Warren Buffett on Donald Trump in 1991

Fascinating comment by Warren Buffett in a Q&A session with Notre Dame business school students about why Donald Trump’s Taj Mahal filed for Chapter 11 bankruptcy in 1991:

“The big problem with Donald Trump was he never went right. He basically overpaid for properties, but he got people to lend him the money. He was terrific at borrowing money. If you look at his assets, and what he paid for them, and what he borrowed to get them, there was never any real equity there. He owes, perhaps, $3.5 billion now, and, if you had to pick a figure as to the value of the assets, it might be more like $2.5 billion. He’s a billion in the hole, which is a lot better than being $100 in the hole because if you’re $100 in the hole, they come and take the TV set. If you’re a billion in the … Read the rest of this article!

Be Wary of Minimum Volatility Funds

I think it is a very, very dangerous game to make a stock market investment with the intention that it will experience minimum volatility in price. This line of thinking suggests that people aren’t really treating a stock investment as a fractional ownership position in a business but instead treat it as a cash-like number on a household balance sheet that ought to rise and rise at every snapshot in time.

To protect myself from this delusion, I keep a log of the story behind Starbuck’s historically amazing performance and the terms of volatility that needed to be endured in order to achieve those performance results. Since its 1992 IPO, Starbucks has grown its earning by 28.8%. Over the past ten years, the earnings growth at Starbucks has been 19.5%. If it has been tucked somewhere in a diversified portfolio, you would be fortunate to own anything else that has … Read the rest of this article!

Diageo Stock: A Top Five Stock Market Investment

There’s about five companies right now–Boeing, Nike, Berkshire Hathaway, Tiffany, and Diageo–that I imagine will collectively outperform the S&P 500 over the coming ten years and I hope to cover in regular detail this summer provided their valuation remains attractive.

What I like about those stocks is the sheer quality of the holdings–they are top-shelf, old timey, trust-department-officers-in-the-1940s-would-put-widow-assets-in-these-stocks type of investment holdings that will almost assuredly destroy the performance of the hottest social media and Silicon Valley stocks over the next 25 years.

I’ve written before that retirement asset investing is best performed in a certain order. Instead of asking yourself “What’s cheap?” and then sorting through to find a business of sufficient quality, it is much wiser to first ask the question “What are the six to eight dozen businesses I’d be interested in owning over my lifetime?” and then working your way through that list to find out … Read the rest of this article!

Procter & Gamble Stock Purchase Program: From Computershare To Wells Fargo Shareowner Services

No, your direct stock purchase in Procter & Gamble stock (PG) didn’t disappear. After using Computershare as its stock transfer agent for the past three years, Procter & Gamble switched to Wells Fargo Shareowner Services on June 9th.

However, when Procter & Gamble commenced the switch last Friday, the shares just disappeared from the accounts of those that had been dripping through Computershare as if the position had vanished. The next day, a message appeared to great those logging into Computershare that Procter & Gamble was switching transfer agents to Wells Fargo Shareowner Services.

That wasn’t the end of issues relating to acceptable prior notice. It wasn’t until this past Monday June 13th that Wells Fargo Shareowner Services began mailing out notifications to create accounts to view their Procter & Gamble investment position, meaning most people were locked out of their holdings from the 9th until the 13th, 14th, or … Read the rest of this article!

Long-Term Swiss Bonds Offer Negative Yields

I would rather buy gold than a government-issued bond with a negative yield. And I’m no cheerleader for bullion as a long-term investment.

You may have seen the news earlier this week out of Germany–their ten-year bonds briefly dipped below the 0% yielding threshold. Switzerland, not wanting to be outdone, now has a negative yield on thirty-year bonds that will mature in the late 2040s.

This is what economic madness in real time looks like.

It is a fact of life that institutions–be they public or private–will engage in transactions or offer you terms that on a deal that will make it nearly impossible to create wealth. Always remember this: The existence of a financial product should never give rise to a presumption that it is an “investment.”

Anytime you spend your money with the hope of creating a subsequent surplus, you must always ask yourself: At what price, on … Read the rest of this article!