Mike Kueber's Blog

July 11, 2014

Buffett, Gates, and Adelson weigh-in on immigration policy

Filed under: Issues,Politics — Mike Kueber @ 5:27 pm
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A few days ago, one of my favorite yogis posted on Facebook a photo of a sad-looking Indian (Native American), with the following caption:

  • “So you’re against immigration? Splendid, when do you leave?”

Although my brain told me to let the posting pass, I couldn’t stop myself from responding as follows:

  • “Conflating legal immigration with illegal immigration, which the liberal media does continually, is not helpful to understanding the issue. I haven’t heard of a single conservative against legal immigration.”

Fortunately for me, there was no resulting brouhaha, and one of my yogi classmates even said she agreed with me.

Today, the immigration issue again came to my attention when one of my heroes, Warren Buffett, along with two other billionaires, Bill Gates and Sheldon Adelson, authored an op-ed piece in the NY Times titled, “Break the Immigration Impasse.”  The piece is supposed to be significant because, while Gates and Buffett are liberals, Adelson is a conservative, and their ability to achieve a compromise suggests that Congress could do likewise if it focused on good policy instead political posturing. After looking closely at the op-ed piece, I disagree.

Perhaps the most constructive component of the op-ed piece is that, unlike the Indian posting in Facebook, Buffett and his gang distinguish between legal immigration and illegal immigration. They accurately describe America’s flawed immigration for kids educated in our universities (“talented graduate program”) and the “immigrant investor program” (EB-5). Those are programs where there is bipartisan support.

But sandwiched between these two programs, Buffett and his gang gloss over the insoluble part of the immigration problem – i.e., the eleven million illegal immigrants. About them, they spout pabulum:

  • “Americans are a forgiving and generous people, and who among us is not happy that their forebears — whatever their motivation or means of entry — made it to our soil? For the future, the United States should take all steps to ensure that every prospective immigrant follows all rules and that people breaking these rules, including any facilitators, are severely punished. No one wants a replay of the present mess.”

The first part of this paragraph is as shallow and trite as the Facebook posting. If they wish to compare the immigration in the 1800s and early 1900s with today’s immigration, they should make their case instead of simply implying that they are. They differences are so profound, beginning with the fact that immigration back then was legal, that any attempt to equate them requires more than a superficial reference.

The second part of the paragraph also requires elaboration. How can you talk about law-breakers being severely punished in the future when you are granting them amnesty this time? When Reagan granted amnesty in the 80s, he also said that future law-breaking would not be tolerated. Won’t America want to be humane to future law-breakers, too?

Seems to me that Buffett and Gates needed to contend with a stronger negotiator that Sheldon Adelson, who seems to have given away the conservative store.

March 2, 2014

2013 – investing and Berkshire Hathaway

Filed under: Investing — Mike Kueber @ 2:50 am
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My 401k investments in 2013 were exceptionally successful, unless you compare them to other aggressive investors, who were rewarded by 32% from the S&P 500.  Really aggressive investors did even better, with a return of 38% from small- and mid-cap funds.  So the 40% that I invested in the S&P and the 24% invested in small- and mid-cap funds did really well.  Unfortunately, I had 24% in international funds that returned only 14% (“only” is a relative term), and even worse I had 12% in bonds that lost 3% for the year.  So much for diversification!

My non-401k investments did even worse because much of it was invested in Berkshire Hathaway and some was in Ford and Lifetime Fitness, none of which did as well as the S&P.  Regarding Berkshire, Warren Buffett this week issued his annual letter to the shareholders.  In the letter, he noted that the company stock gained a mere 13% in 2013, while its intrinsic value increased by 18%.  Although both of these gains were dwarfed by the S&P, Buffett explained that he and Charlie Munger expected the company to do better than the S&P in all bearish and modest years and to be beat often by the S&P in bullish years like 2013.

Buffett remains confident in America’s economy vis-à-vis the rest of the world, and he remains confident of Berkshire’s performance vis-à-vis the rest of the market.  As I read Buffett’s letter, he fortified my support of his leadership (including his transition planning), so I will continue to leave 10% of my total net worth with Berkshire.

Incidentally, Buffett’s letter noted that Berkshire’s net worth increased by $34.2 billion in 2013, but a related article in USA Today focused on the company’s record annual profit of $19.5 billion, which exceeded 2012’s of $14.8 billion.  Because the profit was expected to be $18 billion, I am hopeful that the market will correct upwardly this Monday.

 

 

 

 

February 2, 2013

Investment diversification

Filed under: Investing — Mike Kueber @ 3:28 am
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This morning brought me a reminder of the importance to diversify your investments. 

Since becoming active in the stock market in the spring of 2009 (a fortuitous time because the market bottomed out on March 9, 2009), my favorite stock has been Life Time Fitness.  In addition spending a couple hours every morning at a Life Time gym just a couple of miles down the hill from me, I have experienced the pleasure of watching my Life Time stock, which I purchased for $15 and $19 move up and up, eventually doubling.

In 2010, I sold about 50% of my Life Time stock at $35 to pocket a portion of my good fortune (and to go forward with house money), and on Christmas Eve I sold 50% of my remaining shares at $49.  My thinking was that I had too large a percentage of my brokerage account (15%) invested in one small company (plus more than 40% in one large company with an aging savant – Berkshire). 

But as the stock continued up through January to almost $53, I started having second thoughts.  I still loved the gym, and it had been the best stock I had ever owned.  How loyal was that?  Beyond second thoughts, I started having daydreams, too, about “what if” I had shown courage and invested my entire brokerage account in Life Time?  I could have more than tripled my account.

Then came this morning.  When I checked my brokerage account this morning, the following news from Market Talk was waiting:

  • 8:57 EST – Life Time Fitness’ (LTM) preannounced 4Q miss and downbeat guidance sends shares tumbling and leads William Blair to cut its rating on the gym operator to market perform. While dues growth remains “solid” thanks to price increase, “we are increasingly worried that LTM is walking a fine line between monetizing members and engendering member pushback,” says William Blair. Following 3Q which saw the largest sequential increase in attrition since 2008, membership growth was weaker than expected in 4Q, says the firm.  Shares fall 16% to $42.60 premarket.

By the close of the day, Life Time was down $11.37 (22.41%) to $39.36.  Wow.  That’s a big loss, but I would be really kicking myself if I had been greedy.  Everyone knows that it’s crazy for casual investors to avoid diversification.

p.s., on Christmas Eve, I also sold 33% of my Berkshire.B for $90 because Buffett can’t live forever.  Today it closed at $98, and I think I will start kicking myself for not trusting Buffett to outlive me.