Google Inc (NASDAQ:GOOG) is certainly one of the more active tech companies around. Between all their legal battles (over patents, anti-trust and privacy and security issues), introduction of new devices, new Android operating systems and all the latest experiments (Google Glass, Project Loon, among others), CEO Larry Page and co-founder Sergey Brin have certainly found ways and opportunities to keep Google in the news as often as possible – and keep its influence in people’s lives. And the headlines don’t let up this week, as we have a trio of items that may impact some of you investors.
Google Inc (GOOG) Brings The Hill to The View
One of the ways that Google Inc (NASDAQ:GOOG) is active every day is in the area of lobbying efforts, and a recent junket certainly qualifies in this area. Byron Tau, with help from Andrea Drusch and Anna Palmer, wrote on Politico about Google executives hosting the chiefs of staff for the California Congressional delegation at the main Google campus in Mountain View. The goal of the junket, which was approved by the House Ethics Committee? Apparently to introduce the congressional delegation to the impact of Google on the statewide economy. Google spent nearly $900 per representative, according to house filings.
Google NOW Powers Up Its Encryption … Too Late?
So it only took for the leak of NSA documents before Google Inc (NASDAQ:GOOG) reportedly figures out that it needs to strengthen ts encryption. Which, of course, we find interesting, as Google maintained in a court case its right to read e-mails, and in fact saying that Gmail users should “expect” that their e-mails will be scanned and read.
Sounds like a NIMBY thing, doesn’t it? As Saroj Kar reports on SiliconAngle that Google has been working on a initiative designed to enhance its encryption models. While Google Inc (NASDAQ:GOOG) is admitting that no encryption is hack-proof, it is maintaining that this new model will make things more difficult for hackers or government agencies to conduct any digital surveillance.
New Moto X Ads – Google Claims Other Phone Users are ‘Lazy’
In terms of the smartphone wars, Google Inc (NASDAQ:GOOG) was putting a lot of stock into its latest Android-based entry, the Moto X, the debut of Motorola Mobility since Google bought it 18 months ago. However, as the phone came out, while there has been positive feedback with some of the features of the phone, the device is not hitting a stride in the market – which is noteworthy, as Apple Inc. (NASDAQ:AAPL) is due to unveil its latest iPhone editions this week.
In an effort to kick up support for the Moto X, Google Inc (NASDAQ:GOOG) has been sending out a series of advertisements highlighting the many sensors and touchless controls possessed by the phone, and some of the ads have started to go viral. Kelly Hodgkins over at IntoMobile wrote about three recent ads that all have the same message – that those who do not use the Moto X smartphone are lazy,” apparently giving the argument that “lazy” smartphone users should line up to use the Moto X.
First of all, would you appreciate being called “lazy”? And would that encourage you to buy a smartphone that would be “conducive” to your “laziness”? OK, we know that these ads are meant to be funny and satirical, but still…
What do you think about these news items if you were an investor in Google Inc (NASDAQ:GOOG) like fund managers Philippe Laffont or Stephen Mandel? Will you jump in, stay on the sidelines, or wait and see over the next few months?
Warren Buffett never mentions this but he is one of the first hedge fund managers who unlocked the secrets of successful stock market investing. He launched his hedge fund in 1956 with $105,100 in seed capital. Back then they weren’t called hedge funds, they were called “partnerships”. Warren Buffett took 25% of all returns in excess of 6 percent.
For example S&P 500 Index returned 43.4% in 1958. If Warren Buffett’s hedge fund didn’t generate any outperformance (i.e. secretly invested like a closet index fund), Warren Buffett would have pocketed a quarter of the 37.4% excess return. That would have been 9.35% in hedge fund “fees”.
Actually Warren Buffett failed to beat the S&P 500 Index in 1958, returned only 40.9% and pocketed 8.7 percentage of it as “fees”. His investors didn’t mind that he underperformed the market in 1958 because he beat the market by a large margin in 1957. That year Buffett’s hedge fund returned 10.4% and Buffett took only 1.1 percentage points of that as “fees”. S&P 500 Index lost 10.8% in 1957, so Buffett’s investors actually thrilled to beat the market by 20.1 percentage points in 1957.
Between 1957 and 1966 Warren Buffett’s hedge fund returned 23.5% annually after deducting Warren Buffett’s 5.5 percentage point annual fees. S&P 500 Index generated an average annual compounded return of only 9.2% during the same 10-year period. An investor who invested $10,000 in Warren Buffett’s hedge fund at the beginning of 1957 saw his capital turn into $103,000 before fees and $64,100 after fees (this means Warren Buffett made more than $36,000 in fees from this investor).
As you can guess, Warren Buffett’s #1 wealth building strategy is to generate high returns in the 20% to 30% range.
We see several investors trying to strike it rich in options market by risking their entire savings. You can get rich by returning 20% per year and compounding that for several years. Warren Buffett has been investing and compounding for at least 65 years.
So, how did Warren Buffett manage to generate high returns and beat the market?
In a free sample issue of our monthly newsletter we analyzed Warren Buffett’s stock picks covering the 1999-2017 period and identified the best performing stocks in Warren Buffett’s portfolio. This is basically a recipe to generate better returns than Warren Buffett is achieving himself.
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