InvestorsFriend.com Newsletter March 8, 2003
Warren Buffett
Oh happy day, today is the day that Warren Buffett released his annual letter to the shareholders. Warren is reportedly the second richest person in the world (after Bill Gates) and he made essentially all of his money by investing in stocks and bonds. When Warren speaks, I listen!
Some key points in this years letter:
To be a winner work with winners (in explaining his choice of winning managers for his subsidiary companies). Good advice, related to this I would add, to be a winner, copy shamelessly from winners. That’s why I am eager to copy from Warren.
This year Warren opines that almost all stocks are still over-valued or at least not bargains. He warns about derivatives as financial time bombs. He asserts that many CEOs are over-paid and that most Board members are not doing their jobs in looking after shareholder interests.
Read the whole letter at http://www.berkshirehathaway.com/letters/2002pdf.pdf
Read prior year’s letters at http://www.berkshirehathaway.com/letters/letters.html
These should be required reading for every CEO, executive and board member. If you have a chance, send a copy of these links to them. (Just cut and paste into an email).
Education
I just posted a new article that reviews the concept of what stock investing is all about and how growth in EPS and dividends are the tail winds that propel stock values upward while your required rate of return is a head wind or dead weight that drags down the value that you should be willing to pay for any stock. Most investors and (I suspect) most advisors do not really understand this basic math. Even if you do, you can never review the basics too many times.
What To Invest In Now?
Most of my stock research is for sale only on a subscription basis.
However, I have posted a few more free reports to the home page of the site including Canadian Medical Laboratories which is worth considering.
One new site that I came across offers a lot of information on Income Trusts. I don’t necessarily agree with everything they say but I think that Income Trusts in general are well worth looking at. They posted a bit of my work to their site. Here is a link to their site and you can sign up for their free newsletter.
http://www.investingforincome.com/
Canadian Dollar
The rise in the Canadian dollar will hurt exporters. Be cautious of companies that export most of their production. All else being equal, the rise in the dollar will lower their earnings or their growth in earnings.
Market Valuation
My calculations indicate that the market is not cheap. Given the current uncertainty, I see little reason for near-term optimism. Those with cash should be cautious and not be in too big a hurry to jump into the market.
Having said that, I still believe that individual bargain priced stocks exist.
End