Berkshire Hathaway is led by the greatest investor of all time – Warren Buffett. This weekend offered the Superbowl of investing events, the Berkshire Hathaway annual meeting. Shareholders (many multi, multi millionaires) and worshippers flock to Omaha, Nebraska to take in the musings of the Oracle of Omaha. It’s Woodstock for capitalists with Berkshire and Warren Buffett on the Sunday Reads.
Here’s a presentation video from CNBC. You’ll hear some commentary as Warren Buffett takes reader questions. It’s not surprising that ‘why are you sitting on 189 billion dollars in cash?’ was asked and answered. The cash pile could reach a staggering $200 billion by the end of the second quarter. That cash pile is one of the reasons I love holding this stock. It’s my wife’s largest position and almost 40% of her spousal RRSP. From her holding period (2014) the stock has offered some slight outperformance. But considering the cash pile, it is essentially a Balanced Growth Portfolio outperforming the market.
BRK.B has returned to its outperforming ways in the last 3 years, 13% annual vs 8% annual for the S&P 500. In recent down years for the market (2018 and 2022) Berkshire offered positive returns. And of course, given that Berkshire does not pay a dividend, it would be extremely tax efficient for Canadian and U.S. investors. Retirees will sell shares to create retirement income – homemade dividends.
Berkshire earnings
Berkshire reported wonderful earnings that beat on the revenue and earnings fronts. Earnings soared by 39% from the same quarter in 2024. Many Berkshire divisions pitched in, but was led by the insurance business.
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I have long suggested Berkshire Hathaway (BRK.B) as a staple for retirees and near retirees. It’s a massive hedge for a recession and major market correction. It could mean $200 billion or more in the hands of the world’s greatest investor as assets go on sale. The Warren Buffett magic happens during and through market corrections.
If we don’t get that recession, there’s nothing wrong with market-like returns. From 2014, Berkshire has delivered 12.4% annual vs 7.8% for the TSX Composite.
Related post: What is the cost of your Canadian home bias.
I included Berkshire in U.S. stocks for long run, I pointed to a value oriented portfolio for 2023. Those conviction picks have thumped the market from mid 2023. Our personal U.S. stock portfolio has beat the market by about 2% annual from construction in 2014/2015. I will soon do a portfolio update post for Seeking Alpha and on Cut The Crap Investing.
More Sunday Reads
We’ll start the financial journey with Banker on Wheels. You’ll find a podcast in which Ed Yardeni predicts that the roaring 20’s still might be a thing. The image below is a snip, you’ll have to go to the Banker site to press play.
Changing gears we’ll head on over Dividend Hawk for his take on the week that was. Of course it was one of busiest weeks for U.S. earnings reports. Also in the mix was Bell Canada (BCE). A few weeks ago I posted on how I sold half of my Bell stock. Earnings decreased by 15.3% year over year, as revenue slipped by 0.7%. That said, is the bottom in for Bell and other telcos and utilities? BCE was up 2.9% for the week.
At My Own Advisor, Mark looks at the 30-30-30-10 budgeting idea.
- 30% of your budget is for housing (rent or mortgage).
- 30% of your budget is for other necessary expenses such as groceries, housing utilities, gas/transportation, etc.
- The other 30% of your budget is set aside for paying off debt and/or saving and/or investing.
- The final 10% of your budget is for wants and fun money like travel.
That’s not a bad template. The end goal is to reduce debt and have money available for investing on a regular schedule.
Who wants to become a millionaire?
On this blog I showed how much you have to invest each month to become a millionaire. I hope you’ll find that an inspiring message. That’s an especiallly good share for younger adults. Start early and it doesn’t take much.
Bob at Tawcan offers a wonderful example of a robust savings/investing rate. Here’s Bob’s 2024 goals and resolutions. Keep in mind that it is total return for the win. More money creates more income in retirement.
This week I updated the GIC rates at EQ Bank. There are a couple of GIC rate hikes, but mostly some cuts as the bond market sniffs out the potential of rate cuts in Canada.
At Stocktrades.ca Dan looks at the top money market funds and cash ETFs in Canada.
At Findependence Hub gold glitters. Gold makes balanced portfolios better.
Tweets of the week
Don’t forget, making money is great. It is total return for the win. Have a look at that thread.
RBC global best energy ideas is bested by the Big 4 in Canada. I’m happy to keep adding to those 4 companies.
Apple’s outrageous share buy back …
That’s almost enough to buy Bank of Montreal and Scotiabank.
And a shocking chart. This will be the topic of a post this week.
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What interest do you think BRK.B earns on its 200b cash pile? Better than the approx 5% retail can get?
Initially not interested because of high cash. But if earning good interest then it makes the stock more stable.
Hi Cris, I understand that Berkshire is earning in that 5% range. All said, he would have been better investing. The world’s greatest investor has created opportunity cost. But I don’t mind that in the total portfolio context. It’s a holding with a significant cash holding, and again, a recession hedge. We might get some comfort in the next recession knowing the world’s greatest investor is buying bargains, creating considerable future wealth.