Investment lessons from the world’s greatest investor – Warren Buffett.

Every year thousands of shareholders flock to the Berkshire Hathaway annual meeting to get an update on company progress, and to hear The Oracle Of Omaha offer his folksy words of wisdom.

As you may know Berkshire Hathaway is the company operated by Warren Buffett and his team. Mr. Buffett is one of the richest folks on earth. He usually ranks in the top 3. He’ll trade places with Bill Gates from Microsoft or Jeff Bezos of Amazon or Carlos Slim who owns and operates several businesses from Mexico.

This article lists Mr. Buffett at number 3 on the list for 2018.

Warren Buffett Richest Man

Warren Buffett created his wealth by investing. He bought a struggling textile company and then started adding other companies and investments. Berkshire Hathaway owns many companies outright, and it also holds large positions in many of the publicly traded companies that you likely hold directly or by way of your funds.

Here are the top 10 holdings from CNBC, late 2018.

Berkshire Top Holdings

Yup, all of the holdings are leading constituents within the S&P 500 that you’ll find in almost every portfolio. When you hold the Berkshire Hathaway (BRK.B) stock you’re essentially owning a concentrated fund (ETF) that is managed by the world’s greatest investor. The portfolio again holds many private companies that are owned outright. You own this ‘fund’ with no management expense ratio – there is no MER. You get Warren for free.

I own Berkshire Hathaway, well it’s in my wife’s account. She has likely never heard of Berkshire Hathaway even though she has an open invite to that annual general meeting. We use a basket of Dividend Achievers for our US stocks, but we do have 3 ‘picks’ as well and that includes Berkshire, Apple (yes Warren has me doubling down on that) and BlackRock. BlackRock operates iShares the leading ETF provider in Canada and around the globe. I had to take part in that simple theme – the massive move away from high fee mutual funds to low fee index-based investing. That’s an undeniable trend.

You’ll find mention of those Dividend Achievers in my post from this week The Simple 7 ETF Portfolio For Retirees.

What can we learn from the world’s most successful investor? 

Mr. Buffett mostly tells us that we should be patient. Time is an investor’s best friend.

warren buffett holding period

We also should not react to market noise that includes economic and political guesswork. Mr. Buffett suggests that we should be hands off.

Lethargy Quote

And while Mr. Buffett is the world’s greatest investor he suggest that you buy market index funds such as that S&P 500 in a cost-effective manner. He’s very humble. Yes, the guy who beats the market with regularity suggests that you should not try to beat the market, you should simply buy the market. Don’t look for the needle in the haystack, buy the haystack.

“consistently buy an S&P 500 low-cost index fund… I think it’s the thing that makes the most sense practically all of the time.” – Warren Buffett 

  • Be patient.
  • Invest on a regular schedule.
  • Hands off the investments.
  • Keep your fees low.

Of course, we going to go one better and suggest some greater diversification beyond holding that S&P 500 index fund. This is Easy Street for Canadian Investors.

Robb Engen of Boomer and Echo did a great job of picking out some wonderful Buffett gems from this year’s annual letter.  You can read the full letter here.

Other reads from my favourite writers and sites. 

Mark Seed of My Own Advisor had a busy week, all while trying to sell his house to downsize to a condo. Here’s Weekend Reading, RRSP stuff, FIRE and more. That great compilation covers a lot of what went on around the blogosphere in the last week or so. Much of the heavy lifting is done.

Jonathan Chevreau on Findependence Hub announced that Franklin Templeton is offering multi-asset ETF portfolios for advisors. In that article Mr. Chevreau makes mention of …

I am working with Dale Roberts and eight other ETF experts to select the 2019 edition of the MoneySense ETF All-Stars, which will be published later this month. A year ago we were quick to spot the trend and made all three of the Vanguard portfolios All-Stars, albeit in a new category. The question for us this year is which of the newer offerings should be added? Stay tuned!

I am thrilled to be on that MoneySense ETF panel along with Robb Engen, plus other returning panelists and a few other new names. So far it has been a very interesting experience.

For the Financial Post this week Jonathan offered Your biggest tax asset in retirement may be sleeping right beside you.

And I found this fascinating. Robo Advisor Nest Wealth did a poll this RRSP season and found that 1 out of every 3 accounts opened were with Robo Advisors. Are Canadians actually starting to ‘get it’.

Here’s CEO Randy Cass on BNN Bloomberg. Stay tuned, I’ll be chatting with Randy next week to gain more details on that study and to talk with Randy about the state of the ‘Robo Nation’ 5 years after the launch of Nest Wealth.

Million Dollar Journey offered a nice mix from installing solar panels, top rated credit cards to 8 sources of income available in retirement.

Here’s Boomer and Echo’s Weekend Reads, One Ticket Edition.

And for those who like to build their own stock portfolio please have a read of Investing the Canadian Way – Tricks I Use to Boost Returns. The post is from Mike of The Dividend Guy Blog. It’s a great blog and story. Mike is a wonderful guy and inspiration. A financial guy who left it all behind to help investors in his own way. He started his new life venture with a 1-year trip around North America with his family, young kids in tow. What a courageous move. What a life experience.

Mike The Dividend Guy

More reads …

This week I also offered The Biggest Stock Market Collapse In Our Lifetime Is Now A Distant Memory.

The Globe and Mail reported that Canada’s Oldest And Largest ETF Is Bleeding Assets. Investors are looking to save a few basis points with funds that also offer more companies than the TSX 60. Well guess what folks, that XIU ETF has a slight outperformance over those more ‘diversified’ and more cost-effective ETFs such as XIC. I think that might continue.

I argued for XIU on the ETF All Star Panel. Stay tuned.

Thanks for reading.

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