes with it. You don’t need a license for this underwriting work, just some loose cash and a steady nerve. One product you could sell: a put option on the SPDR S&P 500 fund, exercisable until December 2014 at a strike price of $125. The buyer of the option obtains the right to sell you a share for $125.
What JP Morgan’s Whale Trade, Warren Buffett and Rube Goldberg Tell Us About Risk (Forbes)
How is it possible for JP Morgan (NYSE:JPM), the bank with the best reputation on the Street for having a handle on risk control, to still be guessing about how much damage was done by the over-exuberant trading by the “London Whale”? First it was $2 billion. Then it was $5 billion. No, hold on, make that seven. Then, “can we get back to you on that?” The answer is that some, indeed much of what is traded on modern markets is so complicated, that the traders themselves don’t really understand what is going on. When you buy a camel at a camel market, a quick check of the dental configuration and maybe a few bits of palpating teeth or what ever is done in a camel’s annual physical exam tells you what you need to know.
Buffett’s Geico Resumes Coverage Of Classic, Vintage Autos (Bloomberg)
Geico, the third-largest U.S. auto insurer, said it is returning to the market of covering classic and vintage vehicles. “The collector car product ensures all Geico policyholders are covered regardless of their make and model and gives our customers another option to keep all of their business under the Geico umbrella,” John Zinno, vice president of the auto insurer, which is owned by Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), said in a statement today.
Investment Advice from Warren Buffett (InAudit)
Since an early age, Warren Buffet has been involved in finance in its various forms and has been established as a foremost advisor with a proven success philosophy. During the course of time, this remarkable man has offered much advice and financial learning, relating to tips for investing. The foundation of his philosophy has been that cash can open many doors to opportunities. To prove this, he has always retained immediately available cash, for unprecedented losses, or quickly seized acquisitions or investment opportunities. This could be related to guidance from his grandfather, contained in a letter to him in 1939.