Alternative Asset Investing: Real Estate, Farmland, and Timber

I have been the capital deployments among America’s wealth, and according to a recent U.S. Trust white paper, affluent Americans are looking towards more esoteric alternative asset investments in real estate, farmland, and timber:

Although 89% of respondents say their biggest investment gains have come from traditional stocks and bonds, more sophisticated strategies are present in the portfolios of the wealthy. Use of tangible assets — such as investment in real estate, farmland and timber properties — is substantial and increasing. Nearly half of the wealthy (48%) currently [editor’s note: this is 2016] own tangible assets, up from 41 percent in 2014.

U.S. Trust Insights on Wealth and Worth

That is quite the striking passage. In other words, this quote is wealthy, presumably very smart, somewhat older, Americans saying: “I made almost all of my money from x. I know x works. But I want to do y because it … Read the rest of this article!

Fayez Sarofim And What The Mainstream Financial Media Gets Wrong

If you flip through channels and see television programs that try to stereotype and chronicle the daily life of the wealthy, the focus will likely be on the assets that do not generate cash flow, and are generally illiquid. You see the wine collections, chilling in a specially created basement room that functions as a private lair. You see the fancy schmancy art purchased at auctions through Sotheby’s lining the hallway walls. You see the autographs of Joe Dimaggio, Paul McCartney and other assorted Beatles, and maybe a letter signed by President Kennedy somewhere in there.

The problem with these depictions is that they create the illusion that the wealth-building process is about art, collectibles, gold, rare wins, and other items that do not generate cash flow for their owners until the goods get sold. It corrupts the story of wealth-building by suggesting that it is wise to take money … Read the rest of this article!

Southwest Airlines: Warren Buffett’s Rumored Buyout

Recently, there have been rumors that Warren Buffett is considering the outright purchase of Southwest Airlines after Buffett indicated during a CNBC interview that he would not rule out the prospect of owning an entire airline and online rumors suggested that he was in communication with Southwest’s Board of Directors about purchasing Southwest outright for $75 per share.

I will say this about the speculation: If Buffett is contemplating purchasing an airline, it will almost certainly be Southwest. As you may know, Southwest is unique in that: (1) it has a strong cash-positive balance sheet with $3.6 billion in cash and $3.3 billion in debt; (2) it has no preferred stock outstanding or any pension that would require perpetual redress; and (3) Southwest has not had an unprofitable year aside from the 9/11 aftermath, and even managed to earn profits of $140 million to earn $140 million in profits in … Read the rest of this article!

Following Ben Graham

In Security Analysis, Benjamin Graham would distinguish between companies that had recently fallen in price, speaking in terms of “imaginary value disappearing” and “real value becoming unrecognized.” A successful value investor must be able to distinguish instances of the latter from the former.

In my most recent Patreon post, I focus on a company that is currently trading at 8.8x earnings and is primed for a 51% price increase upon a modest return to favor in Mr. Market’s eyes. To become a subscriber, please click here.

Originally posted 2019-03-09 14:27:40.

Read the rest of this article!

Jesus, John Templeton, and Confucius On Charitable Giving

Although John Templeton, the famous mutual fund pioneer, managed to create a $6+ billion fortune over the course of his lifetime, he never had too many periods in his adult life where he refused to “give until it hurts.” Templeton developed the personal philosophy that giving to others ought to be obligatory and enjoyable, and often argued that intelligent men should have no trouble being simultaneously generous while also getting a little something for themselves.

This is a strong contrast to the Confucian school of thought on charity—namely, that we have a series of obligations that flow outward. The general argument of Confucius is this: our first responsibility is not to be a charitable case ourselves, and once we have our personal matters settled, our obligations flow outward: you take care of your spouse, then kids, then parents, then extended family and closest friends, then friends, then acquaintances, then your … Read the rest of this article!