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INVESTOR IN THE FAMILY Radio

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Now displaying: April, 2017
Apr 28, 2017

Welcome to Episode 4 of the "Becoming Buffett" Series!

This week we discuss the 1968 letter to Berkshire Hathaway shareholders.

Buffett's annual letters book: http://amzn.to/2ogVi4U

Some brief notes:

1968

“Immediately after year end, we purchased all of the stock of Sun Newspapers, Inc. and Blacker Printing Company, Inc., which represents an initial entry into the publishing business.”

  • Working hard to improve operating earnings in textile ares
    • They aren’t just abandoning the investment at the first sign of trouble, willing to be patient to allow thesis to play out.
  • Letter now divided into three sections: textile operation, insurance operations, and marketable securities/acquisitions
    • Could you have one more income stream 3 years from now?
  • Insurance operations going well
    • Investment income increased substantially in 1968
    • Capital gains from common stock investments
    • “The insurance companies continue to seek new areas for expansion”
    • Could you make ONE great investment this year that could reward you for years to come?
  • Marketable securities/acquisitions
    • Funds were held in common stocks as a temporary investment while waiting for acquisition or expansion opportunities
    • Bought Sun Newspapers, Inc. and Blacker Printing Company, Inc. as entries into the publishing industry
    • “This purchase, while small, has the potential for future expansion.”
      • Is there a local, private company you could buy an interest in (or buy outright)?
      • Let’s stretch our thinking in regard to the options available to us as investors
  • Management of insurance and publishing companies continued under existing leadership after acquisition
    • Quality mgmt is a big deal to Buffett
    • Is it for you?
    • Are YOU a quality manager of your business (household)?
    • The benefits of great management is that you now have super talented people working to make you money; work to surround yourself with people smarter than you!

http://investorinthefamily.com/

 

Apr 20, 2017

Welcome to Episode 3 of the "Becoming Buffett" Series!

This week we discuss the 1967 letter to Berkshire Hathaway shareholders.

Buffett's annual letters book: http://amzn.to/2ogVi4U

 

Some brief notes:

“Our goal is to obtain a reasonably stable and substantial level of earning power commensurate with the capital employed in the business.”

  • Negative: Sales were down, sharp drop in prices, sales and profits down substantially, depressed conditions in textile markets, curtailed production 15%
  • Positive: one sector doing well due to “attempting to establish product lines away from areas of direct competition”
  • P8, para1: spending money internally for the purpose of future increased cash flows
  • P8, para4: conducted research and made tough decision to close a quality plant that had lack of demand for product
    • What are we a slave to financially? Your job?
    • What do you need to cut and stop throwing money into?
  • P8, para7: broader investment philosophy (insurance companies)
    • You can have time as an investor if you are focused on the long-term
    • This was BH’s first move toward diversification: textiles and insurance
    • This was a slow process, could you research and add one company per year to your BH?
    • As you acquire more capital, where will you allocate it?
  • P9, para2: mgmt continues to be alert to new opportunities for capital allocation
    • They were poor investors from 1956-66 (pre-Buffett), had basically no ROI on invested capital for 10 year period
    • Can you relate to that?
    • Acknowledged the reality and are learning from it.
    • Keeping liquid money in stocks as they wait for the right capital allocation/investment opportunity
    • Will not hesitate to borrow money to take advantage of attractive opportunities

http://investorinthefamily.com/ 

Apr 13, 2017

Welcome to Episode 2 of the "Becoming Buffett" Series!

This week we discuss the 1966 letter to Berkshire Hathaway shareholders.

Buffett's annual letters book: http://amzn.to/2ogVi4U

 

Some brief notes:

1966

“It has always been among the goals of BH to maintain a strong financial position.”

  • Remember, we are business owners.
  • The management of our family’s finances and investment is a business.
  • We must not make the mistake of degrading our situation with false mindsets that lead us to any other thinking.
  • The term “personal finance” seems almost inane (boring and worthy to be ignored), but the term “corporate finance” has the air of grandeur.
  • We cannot make that mistake.
  • The management of our personal finances is a business endeavor that must be taken seriously
  • In Buffett’s 1966 letter (not signed by Buffett) we see why.
  • This is the letter that plants the seeds for the birth of BH as we now know it
  • The meat of the letter is the company’s intentions to have a strong financial position and be poised to act when acquisition opportunities arise
  • Is the same true for YOU and ME?
  • Another point I want to make is the chart I mentioned last week showing the companies that BH has acquired since 1965.
  • I count 59 companies over 50 years.
  • How does that compare to your portfolio?
  • Why don’t we buy like this?
  • The Entrepreneur to Mutual Fund of Mutual Funds continuum
  • The less info we have, the more diversified we should be
  • Knowledge/understanding = conviction = concentration of assets

http://investorinthefamily.com/ 

Apr 7, 2017

This week we launch our new series "Building Berkshire."

It's time we all make a mindset shift in how we view our investing. 

Buffett's annual letters book: http://amzn.to/2ogVi4U

http://investorinthefamily.com/

 

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