The Long Term Investor

HERE...is the Buffett shareholder letter for this year.

'Never bet against America': Full text of Warren Buffett's annual letter to shareholders

https://www.livemint.com/news/world...al-letter-to-shareholders-11614434698818.html

 

The article above mentions that Buffett started their meeting with a slide of the 20 largest companies by market capitalization in the world......as an example of the strength of America and the American system. I could not find his slide.....but I assume his list is the same as the list below. STARTING WITH #1.

APPLE
SAUDI ARAMCO
MICROSOFT
AMAZON
GOOGLE
TENCENT
FACEBOOK
TESLA
ALIBABA
TSMC
BERKSHIRE HATHAWAY
SAMSUNG
VISA
JP MORGAN
KWEICHOW MOUTAI
JOHNSON & JOHNSON
WALMART
NVIDIA
DISNEY
MASTERCARD

Now that list is what I call the power of long term investing.....I happen to own 6 of the 20.....in my little stock portfolio of 12 companies. There are a few Chinese companies on this list.....NOT for me. I dont trust any financials or other business information from that country......too much fraud and deception. Plus....I dont care to be in business with the Chinese government....too much chance they will at some point SCREW the shareholders.

 

The financial media....running in the usual HERD is.....ALL....Buffett, Buffett, Buffett tonight. The VAST majority of articles are on Berkshire, Buffett, Munger, etc, etc, etc. NOT particularly relevant to anyone that does not own Berkshire......but....that is the media line and mentality at this MOMENT.

On one site I scanned......there were 32.....SEPARATE..... articles on the above. I DO agree with most of what Buffett and Munger say.....and.....the philosophy they have applied in their careers and investing.....but....this level of conformity and......ESPECIALLY...... sensationalism in the financial media is simply.......INVESTOR PORN.

 

I am amazed that the site I mention above NOW......has 46 articles about Buffett, Munger and Berkshire. We NOW have a MONOLYTHIC investing media. Very little independent thinking.......and unfortunately.....MOSTLY.... a singular focus on the short term and trading.

BUT......that does NOT stop us lifetime investors from achieving success with OUR money.

 

It is nice to move on from April. It was a strange month. REALLY nice gain for the month....the SP500 was up by 5.2%.....yet......the earnings at the end of the month were disrespected and not rewarded as they deserved. SO....it is nice to start a new month.....MAY.

All in all APRIL was awesome......and....the BIG EARNINGS that were ignored at the end of the month are STILL AMMUNITION for good gains moving on.

Uber, Lyft earnings, April jobs report: What to know this week

https://finance.yahoo.com/news/uber...-report-what-to-know-this-week-163651891.html

(BOLD is my opinion OR what I consider important conte
"Investors will have another packed schedule of corporate earnings reports to consider, alongside the latest monthly jobs report from the Labor Department.

The April jobs report will likely be the latest positive data point underscoring the U.S. economic recovery. According to Bloomberg data, consensus economists expect to see that non-farm payrolls grew by 978,000 for the month, accelerating from March's gain of 916,000 and representing the biggest rise since August 2020. The unemployment rate likely fell to 5.7% from 6.0% in March, or to the lowest level since March 2020. And the labor force participation rate probably rose 0.2 percentage points to 61.7% as more individuals came off the sidelines and returned to work or job searches.

Some economists are expecting even stronger gains. Nomura economist Lewis Alexander said this Friday's report will show "a monster U.S. payroll number," with job gains coming in at well over 1 million.

"Reopening activity spurred increased spending on leisure and hospitality over March and early April based on the BEA's [Bureau of Economic Analysis'] weekly credit card data, likely translating into a strong increase for food services and accommodation employment, although we see some uncertainty over how quickly increased demand will result in employment gains," he said in a note Friday.

"Moreover, jobless claims, both initial and continuing, trended steadily lower over the April reference period as labor market conditions strengthened, suggesting solid employment gains for other industries," Alexander added. "Business survey measures of employment improved, on net, as did the Conference Board's labor market differential."

Others agreed that the consensus estimate for payroll gains may be too conservative considering the acceleration of the national vaccination program and velocity of the economic reopening over the past month. And many populous cities and states have recently signaled their intents to lift even more restrictions in the near-term, with California setting a full-reopening target of June 15, and New York City aiming to fully reopen July 1. This could stoke even more hiring in the lead-up.

"It seems that the one question we have fielded multiple times over recent days about payrolls relates to the prospects for a near-2 million gain. The reality is we cannot outright discount that," RBC Capital Markets economists wrote in a note Friday. "Many of the metrics we tend to use for forecasting payrolls are out of sorts at the moment thanks to the aggressiveness of the reopening. So what we would say is this: Whether a 2 million gain happens or not, the clawing back of those people sitting on the sidelines seems poised to continue in earnest over the coming months."

For investors, the April payrolls report will likely also serve as another piece of data showing the economy made strides toward achieving the Federal Reserve's target of "substantial further progress" in the recovery, after which policymakers have signaled they would be willing to start discussions to roll back crisis-era monetary policy support. Still, Fed Chair Jerome Powell has said he wanted to see sustained improvement in the economy and a "string of months" of 1 million or more job gains before discussing a policy pivot.

But when asked what might constitute a "string of months" during his last press conference on Wednesday, Powell declined to offer a firm number.

"I can tell you what it's not. It's not one really good employment reading, which is what we got in March. We got close to a million jobs in March and a very strong labor market reading. And I was just suggesting that we'd want to see more like that," Powell said during his latest press conference on April 28. "We're eight and half million jobs below where we were in February of 2020, and that doesn't account for growth in the labor force and growth in the economy, that trend we were on. So, we have, we're a long way from our goals, and we don't have to get all the way to our goals to taper asset purchases. We just need to make substantial further progress. It's going to take some time."

Uber, Lyft earnings
Ride-hailing giants Uber (UBER) and Lyft (LYFT) will be among the major companies to report quarterly earnings results this week.

The reports come following weeks' worth of estimates-topping first-quarter results from a host of companies across sectors. As of Friday, 86% of S&P 500 companies had beat consensus estimates on earnings per share for the first quarter, according to FactSet data. And if this percentage holds through the end of earnings season, it will mark the highest beat rate since FactSet began tracking the data in 2008.

Both Uber and Lyft could see some upside as beneficiaries of the economic reopening this year, with vaccinated individuals more apt to return to traveling and ride-sharing. Both companies have targeted achieving adjusted EBITDA profitability by the end of this year, aided by a pickup in demand and more prudent cost-cutting measures.

"We continue to like Lyft as a mobility pure play, as ride-share recovers in US&C [the U.S. and Canada], driven by vaccination," JPMorgan analyst Doug Anmuth said in a note Friday. "On the 1Q call we will be focused on commentary around the cadence of recovery in ride-share, and more color on the incentives and promotion spend required to increase driver supply."

Anmuth also sees Uber getting a boost from the ride-hailing demand recovery, and added that momentum in Uber's food and drink delivery business should continue to perform strongly. Delivery gross bookings, which include Uber Eats, exceeded mobility gross bookings in each of the last three consecutive quarters, as customers opted for at-home dining over going out to restaurants. Strong first-quarter results from smaller competitor Grubhub (GRUB) last week suggested that strength would likely continue. Still, Uber's delivery business remains unprofitable, though CEO Dara Khosrowshahi said in February he believed it would post an adjusted EBITDA profit by the end of this year.

Given Lyft's singular focus on ride-hailing, its shares have outperformed those of Uber so far for the year-to-date, after underperforming in 2020. Shares of Lyft have risen 13.4% so far in 2021, versus a 7% rise in shares of Uber and an 11.5% rise in the S&P 500.

Both companies, however, are exposed to regulatory risks, especially around potential classification of their drivers. Both Uber and Lyft sold off last Thursday after U.S. Labor Secretary Marty Walsh told Reuters he supported reclassifying most gig workers as full-time employees rather than as contractors. Uber and Lyft have previously said such a move would increase costs for the companies to a detrimental degree, and would force them to hike prices for riders.

A Supreme Court decision in the U.K. — one of the company's most lucrative international markets – earlier this year already dealt a blow to Uber on this front. It required the company to reclassify drivers as "workers" entitled to benefits like a minimum wage, holiday and sick pay, and rest time.

"While our 1Q Mobility EBITDA has upside, margins will compress 2Q-4Q due to incentives and UK-related costs, and could possibly push our breakeven timeline from 3Q21 to 4Q21," Anmuth said.

Earnings calendar

• Monday: Estee Lauder (EL) before market open; Diamondback Energy (FANG), Chegg (CHGG), ZoomInfo Technologies (ZI), Avis Budget Group (CAR) after market close
  
  
• Tuesday: Under Armour (UAA), CVS Health (CVS), Marathon Petroleum (MPC), Dominion Energy (D), Warner Music Group (WMG), Pfizer (PFE), ConocoPhillips (COP), Apollo Global Management (APO) before market open; T-Mobile (TMUS), Xilinx (XLNX), Virgin Galactic Holdings (SPCE), Match Group (MTCH), Lyft (LYFT), McAfee Corp (MCFE), Akamai Technologies (AKAM), Coursera (COUR), Zillow Group (ZG), Activision Blizzard (ATVI), Devon Energy Corp (DVN), Caesars Entertainment (CZR) after market close
  
  
• Wednesday: Hilton Worldwide Holdings (HILT), The New York Times (NYT), General Motors (GM), Sinclair Broadcast Group (SBGI) before market open; Qorvo (QRVO), Booking Holdings (BKNG), GoDaddy Inc (GDDY), Marathon Oil Corp (MRO), Uber Technologies (UBER), WW International (WW), Rocket Cos (RKT), PayPal (PYPL), Twilio (TWLO), Etsy (ETSY) after market close
  
  
• Thursday: Wynn Resorts (WYNN), SeaWorld Entertainment (SEAS), Moderna (MRNA), Regeneron Pharmaceuticals (REGN), ViacomCBS (VIAC), Wayfair (W), Tapestry Inc (TPR), Norwegian Cruise Line Holdings (NCLH), Kellogg (K) before market open; Square (SQ), Dropbox (DBX), Shake Shack (SHAK), GoPro (GPRO), Datadog (DDOG), TripAdvisory (TRIP), Expedia (EXPE), Cloudflare (NET), Live Nation Entertainment (LYV), iHeartMedia (IHRT), Beyond Meat (BYND), Peloton (PTON), Roku (ROKU), Planet Fitness (PLNT), AMC Entertainment Holdings (AMC) after market close
  
  
• Friday: Cigna (CI), Plug Power (PLUG), DraftKings (DKNG), Cinemark Holdings (CNK), Nikola (NKLA) before market open
  

Economic calendar

• Monday: Markit US Manufacturing PMI, April final (60.7 expected, 60.6 in March); Construction spending, month-over-month, March (1.7% expected, -0.8% in February); ISM Manufacturing, April (65.0 expected, 64.7 in March)
  
  
• Tuesday: Trade balance, March (-$74.0 billion expected, -$71.1 billion in February); Factory orders, March (1.3% expected, -0.8% in February); Durable goods orders, March final (0.5% in prior print); Durable goods orders excluding transportation, March final (1.6% in prior print); Non-defense capital goods orders excluding aircraft, March final (0.9% in prior print); Non-defense capital goods orders shipments excluding aircraft, March final (1.3% in prior print)
  
  
• Wednesday: MBA mortgage applications, week ended April 30 (-2.5% during prior week); ADP employment change, April (888,000 expected, 517,000 in March); Markit US services PMI, April final (63.1 expected, 63.1 in prior print); ISM Services Index, April (64.2 expected, 63.7 in March)
  
  
• Thursday: Challenger job cuts, year-over-year, April (-86.2% in March); Non-farm productivity, 1Q preliminary (4.1% expected, -4.2% in 4Q); Unit labor costs, 1Q preliminary (-1.0% expected, 6.0% in 4Q); Initial jobless claims, week ended May 1 (540,000 expected, 553,000 during prior week); Continuing claims, week ended April 24 (3.640 million expected, 3.660 million during prior week)
  
  
• Friday: Change in non-farm payrolls, April (978,000 expected, 916,000 in March); Unemployment rate, April (5.7% expected, 6.0% in March); Average hourly earnings, April month-over-month (0.0% expected, -0.1% in March); Average hourly earnings, April year-over-year (-0.5% expected, 4.2% in March); Labor force participation rate, April (61.6% expected, 61.5% in March); Wholesale inventories, month-over-month, March final (1.4% expected, 1.4% in prior print); Consumer credit, March ($20.000 billion expected, $27.578 billion in February)"

MY COMMENT

Lots of continued earnings this coming week. So far we are at 86% BEATS. That is an AMAZING number.....a very strong indicator for business going forward. Looking forward to a repeat of APRIL in MAY. In other words......a great month.

 

I like this little story.....shows the resiliency of investors in the face to tax changes......and......is certainly a strategy for anyone to consider regardless of taxes. Any little edge helps.......and.....adds up to more money in the long run.

Rich Americans Fleeing Tax Hikes May Turbocharge Shift to ETFs

https://finance.yahoo.com/news/rich-americans-fleeing-tax-hikes-120000017.html

(BOLD is my opinion OR what I consider important content)

"The booming ETF industry may be set to lure even more cash in the coming years as rich Americans facing higher capital gains taxes look to limit what they owe Uncle Sam.

President Joe Biden’s plan to double the rate those making more than $1 million a year pay on investment profits would accelerate a shift that’s already seen hundreds of billions of dollars migrate from mutual funds to exchange-traded funds, market watchers say. That’s because ETFs are generally more tax efficient, spinning off fewer capital-gain disbursements that for some could soon become a lot more costly.

In fact, by one measure, the tax efficiency of ETFs has been the single most important driver behind the tectonic shift in asset allocations in recent years. While the administration’s plan remains in its infancy and is sure to face intense scrutiny from lawmakers in the months ahead, even an incremental hike in the capital-gains rate would likely spur further ETF usage, according to David Perlman, an ETF strategist at UBS Global Wealth Management.

“If capital gains tax rates are going to be higher, if you have a choice of a structure that helps to defer capital gains and gives you more control over when to recognize those gains, you’d be more inclined to go in that direction,” Perlman said.

When an investor exits a mutual fund, the fund’s manager must sell securities to raise cash for the redemption. The same investor leaving an ETF can sell their shares on to another investor, meaning neither the fund nor its manager has made a taxable transaction.

Meanwhile, the “in-kind” process used to create and redeem shares in an ETF -- whereby the ETF issuer exchanges the fund’s underlying securities with a market maker rather than transacting in cash -- means the ETF rarely executes a taxable sale.

A December study by researchers at Villanova and Lehigh universities found that over the past five years, ETFs have averaged a tax burden 0.92% lower than active mutual funds. Moreover, particularly for high net-worth investors, tax considerations have outweighed both performance and fees as the primary driver of flows out of active mutual funds and into ETFs, the findings showed.

“There’s no question Biden’s plan to hike the capital gains tax could be a boon for ETFs,” Nate Geraci, president of the ETF Store, an advisory firm, said via email. “Despite significant market share gains by ETFs over the past decade, there are still trillions of dollars locked in less tax efficient mutual funds.”

Last year alone, the ETF industry took in almost $500 billion, while mutual funds lost about $362 billion, according to data compiled by Bloomberg.

ETF Advantage

Most ETFs hardly pass along any capital gains to shareholders nowadays. Only 3 of 585 in a CFRA analysis made disbursements in 2020, Todd Rosenbluth, head of ETF & mutual fund research at the firm, wrote in an April 26 report. Over the same span, 37 of 39 domestic equity mutual funds from T. Rowe Price Group Inc. incurred a capital gain, the analysis showed.

“We expect more people that mix ETFs and mutual funds together will be more inclined to shift toward strategies to avoid paying higher capital gains taxes in the future,” Rosenbluth wrote.

Even investors not affected by the higher rate could migrate toward ETFs, he added. Simply the discussion of capital gains reminds investors of the industry’s innate tax advantages over mutual funds.

Others aren’t convinced a higher capital-gains rate will do much to boost inflows into ETFs. Wealthy investors would have to sell their mutual fund holdings to make the switch, triggering significant tax liabilities in the process, said Michael Zigmont, head of trading and research at Harvest Volatility Management.

“I see this tax hike not being good or bad for ETFs,” he said.

Meanwhile, ETFs don’t suit every investment need. The U.S. retirement system remains heavily geared toward mutual funds, for example.

Nonetheless, Perlman agrees with Rosenbluth that the potential tax change could even have an impact on investors below the $1 million annual earnings threshold.

Those expecting to soon find themselves in the upper tax bracket, or concerned the threshold could be lowered down the road, are also likely to shift their future allocations, he said.

“The incentives apply more broadly than just to those impacted by the proposal,” Perlman said.

MY COMMENT

That is a pretty big.......0.92%.....savings on the tax burden for an ETF versus a mutual fund. I am NOT going to be under the new tax rates since I will not be near the income level. BUT.....I am going to have to take a look at my SP500 Index fund and see if an ETF would be worth using from this point forward. If I can save on capital gains taxes each year.....I will not sell the current SP500 Index Fund.....I will simply put any future funds into an SP500 ETF.

 

NICE.....as good of an open as we have had in a little while. There is really NOTHING going on that is particularly negative.

Investors need to learn to RELAX....go with the flow. With all the headlines and sources trying to get clicks every day.......there is just an environment of FRENZY. In investing......everything....dos not have to be TODAY. There is nothing wrong with getting on with life....day to day.....and let the markets take care of themselves.

 

Since.....everything.....in the media at the moment is ALL Buffett.......the guy must have an amazing PR team......here is a little article that is very WISE ADVICE for may many people.

Warren Buffett makes the case for doing what he says, not what he does: Morning Brief

https://finance.yahoo.com/news/warr...t-picking-stocks-morning-brief-101144151.html

(BOLD is my opinion OR what I consider important content)

"Picking stocks is so hard, even Buffett makes mistakes

"I recommend the S&P 500 index fund and have for a long, long time to people," Berkshire Hathaway (BRK-A, BRK-B) CEO Warren Buffett said at the company's annual shareholders meeting on Saturday.

"And I've never recommended Berkshire to anybody because I don't want people to buy it because they think I'm tipping them into something."

Sure, Berkshire is a massive $630 billion conglomerate with all sorts of businesses under its umbrella. But in the investor community, the company is best known for its $282 billion stock portfolio. A portfolio overseen by Buffett, who is widely considered to be the greatest investor of all time thanks to his stock-picking prowess.

And so no matter what Buffett says, there will always be those who will attempt to mirror his performance by tracking his public statements and monitoring Berkshire's regulatory filings.

If you followed Buffett's advice and bought the index last year you probably aren't complaining: the S&P outperformed Berkshire by 16 percentage points in 2020.

Still, none of this is going to stop people from questioning and criticizing Berkshire's various trades.

Buffett and Munger acknowledge poorly timed trades

The first shareholder question during the meeting's hours-long Q&A was about Buffett's decision to dump airline shares at their lows early on during the COVID-19 pandemic — shares that have generated extraordinary returns in the year since Buffett disclosed the sale.

Buffett went into detail about how those airlines may have actually benefited from Berkshire's sale as it potentially accelerated financial support from the government. But his fundamental reasons for selling haven't changed.

"I still wouldn't wanna buy the airline business," he said.

But he didn't shy away from the point of the question, which was why Berkshire appeared to be "fearful when others were greedy." In fact, he actually reminded the audience that Berkshire also trimmed its stake in banks, which have also outperformed the market in the past year.

"Looking back, you know, it'd have been better to be buying," Buffett admitted. "I do not consider it a great moment in Berkshire's history. But also we've got more net worth than any company in the United States under accounting principles."

Of course, these market bottoms only become clear in hindsight. And Buffett's right-hand man Charlie Munger made a blunt point about that.

"It's crazy to think anybody's going to be smart enough to husband money, and then just come out on the bottom deck in some crazy crisis, and spend it all," Munger said in response to a question about why Berkshire wasn't more acquisitive in March 2020. "There always is just some person that does that by accident. But that's too tough a standard. Anybody who expects that of Berkshire Hathaway is out of his mind."

And so while Buffett and Munger might take pride in investing in good businesses that eventually generated attractive returns, they're not exactly aiming to buy at bottoms and sell at tops.

'A great argument for index funds'

Prior to the Q&A, Buffett shared two slides in an exercise illustrating how difficult it is to pick winners in the stock market.

The first slide listed the world's 20 largest companies as measured by market capitalization as of March 31, 2021. It included familiar names like Apple (AAPL), Saudi Aramco, Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOG, GOOGL), Facebook (FB), Tencent, and Tesla (TSLA) at the top.

"How many of those companies are going to be on the list 30 years from now?" he asked. "What would you guess? Think about that yourself."

He then followed that with a slide listing the top 20 companies from 1989.

"None of the 20 from 30 years ago are on the present list," he said. "None. Zero."

"It is a reminder of what extraordinary things are going to happen," he said. "We were just as sure of ourselves as investors and Wall Street in 1989 as we are today. But the world can change in very, very dramatic ways."

To be sure, Buffett's slides included a lot of non-U.S. names that you'd never find in an S&P 500 index fund. But his general point is that you're better off investing broadly than putting all your money into what appear to be the winners.

"It's a great argument for index funds," Buffett added. "The main thing to do was to be aboard the ship."

To further his point, he also made the case for why it isn't even enough to know which industries will boom versus bust. He noted that the emerging U.S. auto industry of the early 1900s eventually saw over 2,000 auto companies formed.

"Of course, you remember that in 2009, there were three left — two of which went bankrupt," he said. "So, there is a lot more to picking stocks than figuring out what's going to be a wonderful industry in the future."

During the shareholders meeting, Buffett repeatedly reiterated his recommendation for investors to buy index funds over picking stocks like he does. As Myles Udland puts it: "The advice from Buffett, as always, is do what I say, not what I do."

Though as Buffett said this weekend, "It's not as easy as it sounds."

MY COMMENT

Buffett makes a very good point. Number one.....his own company often can NOT beat the SP500. Second......an investor over an investing lifetime......30-40 years......is going to have to pick the right stocks OVER A LIFETIME to equal or perhaps slightly beat the SP500. Simply guessing that some industry is going to do well in the future is NOT enough.

By being substantially invested in the....constantly changing and updated SP500......you are GUARANTEED to be invested in the top companies of any particular time in history.....the cream of the crop.

 

For those living under a rock....or perhaps off the grid.....might not be a bad thing for ZEN INVESTORS......here is a little summary of the Buffett stories of the past 5 days that are dominating the financial media.

9 Takeaways From Berkshire Hathaway's Annual Shareholder Meeting

https://finance.yahoo.com/news/9-takeaways-berkshire-hathaways-annual-160209571.html

(BOLD is my opinion OR what I consider important content)
"Warren Buffett on May 1 addressed Berkshire Hathaway Inc's (NYSE: BRK-A)(NYSE: BRK-B) shareholders at the annual general meeting, which was held in Los Angeles virtually due to the COVID-19 pandemic.

Buffett, chairman of Berkshire Hathaway, was joined by his long-time business partner Charlie Munger and Berkshire's heads of insurance and non-insurance operations, Ajit Jain and Greg Abel.

Buffett and his associates spoke about the company's performance and answered questions from shareholders and others on market speculation, Apple, SPACs, Robinhood, Elon Musk, Bitcoin, the U.S. economy and other subjects.

Here are some of the key takeaways from the event.

On Robinhood

Regarding the explosive popularity of trading apps like Robinhood, Buffett said, "Robinhood has become a very significant part of the casino aspect of the casino group that has joined into the stock market in the last year or year and a half."

"There's nothing illegal about it. There's nothing immoral, but I don't think you'd build a society around people doing it," Buffett added.

"I think the degree to which a very rich society can reward people who know how to take advantage, essentially, of the gambling instincts of the American public, the worldwide public — it's not the most admirable part of the accomplishment."

Munger said it's "God-awful that something like that would draw investment from civilized men and decent citizens. It's deeply wrong. We don't want to make our money selling things that are bad for people."

On Big Tech Growth Stocks

While talking about tech company stocks and their growth, Munger said, "I personally would not like to see our present giants brought down to some low level by some anti-competitive reasonings. ... I think they're a credit to the Americans, credit to our civilization."

On Chevron and Climate Change

When asked about Berkshire's decision to invest in the oil and gas industry and queried whether we might have "build our own unrealistic consensus on the pace of change" to clean energy solutions, Buffett defended the company's investment in Chevron and in the industry.

"Chevron is not an evil company in the least, and I have no compunction about owning it in the least, about owning Chevron. And if we owned the entire business, I would not feel uncomfortable about being in that business."

Talking about the Berkshire board of directors' recommendation to vote against reporting climate-related risks, Munger added, "I don't know we know the answer to all these questions about global warming. The people who ask the questions think they know the answer. We're just more modest."

On the outlook for fossil fuels, Buffett said, "I would say that people that are on the extremes of both sides are a little nuts. ... I would hate to have all the hydrocarbons banned in three years... and on the other hand, what's happening [with climate change] will be adapted to over time just as we've adapted to all kinds of things."

On Politics and Biden

Talking about U.S. President Joe Biden, Buffett said, "When I'm sitting at a Berkshire Hathaway annual meeting presumably speaking for Berkshire, I don't really like to get into political questions generally, and I don't really think I should. But I also think if somebody asked me who I voted for in the last election as a personal question — I voted for Biden. But I've never asked a single employee of ours who they voted for or anything of the sort."

Answering a question about Biden's tax proposals, Buffett said he doesn't leave his politics at the door, but he refrains from speaking on behalf of Berkshire. "I am not at all concerned about higher taxes," he added.

On this Munger slammed critics of capitalism and said that a capitalist economy has been key to American prosperity. "I'm a little wary of just constantly being mad at people because they have a little more money," he said.

Munger added that he believes it's "stupid" for states to drive out rich people and lose out on their tax contributions.

On Elon Musk and SpaceX

A shareholder asked the head of Berkshire's insurance business Ajit Jain whether he would be hypothetically willing to write an insurance policy for SpaceX founder Elon Musk for his proposed colonization of Mars.

"This is an easy one. No, thank you, I'll pass," Jain said.

Buffett added, "Well, I would say it would depend on the premium. And I would say that I would probably have a somewhat different rate if Elon was on board or not on board. It makes a difference if someone is asking to insure something."

On Apple Stock

While talking about selling some of Apple's (NASDAQ: AAPL) stock in 2020, Buffett said it was "probably a mistake," with shares rising even further this year following the tech-led 2020 boom in the markets.

"The brand and the product — it's an incredible product," Buffett said of Apple. "It is indispensable to people."

"I sold some stock last year, although our shareholders still saw their shares go up because we repurchased shares. But that was probably a mistake."

Berkshire owned 907,559,761 shares of Apple as of the end of December 2020 for a total market value of $120.4 billion.

On SPACs

Talking about special purpose acquisition companies (SPAC), Buffett said, "The SPACs generally have to spend their money in two years, as I understand it. If you have to buy a business in two years, you put a gun to my head and said, 'You've got to buy a business in two years,' I'd buy one but it wouldn't be much of one."

"If you're running money from somebody else and you get a fee and you get the upside and you don't have the downside, you're going to buy something," he added. "And frankly we're not competitive with that. It's an exaggerated version of what we've seen in kind of a gambling-type market."

On S&P 500

Speaking about the S&P 500 index, Buffett said that most investors would benefit from simply purchasing an S&P 500 index fund over the long run rather than picking individual stocks, even including Berkshire Hathaway.

"I recommend the S&P 500 index fund. I've never recommended Berkshire to anybody because I don't want people to buy it because they think I'm tipping them into something. On my death there's a fund for my then-widow and 90% will go into an S&P 500 index fund," he said.

About index funds, Munger said, "I personally prefer holding Berkshire to holding the market," he said in response to the same question. "I'm quite comfortable holding Berkshire. I think our businesses are better than the average in the market."

On Bitcoin

Buffett dodged a question about Bitcoin (CRYPTO: BTC), but Munger didn't:

"Those who know me well are just waving the red flag to the bull. Of course, I hate the Bitcoin success. I don't welcome a currency that's so useful to kidnappers and extortionists and so forth. Nor do I like just shuffling out a few extra billions and billions and billions of dollars to someone who just invented a new financial product out of thin air. I think I should say modestly that I think the whole damned development is disgusting and contrary to the interests of civilization, and I'll leave the criticism to others."

MY COMMENT

Agree or disagree....there it is in a nutshell. Tow great long term investors at the end of their run.

 

HERE is a little BUMP in the road for Tesla owners.

Tesla said to be facing 6-month delay in opening Gigafactory Berlin, based on German repor

https://electrek.co/2021/05/03/tesl...-in-opening-gigafactory-berlin-german-report/

(BOLD is my opinion OR what I consider important content)

"Tesla’s issues in Germany have now reportedly resulted in a six-month delay of the start of production at Gigafactory Berlin, according to a local industry paper.

Gigafactory Berlin is one of Tesla’s most important projects right now since it will bring the Model Y to Europe, and it will introduce a new generation of the electric vehicle using Tesla’s new structural battery pack technology with its new 4680 battery cell.

It’s expected to become a big part of Tesla’s growth story for next few years and help accelerate electric vehicle adoption in Europe.

Originally, the start of production has been expected in July 2021, but the project has run into some issues.

The automaker has been having issues obtaining important building permits and environmental approvals for the project.

It ran into some problems with the water supply company, environmentalists who didn’t want to move some local animals as part of Tesla’s deforestation of the site, and Tesla even fired “Mister Gigafactory,” the engineer in charge of Gigafactory Berlin project.

Despite those problems, CEO Elon Musk said last week during Tesla’s quarterly financial call that he expected production to start this year:

“We’re building factories as quickly as we can. Both Texas and Berlin are progressing well, and we expect to have initial limited production from those factories this year and volume production from Texas and Berlin next year.”

But now a new report coming of Germany’s Automobilwoche, am auto industry paper, states that Tesla’s timeline for Gigafactory Berlin has slipped to January 2022:

“The start of series production in Tesla’s new Gigafactory in Grünheide near Berlin has been delayed by six months until the end of January 2022. Tesla boss Elon Musk officially gave the team half a year more, reports the Automobilwoche, citing company circles.”

According to the report, the regulatory approval for the project is part of the delayed timeline as Tesla reportedly notified authorities that it will modify its application.

The publication also stated that construction delays are also at play, including for the battery cell production facility that Tesla is building at the site.

During the same previously mentioned call held by Tesla last week, Musk also said that he expects Tesla to start volume battery cell production at Gigafactory Berlin next year."

MY COMMENT

Since I see the Austin Tesla plant site regularly......I can say it is FAR BEHIND the Berlin plant in completion. Of course....that is expected since it was started much later. If it was me.....I would use the timeline of the Berlin plant as a MODEL for the Austin plant. If Berlin is going to be January 2022.....I would guess that Austin is going to be somewhere in the August 2022 to January 2023 timeline.

 

I mentioned in a prior post that a home in my little area of homes cane onto the market a few days ago. An identical house to mine....but....with upgraded bathroom finishes and a pool. WELL....it sold in one day.....at a record price per square foot for the little neighborhood of about 85 homes.

I LIKE IT.....but.......have no plans to move......hopefully.....for a long time.

 

The RALLY continues......although the NASDAQ has just gone red. I like the tone of this little article.....I think it reflects the general business environment at the moment.

GLOBAL MARKETS-Stocks rally as investors begin May in bullish mood

https://finance.yahoo.com/news/global-markets-stocks-rally-investors-120833947.html

(BOLD is my opinion OR what I consider important content)

"European shares gained on Monday as investors bullish about the global economic recovery looked ahead to a busy week for U.S. economic data that is expected to underline the strength of the rebound.

With China, Japan and Britain closed for public holidays, volumes were thin.

The Euro STOXX index rose 0.71%, while the German DAX gained 0.61% and France's CAC 40 0.5%.

Wall Street futures were higher, pointing to yet more gains after stock markets notched up another round of record highs last week.

The MSCI world equity index, which tracks shares in 49 countries, was flat on the day and below record highs, however, as losses in Asia offset the gains in Europe.

Underpinning investors' enthusiasm for riskier assets is the sense that the global economy is about to boom as countries come out of lockdowns and consumers and businesses unleash some of their excess savings built up over the past year.

Investor optimism has been enhanced by a run of forecast-beating corporate earnings during the past few weeks.

German retail sales data for March came in far better than expected, underlining that a U.S.-led economic rebound is now gaining traction elsewhere.

Recent business surveys have also pointed to soaring confidence about the recovery, although some economists think businesses may be getting ahead of themselves and influenced more by the success and speed of COVID-19 vaccination rollouts.

"The data has been unrealistically strong in recent months - while the underlying economy is performing very well, manufacturing growth is not quite at the stratospheric levels the surveys imply," said UBS economist Paul Donovan.

"Newsflow about the vaccination cycle may be more important in dictating answers to sentiment surveys than actual economic activity."

A busy week for U.S. economic data is expected to show resounding strength, particularly for the ISM manufacturing survey and April payrolls. Forecasts are that 978,000 jobs were created in the month as consumers spent their stimulus money and the economy opened up more.

Analysts at NatWest Markets, for instance, see U.S. payrolls surging by 1.25 million in April with unemployment diving to 5.2%, from 6% in March.

GERMAN YIELDS RISE

Such gains could stir speculation of a tapering in asset purchases by the Federal Reserve, though Chair Jerome Powell has shown every sign of staying patient on policy.

Powell is due to speak later on Monday and will be followed by a raft of Fed officials this week. Dallas Fed President Robert Kaplan caused a stir on Friday by calling for beginning the conversation about tapering.

The 10-year Treasury yield ended last week with a rise of 6 basis points. On Monday the 10-year yield edged 1 basis point higher to 1.64%.

German benchmark yields rose to their highest since March 2020 as growing signs of a strong recovery in the euro zone economy encourages more selling of safe-haven government debt, while Italian yields reached their highest since September.

The German 10-year yield rose more than 3 basis points to -0.162%.

"Recovery is picking up, vaccinations are accelerating, reopening is nearing," said Arne Petimezas, analyst at AFS Group in Amsterdam.

The rise in Germany yields accelerated last week when German inflation advanced further above the European Central Bank's target, and U.S. data showed economic growth speed up in the first quarter.

In currency markets, the dollar index stood at 91.115 , down 0.1% on the day but still off a two-month trough of 90.422. The dollar ended April with a loss of 2% and has been pressured by the rapid expansion of the U.S. budget and trade deficits.

The euro rose 0.3% to $1.2051, having backtracked from a nine-week peak of $1.2149 on Friday.

Cryptocurrency ether scaled a new record high beyond $3,000 as investors bet that it will be of ever greater use in a decentralised future financial system. Its lightning rally - now up 325% in 2021 - has eclipsed that of bigger rival bitcoin.

Oil prices ran into profit-taking, having ended last month with gains of 6% to 8%, on concerns about demand in India as the country battles a new wave of COVID-19.

Oil prices later stabilised and Brent was little changed at $66.75 a barrel, while U.S. crude gained 18 cents to $63.79 per barrel.

Commodity prices, including oil, metals and many agricultural products, have rallied hard in recent weeks as investors wager on a wave of new demand as economies reopen."

MY COMMENT

We are SOON going to see more of the BIG states re-open. It is way past due.......but...what matters is moving forward. Global markets and business is NOW starting to see the same business boom as we are seeing here in the USA. this WILL mean massive revenue and profits for the AMERICAN companies.....particularly the BIG CAP companies......that are world wide leaders in business.

YES......as usual....my opinion is that the next ONE TO TWO years are going to be GOLDEN for investors.

 

LOL....I see it is STILL April.....at least in terms of how the markets are doing. A little bit up.....a little bit down.....and not much REAL movement one way or the other. I was SLIGHT red today......and got beat by the SP500 by .39%.

As has been the case lately I have not been in touch with the markets during the day.....but with the DOW up and the SP500 up today and the NASDAQ down......I pretty much knew what to expect without looking.

 

CUE the.....CPA's and Estate Planing attorneys. People are already taking steps to deal with the coming tax changes. I have yet to see an article or anything that says what the REAL changes are in an ACTUAL bill. Some of this "stuff" is going to be real important to "regular" people......like the elimination of the step-up in basis. I would be surprised if that it limited to the top 1%. AND.....from what I have seen so far the changes to the estate tax rates and exemption would impact many many people well below the top 1%.

Rich Americans switch up money plans to soften Biden's proposed tax hikes

https://finance.yahoo.com/news/rich...lans-to-soften-biden-tax-hikes-161430993.html

(BOLD is my opinion OR what I consider important content)
"President Joe Biden’s tax proposals threaten the preferential treatment rich Americans get on their income, investments, and inheritance, prompting the wealthy to adjust their finances before the tax changes can take effect.

"People have been thinking about this since there was a possibility that Joe Biden would be elected president," Lewis Taub, a certified public accountant and New York director of tax services at Berkowitz Pollack Brant Advisors, told Yahoo Money. "I've been discussing this with clients since October or November of 2020."

Biden’s plan targets some of the biggest advantages in the tax code that wealthy Americans utilize, especially the treatment of capital gains — a big source of their income that’s taxed at a lower rate than wage income, which is the main source of income for the bottom 99% of Americans.

“High net worth individuals worry about two things,” Taub said. “They’re worried about capital gains, and they're worried about their estate planning plus timing of their gifts.”

‘Plan on an annual basis’
Biden’s plan nearly doubles the base top long-term capital gains rate, increasing the effective rate to 43.4%, including the Medicare surcharge.

If implemented, the new capital gains rate would be at its highest level in almost 100 years, according to the Tax Foundation. That could be costly for the top 1% — capital income accounted for 41% of their income in 2016, according to data from the Congressional Budget Office.

The 43.4% rate would apply to those earning over $1 million. But some high-income earners may get under that threshold with advanced planning, allowing them to pay the next lowest rate of 23.8%.

“You might be able to plan on an annual basis to keep your overall income underneath that $1 million, just so you don't have to pay extra tax on capital gains,” Karl Schwartz, CFP and CPA, at Team Hewins, a wealth management company that works with high net worth individuals, told Yahoo Money.

For instance, those selling a business could choose an installment sale that spreads the income from the sale over time, keeping them in a lower income tax bracket.

The potential tax changes likely would go into effect in 2022, according to Taub, giving wealthy Americans until the end of the year to review their portfolios and income sources. Investors who are looking into selling stocks may do it before the potential tax hikes kick in.

“There is an acceleration of gains, there's an acceleration of income,” Taub said. “If you're thinking of selling something in the not too distant future, you might want to do it in 2021 as opposed to 2022, because the tax would probably be less in 2021.”

Biden’s plan includes restoring the top individual income rate to 39.6% for taxable incomes above $400,000. Many close to that threshold may accelerate income into 2021, according to Taub, such as converting traditional IRAs to Roth IRAs or exercising stock options. Deferring deductions to 2022 also can lower taxable income for high net worth individuals.

‘Zero gain’
Current tax law allows heirs to inherit stocks, real estate, and other assets that the deceased owned without paying tax on the gains in value — called the step-up basis. This can effectively tax-exempt an investor’s lifetime capital gains when inherited by an heir.

“People are always astounded when I tell them,” Jules Martin Haas, a New York-based estate planning lawyer, told Yahoo Money. “They say ‘Is there any tax on this?’ No, you're selling it at fair market value. You sell it with the value that it has today. Zero gain.”

But Biden’s plan would eliminate the step-up basis, meaning the rich would pay capital gains tax on inheritance.

To soften the blow, wealthy Americans are looking to life insurance. If the life insurance policy is held in an irrevocable life insurance trust, the death benefit from the policy would not be included in the estate, meaning the amount of estate tax or capital gains tax that would be due on death would not be increased.

“This is a huge change,” Inna Fershteyn,a New York-based estate planning lawyer, told Yahoo Money. “There's not much you can do ahead of time, other than buy life insurance… there is nothing you can do in terms of moving new assets around to avoid this.”"

MY COMMENT

I have NOT seen anything that the step-up in basis elimination would ONLY apply to the extreme rich. There might end up being some small amount exempted or allowed to step-up....but over time this change is going to impact MOST Americans......a hidden ESTATE TAX on regular people inheriting from mom and dad.

These changes......at the moment still unknown......will also potentially impact the stock market this year. If the changes to the law trigger large amounts of selling of stocks and other investments to capture the gain this year and avoid the changes next year....we will see DOWNWARD pressure on stocks and markets this year.

 

My short term view is that we are likely in for a little correction that could start any time now.......some time over the next 1-3 months....in spite of great earnings. Stocks have shown no indication to REWARD the GREAT earnings. Add in selling over fear of capital gains.....the inflation and interest rate FEAR......and you have some pretty good indicators that the markets will take a PAUSE. At the moment I see a lot of FRANTIC day to day activity.......but not a lot of movement up or down. Kind of a churning market that is just blowing around with whatever breeze is happening to be blowing on any particular day. Not a lot of clear direction.

 

Lately I think many Americans have gotten LAZY about tax and estate planing. As taxes were simplified and estate tax exemptions went up many people have not had to think about this "stuff". It looks to me like we are headed right back to the the old days when many people....well below the top 1%....had to do estate planing.

The primary vehicles that we are going to see undergoing a REVIVAL........the BYPASS TRUST......and.....INSURANCE TRUSTS.

An insurance trust avoids estate tax by buying a big single premium or other type of life insurance policy and than placing that policy in a trust. The trust is the owner of the policy. So when the insured dies....the proceeds of the insurance policy are NOT included in his estate since he was NOT the owner of the asset. The trust is the owner.

In conjunction with the above or separately a bypass trust allows a bucket of assets to go into a trust on the death of the first spouse or person up to the amount of the estate tax exemption......for the benefit of the second person for life. When the second person dies the trust proceeds goes to beneficiaries one or two generations away. Since the second person does not own the assets....the trust does....they are not included in their estate at death and are not subject to estate taxes.

There are various types of bypass trusts and generation skipping trusts that help to reduce estate taxes. ALL of them are intended to use a trust to support and provide for the lifestyle of various generations of family members.....without them owning the assets in the trust.......so there is no estate tax obligation on those assets when the trust beneficiary dies.

Unfortunately the more government tries to tax people....the more we are going to see this sort of convoluted planing of estates for tax purposes.

At the moment a married couple has about $22MILLION in estate tax exemption. If this goes down to $3MILLION or $5MILLION.....or any number below $10MILLION...there is going to be a lot of appointments being made for tax planing.

This USED TO BE....part of the process of being an investor and planing for your heirs and family.......NOW.....we are going to see it come BACK into play for many many more investors and small business owners.

 

Good to hear Zukodany. I know what you mean.

That is what strikes me also......it is TOO EASY. Our net worth has gone way up lately.....due to the continued rise in our house value and other items. Our stock account is lingering just at or below an all time high......but not booming.......at the moment.

Yes things will go up and down....but if planed carefully.....it will be a steady arch UPWARD.....in spite of the times when things are down or linger flat.

Lots of people have been SPOILED by the stock returns over the past year......due to the pandemic. We are NOW going to be back to normal markets. In a normal market.....averaging 10-14%......total return....... over the long term is SENSATIONAL. People have expectations after the past year that are way too high.

 

This is kind of an interesting phenomenon.

Burned out millennials quitting their jobs eye 'private money flowing around’

https://finance.yahoo.com/news/burn...e-private-money-flowing-around-200553228.html

(BOLD is my opinion OR what I consider important content)
"The coronavirus pandemic was not only a public health crisis and an economic crisis. According to numerous anecdotal reports, it’s also led to a torrent of burnout among the workers fortunate enough to have kept their jobs through the pandemic. Many, who could afford to, were inspired to quit their jobs and move in search of some post-pandemic adventure, like starting a dream job or business. The New York Times dubbed it the “YOLO Economy.”

Multiple surveys have found workers are considering or planning to look for a new job. A recent Prudential survey indicated that 1 in 3 millennials plan to look for a new job with a different employer once the pandemic is no longer a public health crisis, compared to only 10% of baby boomers.

While stories about relocating to a cheaper town or taking a chance on a new venture are enticing, such big moves come with a certain degree of risk, and potentially a pretty hefty earnings penalty, warn experts.

According to Payscale research, unemployed workers face a 4% wage penalty which increases to 7.3% if their period of joblessness lasts longer than a year.

“You are kind of rolling the dice, depending on how long you’re planning on being out of the labor market,” warns Greg McBride, Bankrate's chief financial analyst, who says the pandemic is causing major lifestyle and career changes. “People...have been kind of bottled up at home and they have cabin fever or [are] just feeling the need for a change,” he said.

Many millennials have incentives to quit and move to other parts of the country because remote work has allowed it during the pandemic. Some states have accelerated the war for talent by actually offering cash incentives for workers who choose to relocate. West Virginia, for instance, is offering $12,000 with no-strings-attached.

The surge in startup investing during the pandemic has also been a major incentive for millennials jumping on the YOLO bandwagon, says McBride. According to PwC and CB Insights' Q4 2020 MoneyTree report, startup funding hit a record high in 2020 as U.S. based, venture capital backed companies raised nearly $130 billion.

“There’s a lot of private money flowing around in terms of private equity, venture capitalists. So a lot of startups are getting funding and getting repeated rounds of funding,” said McBride. “That’s facilitated...the type of growth that I think can be attractive to somebody who's either looking to do something different in their career, or just maybe looking to jump start their career and view an up and coming company as a way to do that.”

However, McBride warns millennials to still “look before you leap,” in case that dream business falls through."

MY COMMENT

Interesting. It will be fun to watch how this all works out. If you are burned out on a regular job....good luck with starting a business......the work load will be way more than you had as an employee. BUT....that does not mean you should never try....if you are up to it and ready financially....go for it.

BUT.....there are many immigrants and workers in other ocuntries that are more than willing to fill any job that people are leaving. There are also younger generations more than willing to take your job. AND....other people your age will be more than wiling to take your job that you leave. We are going to see more and more companies go back to on-site work. The grass is always greener on the other side of the fence. AND....when the inevitable cuts come........last in.....first out.

My.....old time view.....it is a HUGE mistake for anyone that wants to advance in a company or business to work exclusively from home.