The leveraged buyout was one of the great financial inventions of the 1980s. Buying companies with little money down and stuffing them with debt before exiting with a massive… Read More

When the employees of Florida-based Fairholme Capital came into work on Jan. 11, 2010, they were greeted with great news. Rating firm Morningstar had just selected Fairholme’s Bruce Berkowitz as the “Domestic-Stock Fund Manager of the Decade.” That’s quite an accolade, considering the heady competition. Morningstar chose him because “his aptitude for picking stocks sets him apart from his peers, and Fairholme’s portfolio is filled with attractively priced firms that generate high… Read More

When the employees of Florida-based Fairholme Capital came into work on Jan. 11, 2010, they were greeted with great news. Rating firm Morningstar had just selected Fairholme’s Bruce Berkowitz as the “Domestic-Stock Fund Manager of the Decade.” That’s quite an accolade, considering the heady competition. Morningstar chose him because “his aptitude for picking stocks sets him apart from his peers, and Fairholme’s portfolio is filled with attractively priced firms that generate high free cash flow.” In the just-completed decade — a decade in which the S&P 500 delivered slightly negative returns — Berkowitz’s Fairholme generated a 10-year annualized total return of 13%. The accolades are still pouring in. GuruFocus.com anointed Berkowitz as its “Investing Guru of the Year 2012.” These days, Berkowitz is still seeking out stocks with solid value and cash flow characteristics. According to recent filings, Berkowitz is loading up on shares of four insurers that are the epitome of… Read More

We all have a fantasy we’d like to see come true. For some, it’s being in your favorite football team’s locker room during the coach’s inspiring halftime speech. For others, it might be a backstage pass to a legendary musician’s concert. Nothing so pedestrian for us. Instead, we ask: What if you could be inside Berkshire’s boardroom and see how its directors vet potential companies for investment? Luckily, that’s not just a pipe dream — there’s a way we can find out. Read More

We all have a fantasy we’d like to see come true. For some, it’s being in your favorite football team’s locker room during the coach’s inspiring halftime speech. For others, it might be a backstage pass to a legendary musician’s concert. Nothing so pedestrian for us. Instead, we ask: What if you could be inside Berkshire’s boardroom and see how its directors vet potential companies for investment? Luckily, that’s not just a pipe dream — there’s a way we can find out. Warren Buffett‘s Berkshire Hathaway (NYSE: BRK-B) recently disclosed its holdings through a 13F filing with the Security and Exchange Commission (SEC). Overall, Berkshire’s equity positions increased roughly 4.7% from the previous quarter, to $89 billion, which tells us Buffett is a buyer in a market that others have been disparaging. However, Berkshire’s success speaks for itself. Shares are up 73% since 2009 — more than… Read More

We’ve managed to avoid the great Mayan prediction of the end of the world in 2012, along with countless doomsday prognostications before it. But while we shrug off the continued calls that some people still predict about the end of the world, it’s undeniable there are good reasons investors should have a “doomsday portfolio” to protect them from catastrophic losses.#-ad_banner-# I’m not talking about the end of times, though. In the event of runaway asteroids or the second coming, saving for your golden years will be the least of your… Read More

We’ve managed to avoid the great Mayan prediction of the end of the world in 2012, along with countless doomsday prognostications before it. But while we shrug off the continued calls that some people still predict about the end of the world, it’s undeniable there are good reasons investors should have a “doomsday portfolio” to protect them from catastrophic losses.#-ad_banner-# I’m not talking about the end of times, though. In the event of runaway asteroids or the second coming, saving for your golden years will be the least of your worries.  But I’m also not talking about simply a global malaise in economic growth or the gradual loss of purchasing power in the U.S. dollar, either.   I’m talking about a quick collapse of order — a collapse of faith in our institutions and a resulting widespread loss in financial assets.   And if you think this could never happen, then think again, that’s why I’m showing you how to build a well-rounded portfolio.    Hurricane Katrina destroyed more than $60 billion in economic value and led to massive looting and… Read More

My freshman year in college, I returned to my hometown to attend the wedding reception of a friend. During the festivities, one of the young men who had occasionally wandered into my social circle came over to ask me to dance. He mentioned… Read More

The financial industry is adept at keeping its customers in the dark about what they are spending. There are plenty of regulations in place that are supposed to make such costs transparent, but most of the disclosures are in small print and peppered with legal terms. I’m not suggesting that all fees and charges are unfair. In fact, decades of consumer advocacy have reduced the number and types of tricks brokers, financial advisors, and money managers once used to fleece their… Read More

The financial industry is adept at keeping its customers in the dark about what they are spending. There are plenty of regulations in place that are supposed to make such costs transparent, but most of the disclosures are in small print and peppered with legal terms. I’m not suggesting that all fees and charges are unfair. In fact, decades of consumer advocacy have reduced the number and types of tricks brokers, financial advisors, and money managers once used to fleece their clients. But there are still things to watch out for… Some money managers and financial advisors provide a range of financial services, including asset allocation, stock and bond recommendations, reporting, and so on. Most of them will charge you a fee for financial advice. Some will also collect commissions on any transactions. One of the biggest problems with money managers and financial advisors is that they have a predisposition for mutual… Read More

Having a successful mentor is the fast track to your own success in the financial business. Following in the footsteps and learning from the mistakes of your mentor can shave years and countless dollars off your learning curve. Fortunately, some successful investors have provided a clear and easy-to-follow outline on… Read More

By some measures, stocks just suffered their worst week in 2013. Despite that setback, the S&P 500 is less than 3.2% from its all-time high. Until prices fall further, the weight of the evidence shows stocks are still in a long-term uptrend. SPY Nears Support SPDR S&P 500 (NYSE: SPY) fell for the second week in a row, losing 2.06% last week. Other major market indexes were… Read More

By some measures, stocks just suffered their worst week in 2013. Despite that setback, the S&P 500 is less than 3.2% from its all-time high. Until prices fall further, the weight of the evidence shows stocks are still in a long-term uptrend. SPY Nears Support SPDR S&P 500 (NYSE: SPY) fell for the second week in a row, losing 2.06% last week. Other major market indexes were also down as traders reacted to news that was generally considered to be negative. Among the most important news stories was that a number of companies, including Cisco (Nasdaq: CSCO) and Wal-Mart (NYSE: WMT), lowered their outlook for the rest of the year.#-ad_banner-# Even good news was bad news to traders last week. Retail sales exceeded expectations, and the number of initial unemployment claims fell to a six-year low. The problem with good news is that the Federal Reserve… Read More

In 1990, in a suburb outside of Boston, something unusual happened…#-ad_banner-# As part of their schoolwork, seventh graders at the St. Agnes School in Arlington, Mass. were asked to pick stocks for a model portfolio. In the following two years, the students’… Read More

Interest rates could be the factor that finally triggers a sell-off in the stock market, and that sell-off could be closer than most traders think. Interest Rates Can Impact Stocks In studying the recent market plunge in Japan, I had a feeling that I was missing an indicator that should have warned of the risk. The Nikkei 225 benchmark… Read More

Interest rates could be the factor that finally triggers a sell-off in the stock market, and that sell-off could be closer than most traders think. Interest Rates Can Impact Stocks In studying the recent market plunge in Japan, I had a feeling that I was missing an indicator that should have warned of the risk. The Nikkei 225 benchmark index fell as much as 14.97% from its high in a week.#-ad_banner-# I think I found that indicator and was shocked to discover the exact same setup exists in the United States right now. As a trader, it is important to change positions when the facts change, and after months of bullishness, I am moving to a cautious position in the stock market. In Japan, officials attributed the sell-off to disappointing economic news from China. But news rarely causes an immediate change in the trend of a market. Sell-offs related to news events usually occur when the market… Read More