Happy Friday! There are more good news articles, commentaries, and analyst reports on the Web every week than anyone could read in a month. Here are eight fascinating ones I read this week.
Sage advice
Warren Buffett, whose Berkshire Hathaway Inc. (NYSE:BRK.B) is putting on its annual shareholder meeting in Omaha this weekend, was once asked by a crowd for tips on becoming a better investor. According to The Omaha World Herald:
Buffett thought for a few seconds and then reached for the stack of reports, trade publications and other papers he had brought with him.
“Read 500 pages like this every day,” said Buffett, or words to that effect. “That’s how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.”
And more of it
“I never allow myself to have an opinion on anything that I don’t know the other side’s argument better than they do.” — Charlie Munger
“We all are learning, modifying, or destroying ideas all the time. Rapid destruction of your ideas when the time is right is one of the most valuable qualities you can acquire. You must force yourself to consider arguments on the other side.” — Charlie Munger
Progress
The Wall Street Journal reports on the nation’s budget deficit:
The federal government said Monday it would pay down a small portion of the national debt this quarter for the first time in six years.
The debt reduction, seen as temporary, is a sign that higher tax receipts and spending cuts are improving Washington’s finances. The respite in borrowing will likely give the Obama administration a bit more time before running up against the federal debt ceiling.
The Treasury Department said that it expects to retire a net $35 billion in bonds, notes and bills from April to the end of June. That compares with its estimate from earlier this year that it would rack up an additional $103 billion in marketable debt in the second quarter …
Still, the usual shortfalls will likely return quickly. The Treasury said it expects to borrow a net $223 billion in the July to-September period. And the budget deficit will likely hit $845 billion in the fiscal year ending Sept. 30, down from more than $1 trillion the prior four years, according to the Congressional Budget Office.
Big buybacks
Jonathan Weil of Bloomberg writes on what Apple Inc. (NASDAQ:AAPL) can learn from Buffett about share buybacks:
Berkshire Hathaway Inc. (NYSE:BRK.B), the conglomerate run by Warren Buffett, also used to shun buybacks. Like Apple Inc. (NASDAQ:AAPL), it, too, changed tacks recently. In 2011, Berkshire said it would begin repurchasing shares for as much as a 10 percent premium to its book value, or common shareholder equity. The company’s board raised the limit in December to 20 percent. (Berkshire had paid about $1.4 billion to buy back stock as of the end of last year.)
Unlike Apple Inc. (NASDAQ:AAPL), Berkshire Hathaway Inc. (NYSE:BRK.B) provided well-defined parameters from the outset. The stock currently trades for a 41 percent premium to book, so investors have a clear understanding that Berkshire isn’t a buyer at today’s prices. The company has said it wouldn’t do buybacks if they would reduce Berkshire’s cash to less than $20 billion. It also has said it expects the program to continue indefinitely. There is no timetable.
