Warren Buffett, a rock star in the world of investing, has noticed the pattern of panic in the stock market recently and is using this volatility to his advantage. I am still buying into the market; the only change I’ve made is to buy more stocks, even if I don’t get the price at the lowest point on the curve.
Buffett is filling up his personal portfolio with American stocks with the goal of having an asset allocation 100% in equities in a short time. He sees fear in the market now, and he is sticking to a mantra that has worked well for him throughout his life: “Be fearful when others are greedy, and be greedy when others are fearful.”
You might think it would have been impossible for an investor to lose money during a century marked by [a gain of 17,320% in the Dow]. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.
This is an opportunity that comes around only once every few decades. If you want to have the long-term gains that financial advisers claim stocks can provide, you have to buy low and sell high rather than buy happy and sell afraid.
Photo credit: TEDizen
Buy American. I Am., Warren E. Buffett, New York Times, October 16, 2008 via ramit.
If you are lucky enough to inherit (for example) $10 million in property or investments from deceased relatives, you are also lucky enough to pass a good portion of that to the government in the form of estate taxes. It is kind of a strange concept. Why should that money be taxed? It is simply a gift from one person to another, not a gift to the government. The basic argument in favor of the estate tax is that it helps to prevent massively wealthy families from avoiding tax on their main source of income, generation after generation. The existence of the estate tax also encourages charitable giving, as that is a way to avoid this particular tax.
Opponents of the estate tax often call it a “death tax” to stir emotions and create a political issue. Warren Buffet has is critical of the “death tax” term and is a strong supporter of the estate tax.
The billionaire investor has been an outspoken critic of efforts to repeal the estate tax and in testimony at a Senate Finance Committee estate tax hearing on Wednesday, he told lawmakers that you’d have to attend 200 funerals to be at one where the family of the deceased would owe estate tax.
So it sounds like the families that were intended to be taxes on their estates end up avoiding the tax while still passing along their wealth. Those who want to repeal the tax argue that it hurts farmers and family business owners whose property or business is passed down from one generation to the next, and need to sell part of their business to pay the bill.
Buffett provided suggestions for improvements to the estate tax that will ensure that those passing on their wealth fairly contribute to the government while protecting family-owned businesses.
File this under the category of “problems I’d like to have one day.”
Update: On Advanced Personal Finance, KMC explains why the estate tax is the most misunderstood tax.
Do you think the estate tax should be repealed?
Buffett: Phrase “Death Tax” is “Dead Wrong” [CNN Money]
According to CNN, if you add up the net worth of the 400 wealthiest Americans, you come up with a combined net worth of $1,250,000,000,000. That’s $1.25 trillion.
That’s an increase of $120 billion from last year.
The article then goes on to describe who is in the list (only billionaires, no lowly millionaires). Warren Buffett and Bill Gates, pictured here, are at the top, But that’s not important to me today. This is what I really want to know: [click to continue…]
Here’s another caption contest. What do you imagine is going on between Warren Buffett and Kelli Swanson? Leave your photo caption in the comments below. The winner gets a cookie.
Stephen Dubner, the author of Freakonomics, noted that Warren Buffett (who I’ve been writing much about lately, it seems) made a comment on a talk show recently describing one particular failing of market systems, particularly the free market system enjoyed in this country.
Buffett’s comment: “A market system has not worked in terms of poor people.” This is why he feels the need to give away his fortune to the Bill and Melinda Gates Foundation, which works hard for those with no means to help themselves.
The comments following Dubner’s post have been somewhat insightful. Is philanthropy outside of the free market system, or does this form of economy rely on the “goodness” of a few with incredible means to help those without? Buffett believes that if a better economic system was in place — it looks like he’s thinking globally — there would be no need for this type of philanthropy. But does the economic system take philanthropy into account, thus relieving the government from potential responsibility to the poorest?
It seems that Warren Buffett is domainating the news lately. According to Fortune Magazine, he’s planning to give away 85% of his wealth, mostly to Bill Gates through his foundation.
Buffett has pledged to gradually give 85% of his Berkshire stock to five foundations. A dominant five-sixths of the shares will go to the world’s largest philanthropic organization, the $30 billion Bill & Melinda Gates Foundation, whose principals are close friends of Buffett’s.
Although Buffett has said he plans to give away his money at death, it seems he’s revising his plan. From an interview, here’s what Buffett says about he and his wife (Susie) giving money to their kids before their foundations:
Certainly neither Susie nor I ever thought we should pass huge amounts of money along to our children. Our kids are great. But I would argue that when your kids have all the advantages anyway, in terms of how they grow up and the opportunities they have for education, including what they learn at home – I would say it’s neither right nor rational to be flooding them with money.
Interviewer: From the fact that you’ve given your kids money before to set up foundations and are planning to give them more now, I gather you don’t think that kind of flooding them with money is wrong.
No, I don’t. What they’re doing with their foundations is giving money back to society – just where Susie and I thought it should go. And they aren’t just writing checks: They’ve put enormous thought and effort into the process.
I’m very proud of them for the way they’ve handled it all, and I have no doubt they’re going to keep on the right track.
Not only does Warren Buffett have enough money to fund his foundation and give to others including Bill Gates’ foundation, he also has enough to pass along to his children so they can manage their own foundations. That is pretty impressive, but what’s more impressive is that the money is used for the improvement of society in some form.
If you’ve been bidding on eBay’s auction for lunch with Warren Buffett, you may want to know that the highest bid is currently $455,100. That’s the highest price this annual event has raised is the few years of its existence. The auction opened yesterday and will end on the June 29, so get our your credit card.
Warren Buffett will be once again auctioning off the pleasure of dining with him. Last year, he raised $351,100. This year, he’ll be in New York at Smith & Wollensky. The auction will take place with the help of eBay and will begin on June 22, so get your checkbooks ready.
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