Other People's Money - More about the evils of cheap capital and why tight money is good for investors. "There is no better way to make managers understand how valuable capital is, than to charge them for it," ...Warren Buffett
Lunch Money Indicators - Annual Reports Actions speak loader than words (or sometimes numbers). What are the deeds that speak about the integrity of a company's management?
The 450,000 Square Foot Furniture Store - this is No ordinary store. If you have never been inside the Nebraska Furniture Market it is easy to underestimate its significance. It is not that one furniture store will have much impact on a company the size of Berkshire, but a visit to the Omaha store speaks volumnes about Buffett's business philosophy, and particularly it helps the visitor understand how he has built a huge moat around this furniture business. If I were teaching a class in a business school about moat construction for a retail business I would start the class out with a trip to Omaha.ore about the Nebraska Furniture Market and what it tells about the management philosophy at Berkshire Hathaway. What does the "Principle of Intermediate Fragmentation" have to do with selling home furnishings?
Carnival Cruise Lines - Because the cruise companies are foreign corporations, and because most of the business of cruising is done offshore, substantially all of Carnivals income is exempt from U.S. corporate Tax. Most of the Companies shipboard employees are foreign nationals and are not US residents so they are not subject to US Income tax on wages and the company is not required to contribute Social Security and Medicare taxes on their behalf. While most of the recreation industries are intensely seasonal (Las Vegas is hot in the summer and cold in the winter, Orlando has very hot, very long summers). The Cruise business can mitigate this seasonality to some extent by moving its best ships to take advantage of seasonal rate premiums. Their ships can sail Alaska in the summer and the Bahia or Caribbean in the winter. They can sail Scandinavia in the summer and the Mediterranean in the spring and fall.
Berkshire Meeting - The last week in April is the time to be in Omaha. Highlights of the Berkshire Hathaway annual meeting.
Sit on Your Ass Investing? - Is this the time for buy and hold forever? Or should we be studying what worked in the sixties and seventies. In a roller-coaster market maybe you want to think about getting off, and getting on.
Bubble Watching - Will the FED be able to avoid Bubble Number two? As far as the recovery is concerned fast is bad slow is good.
Costco's Moat - In other words Costco can show the same profit on 10.4% markup as Dillard's can on a mark up of 32.3%. For a watch that manufactures sells for $100. Dillard's would have to sell it for $132.30 to make the same profit that Costco would make by selling the same piece for $110.40 (this percentage is actually based on a markdown not a markup so the real prices would be higher, but you get the idea.) Wal-Mart is bringing 1.5% more down to the bottom line so they would price the watch at $124.5 ($123 + $1.50).Low margins and fast turn over can help to create a respectable moat for a retail powerhouse.
The Dinosaur Dance - This article talks more about moats. Deswell Industries is a company incorporated in the British Virgin Islands with operating subsidiaries headquartered in Hong Kong and all its production facilities located in mainland China.
Ben Laden and Berkshire Hathaway - What happens to the intrinsic value of an insurance company when it has to pay 2.2 billion in claims?
Buy and Hold? - It all Depends Bull markets are great for investors that like to buy and hold but bull markets do not last forever.
Don't Fight the FED - It has been eleven months now, since the Federal Reserve Board started to pull back on the stick, but the economy still has not been able to get off the ground. Every recession since the end of World War II has ended as soon as the Fed stated to ease. Is it going to be different this time?