Decades ago, my dad told me … when listening to advice … find out if they have accomplished what they suggest … before you follow their advice. (Actually, my dad’s expression was, “Make sure they eat their own cooking.”) Warren Buffet fits my dad’s description.
Warren Buffett’s insights are crystal clear, simple and make sense..... here’s 2 Buffett minutes by motivational speaker Chris Howard (http://symbiosis4u.us/MP3/Audio.htm and click on the top left link).
And, here’s a few of Buffett’s insights that I found particularly useful:
1. If everyone else is doing it, be careful … because even a dead fish can float downstream.
2. Successful investing depends less on the size of your circle of competence, and more on staying away from the perimeter. Stepping over the perimeter of your circle of competence transitions you from investor (business owner) to speculator (gambler).
3. The single biggest cause of the recent meltdown on Wall Street was (and still continues to be) people investing like “day traders.” Too many people assess stock certificates like cards in a hand of poker, rather than proof of ownership for a piece of the business. Without dividend oriented ownership, speculation will always produce gyrations in stock prices.
If you are unfamiliar with Warren Buffett, consider this: In 1979, you could have purchased his stock for $290/share. Today it costs $120,000/share … IF you can find someone willing to sell. You can read more about Buffet’s investing philosophy by reading some of his annual Chairman's Letter to Shareholders. http://www.berkshirehathaway.com/letters/letters.html
In terms of business ownership, there are only two ways to own a business. You can either own your own business (http://symbiosis4u.us/MP3/TurnKey.mp3) … or you can own a piece of someone else’s business.
If you own a piece of someone else’s business, you show ownership by supporting the business whose stock you purchased. Consider: if you own stock in Coca-Cola … yet you drink Pepsi-Cola …. you are not a business owner of Coca-Cola stock. You are “day trading” with Coca-Cola stock.
Think about it! If your ONLY monthly income came from your stock in Coca-Cola, would you encourage anyone to buy a soft drink from any other company? A Coca-Cola stock owning evangelist will attempt to get family, friends, co-workers, and even strangers to drink Coca-Cola products. The more people who buy Coca-Cola products, the higher the company profits, the higher your monthly income from dividend checks. Listen to comedian Andy Andrews discussing Coke versus Pepsi. http://symbiosis4u.us/MP3/CokePepsi.mp3
Back in the 1980’s when Lee Iacocca took over Chrysler, the executive parking lot was full of Mercedes, Jaguars, and Porches. Because Chrysler executives were “day trading” with their jobs, Iacocca gave his executives one day to get a Chrysler car, or get a new job.
Note: quality improved dramatically soon after the Chrysler executives had to drive Chrysler cars. They did not want to drive poorly designed and poorly build cars. Iacocca caused Chrysler executives to stop being “day trading” employees and begin functioning like owners. What a pity they did not continue.
Owning a piece of someone else’s business has been one of the primary means of investing for retirement (long term investment as opposed to speculative investment). Many corporations set up 401K accounts (or is it 201K now?) so employees could invest in other businesses.
Question: Did 401Ks become 201Ks because their managers stepped out of their circle of competence and became speculators?
Is that question too harsh? You decide … after you have considered a different kind of comparison.
Since 401Ks began in 1978, tell me any 401K account which has averaged 25% growth from dividends per year, every year?
Can’t think of any? Then consider this easier question.
Since 1978, do you know of any 401K account with a ROI (Return On Investment) of 25% of the monthly contribution … per month … every month?
Yet, such profits are quite common with personal businesses. Unfortunately, few corporations encourage employees to start their own personal businesses.
Caveat: 25% per month is common, but NOT on the aggregate. If a person spends $300 a month on “stuff” from their own business, they can reasonably expect to receive a profit sharing check (like monthly dividends) for about 25% of what they selectively purchased. Currently, in excess of 100,000 items, including from 20% to 80% of “stuff” most families purchase regularly, are available for purchase … with automatic monthly profit sharing.
Based on Warren Buffet’s concepts, augmented with my perceptions, the basic problem with investing by employees is this: other businesses can make money from employees … employees cannot … especially not from themselves.
Allow me to illustrate how pejorative that is for employees.
If Costco were to offer free memberships to employees, which increase Costco profits … most corporations would accept the offer. (Costco is NOT the only membership shopping program http://symbiosis4u.us/Newsletter/Membership.pdf .) But, if Symbiosis Enterprises offers employees 25% profit margins for personal purchases, which also increase my profits, most corporations would not accept.
Is that statement too harsh? You decide after you have reviewed how corporations perceive the abusive (and historically accurate) practices of a classic personal business. http://gr8team-tnt.info/TNT/Ninja.htm
Let me close this newsletter with a question.
If you had a choice between investing $300 every month in your 401K (with whatever return it currently offers), OR re-directing $300 every month (of money you are already spending) in order to receive $75 in profit sharing … which would you choose?
Of course, I won’t explain how a mere $75 a month in profit sharing could fund your $300 a month 401K investment … because … that will be a good subject for a future newsletter.
Warren Buffett’s insights are crystal clear, simple and make sense..... here’s 2 Buffett minutes by motivational speaker Chris Howard (http://symbiosis4u.us/MP3/Audio.htm and click on the top left link).
And, here’s a few of Buffett’s insights that I found particularly useful:
1. If everyone else is doing it, be careful … because even a dead fish can float downstream.
2. Successful investing depends less on the size of your circle of competence, and more on staying away from the perimeter. Stepping over the perimeter of your circle of competence transitions you from investor (business owner) to speculator (gambler).
3. The single biggest cause of the recent meltdown on Wall Street was (and still continues to be) people investing like “day traders.” Too many people assess stock certificates like cards in a hand of poker, rather than proof of ownership for a piece of the business. Without dividend oriented ownership, speculation will always produce gyrations in stock prices.
If you are unfamiliar with Warren Buffett, consider this: In 1979, you could have purchased his stock for $290/share. Today it costs $120,000/share … IF you can find someone willing to sell. You can read more about Buffet’s investing philosophy by reading some of his annual Chairman's Letter to Shareholders. http://www.berkshirehathaway.com/letters/letters.html
In terms of business ownership, there are only two ways to own a business. You can either own your own business (http://symbiosis4u.us/MP3/TurnKey.mp3) … or you can own a piece of someone else’s business.
If you own a piece of someone else’s business, you show ownership by supporting the business whose stock you purchased. Consider: if you own stock in Coca-Cola … yet you drink Pepsi-Cola …. you are not a business owner of Coca-Cola stock. You are “day trading” with Coca-Cola stock.
Think about it! If your ONLY monthly income came from your stock in Coca-Cola, would you encourage anyone to buy a soft drink from any other company? A Coca-Cola stock owning evangelist will attempt to get family, friends, co-workers, and even strangers to drink Coca-Cola products. The more people who buy Coca-Cola products, the higher the company profits, the higher your monthly income from dividend checks. Listen to comedian Andy Andrews discussing Coke versus Pepsi. http://symbiosis4u.us/MP3/CokePepsi.mp3
Back in the 1980’s when Lee Iacocca took over Chrysler, the executive parking lot was full of Mercedes, Jaguars, and Porches. Because Chrysler executives were “day trading” with their jobs, Iacocca gave his executives one day to get a Chrysler car, or get a new job.
Note: quality improved dramatically soon after the Chrysler executives had to drive Chrysler cars. They did not want to drive poorly designed and poorly build cars. Iacocca caused Chrysler executives to stop being “day trading” employees and begin functioning like owners. What a pity they did not continue.
Owning a piece of someone else’s business has been one of the primary means of investing for retirement (long term investment as opposed to speculative investment). Many corporations set up 401K accounts (or is it 201K now?) so employees could invest in other businesses.
Question: Did 401Ks become 201Ks because their managers stepped out of their circle of competence and became speculators?
Is that question too harsh? You decide … after you have considered a different kind of comparison.
Since 401Ks began in 1978, tell me any 401K account which has averaged 25% growth from dividends per year, every year?
Can’t think of any? Then consider this easier question.
Since 1978, do you know of any 401K account with a ROI (Return On Investment) of 25% of the monthly contribution … per month … every month?
Yet, such profits are quite common with personal businesses. Unfortunately, few corporations encourage employees to start their own personal businesses.
Caveat: 25% per month is common, but NOT on the aggregate. If a person spends $300 a month on “stuff” from their own business, they can reasonably expect to receive a profit sharing check (like monthly dividends) for about 25% of what they selectively purchased. Currently, in excess of 100,000 items, including from 20% to 80% of “stuff” most families purchase regularly, are available for purchase … with automatic monthly profit sharing.
Based on Warren Buffet’s concepts, augmented with my perceptions, the basic problem with investing by employees is this: other businesses can make money from employees … employees cannot … especially not from themselves.
Allow me to illustrate how pejorative that is for employees.
If Costco were to offer free memberships to employees, which increase Costco profits … most corporations would accept the offer. (Costco is NOT the only membership shopping program http://symbiosis4u.us/Newsletter/Membership.pdf .) But, if Symbiosis Enterprises offers employees 25% profit margins for personal purchases, which also increase my profits, most corporations would not accept.
Is that statement too harsh? You decide after you have reviewed how corporations perceive the abusive (and historically accurate) practices of a classic personal business. http://gr8team-tnt.info/TNT/Ninja.htm
Let me close this newsletter with a question.
If you had a choice between investing $300 every month in your 401K (with whatever return it currently offers), OR re-directing $300 every month (of money you are already spending) in order to receive $75 in profit sharing … which would you choose?
Of course, I won’t explain how a mere $75 a month in profit sharing could fund your $300 a month 401K investment … because … that will be a good subject for a future newsletter.
