Berkshire Hathaway Board of Directors Approves Share Repurchase Plan

I’ve made no secret of the fact I’ve been a net purchaser of Berkshire Hathaway shares for the past year.  The valuation seemed (and still seems) absurdly low relative to intrinsic value.  Apparently, the Berkshire Hathaway Board of Directors and management agrees.1  The company is now looking at itself as the best use of the firm’s [...]

from Joshua Kennon

We Are Living in the Midst of One of the Biggest Bond Bubbles in History

Today, I was sitting at the dining room table, drinking a cup of coffee and wearing my Brooks Brothers pajamas watching the stock market skyrocket when it occurred to me that, given the secret project and some other things going on at the business, I want to build some cash and bond reserves at one [...]

from Joshua Kennon

Memories: Freezing in a Pumpkin Patch

Last fall, my sister wanted the whole family to go with her to the pumpkin patch so my niece could experience it for the first time.  Unfortunately, she kept pushing it off until it was almost winter so the pumpkin patch was going to close.  This left the only available day for a visit in [...]

from Joshua Kennon

One of the Mansions In Charlie Munger’s Secret “Mungerville” Up for Sale

Given that I wrote about Charlie Munger so much this week (re-reading part of his biography caused him to be on my mind), I thought this was interesting … Years ago, through a tiny property subsidiary called MS Properties (or something along those lines), that is a subsidiary of Wesco Financial Corporation, that is a [...]

from Joshua Kennon

You Will Make Mistakes. Forgive Yourself. Move On. Start Rebuilding.

“His son died, his marriage ended, he lost a lot of money,” said Charles, Jr.  “He just walks away from that (emotionally).  Dad says to himself, that doesn’t work.  Don’t revisit it.  There are some things my dad could deal with better if he faced them more.  My dad, if he had a bad experience [...]

from Joshua Kennon

The First $100,000 Is Hardest

“Munger has said that accumulating the first $100,000 from a standing start, with no seed money, is the most difficult part of building wealth.  Making the first million was the next big hurdle.  To do that a person must consistently underspend his income.  Getting wealthy, he explains, is like rolling a snowball.  It helps to [...]

from Joshua Kennon

The Secret World of Brooks Brothers

Before I “arrived” as they say, I had no idea how different clothes shopping was for men once they became successful.  Honestly, I never thought much about it but the assumption was that in terms of logistics, it would be just like shopping at Wal-Mart only with better surroundings, better service, higher quality and higher [...]

from Joshua Kennon

New Wardrobe Additions for the Wedding

Aaron and I went shopping today for my sister and soon-to-be-brother-in-law’s wedding gifts.  We also decided we wanted to wear something new that wasn’t parked in our respective closets so we headed to Nordstrom and a few other stores. I ended up going with a modern cut lavender white stripe dress shirt with mother-of-pearl buttons [...]

from Joshua Kennon

The Sugar Refiner Shares We Own Are Surprising Me (and More Portfolio Updates)

I hardly ever talk about the portfolios I manage (the last time was when I added Campbell Soup to the blue chip reserve portfolio in Some Changes In the Portfolio), mostly because investment ideas are rare.  Still, I write about it to the same extent I would be willing to discuss something over coffee with [...]

from Joshua Kennon

The Strap on my Montblanc Star Chronograph Automatic Broke (Another Lesson in the Time Value of Money)

When I was 22 years old, or thereabouts, I bought a Swiss made Montblanc Star Chronograph Automatic stainless steel watch from Borsheim’s during the Berkshire Hathaway shareholder meeting.  I wanted something that would last, God willing, for the rest of my life and would remind me of when I was young, just starting out, and [...]

from Joshua Kennon

Does Geographic Location Influence Success?

I was speaking to a relative of mine when this person (who shall remain nameless) expressed horror that after living near New York for so long, I would buy a house near my parents in the Midwest.  “I thought you were going places!” they basically decried in exasperation. It was then that I realized how [...]

from Joshua Kennon

Response to What Is Probably the Most Ignorant Message I’ve Received In 10 Years of Writing Finance Articles

A reader named Medusa wrote me and, to keep it short, explained that I shouldn’t believe people should be rich because the Bible is against rich people, that I was going to die a miserable, lonely old man with no one who loved me because I saved my money instead of spending it, and that [...]

from Joshua Kennon

“Dreams Become Reality One Choice at a Time” – A Lesson on Life, Business, and Money

Isn’t that a fantastic quote?  I got it from Tara Beth Workman a few days ago and I’ve been thinking about it since.  I realize that it is entirely true and that my life is a reflection of that.  All of our lives are reflections of that.  Let me explain. This afternoon, Aaron and I [...]

from Joshua Kennon

Not Every Value Investing Position Is “Buy and Hold”

I’m a value investor.  My favorite type of holding is a company that generates high returns on non-leveraged equity, has a strong competitive position that is virtually unassailable, and is trading at a stupidly low price-to-earnings ratio.  These are rare and when they come along, you have to be willing to make a substantial commitment [...]

from Joshua Kennon

Thanks a Lot, Greece … Bought Some More Berkshire Hathaway

As a result of the Greece debt crisis, stocks crashed today.  The accounts are down roughly 3% to 4% and it’s only noon in the Midwest. We went back for another round, purchasing more shares of Berkshire Hathaway this morning for the reserve portfolio, which comes on the heels of our acquisition last Friday.  I’m [...]

from Joshua Kennon

Interesting Day Both for Our Businesses and the Stock Market

Exciting day … quite a bit of stuff happened at the companies, but I’m not comfortable discussing it (and probably won’t at any time in the future).  Suffice it to say, an opportunity presented itself that could have huge growth potential for one of our major businesses.  It just changed my plans for the rest [...]

from Joshua Kennon

Working on the Book and Investing

  I decided to start working on the book again today (forgive the HP notebook; I had to use a specific program that required Windows so the MacBook Pro is elsewhere until I recall it). I ended up watching the Goldman Sachs testimony to Congress. The culture of Wall Street doesn’t appeal to me. All [...]

from Joshua Kennon

The Maserati Quattro Is a Thing of Beauty

I am not a car guy. In fact, I’m a stern believer that people shouldn’t spend more than 10% of their net worth on a car when they are first starting out (and much lower later in life as their balance sheet equity expands). Thus, if you have $150,000 in savings, you shouldn’t spend more [...]

from Joshua Kennon

PPL Corporation Stock Risk Analysis

This is a risk analysis of PPL Corporation stock for a friend of mine that was hired by the company.  Those of you who want to know how I think about risk management are perfectly welcome to read it but it is specifically targeted so I’m not sure how useful you’ll find it. I’ve worked [...]

from Joshua Kennon

Virgin Money Social Lending – a New Revolution in the Debt Markets

First, I would never loan money to friends or family (with only a handful of exceptions*, one of which is my parents) under any circumstances. To me, money isn’t important – I just want to build and create like a little kid with a Lego set or a real-life version of Sim City. Other people, [...]

from Joshua Kennon

The Dairy Queen Franchisee Revolt

In the year following graduation from college, Aaron and I looked into opening several Dairy Queen franchises in Kansas City, Missouri and the surrounding suburbs near where we had grown up before leaving for the east coast.  Even though we figured we’d end up in a no-income-tax state such as Texas, Washington, or Nevada (paying [...]

from Joshua Kennon

I Finally Understand Buffett’s Comment …

When I was a kid, I recall watching a recording of a speech Warren Buffett gave to a college group and he said it would be incredibly boring to watch him work if you had the opportunity to observe Berkshire Hathaway for a day.  When I began building my company, Aaron and I wanted a [...]

from Joshua Kennon

The Housing Crisis Isn’t All Bad …

As Warren Buffett pointed out in this year’s letter to Berkshire Hathaway shareholders, for every house that falls in value and pushes one family into bankruptcy, another American family benefits from the lower prices as new households are created due to the younger generation graduating from college, settling down, and moving out of their parents’ [...]

from Joshua Kennon

How to Find Investment Ideas

Years ago, I wrote an article called Finding Investment Ideas for Your Portfolio for About.com, a division of The New York Times.  I’ve been thinking for the past few days about how it is that I seem to come across so many opportunities and then I realized that most people like me are always looking [...]

from Joshua Kennon

Rainbow Pancakes

I happened to be sitting at the dining room table, a cup of coffee in one hand, writing out plans for potentially launching a mutual fund this year (this time around, it’s a Parker Duofold rollerball in an amber check pattern from the recent shipment of fine writing instruments we received at Kennon Home Accessories [...]

from Joshua Kennon

Focused Value Investing Strategy

The focus value investing strategy is different from traditional, Benjamin Graham value investing strategy because it is based upon the idea of putting money into more of an investor’s “best ideas”, as Warren Buffett put it.  Some value investors despise focused investing, while others swear by it.  I’m always very hesitant to talk about this particular [...]

from Joshua Kennon

Margin of Safety – The Secret Value Investing Strategy

The single most important concept in all of investing, according to Benjamin Graham and later confirmed by his star student, Warren Buffett, comes down to three simple words: Margin of Safety. What is the margin of safety?  How do you calculate it?  How important is it to developing a successful value investing strategy?  As you’ll [...]

from Joshua Kennon

Tweedy, Browne Value Investing

For years, my family has maintained a substantial portion of our retirement accounts through Tweedy, Browne & Company, the oldest value investing firm in the world. Originally serving as stock broker to the father of value investing, Benjamin Graham, Tweedy, Browne & Company converted to a money management company and eventually launched several highly successful mutual funds [...]

from Joshua Kennon

Charlie Munger Value Investing Strategy

Charlie Munger, the Vice Chairman of Berkshire Hathaway, former hedge fund manager, and billionaire value investor, was instrumental in changing Warren Buffett’s way of thinking about value investing. Charlie insisted that the investor would be better served by focusing on better quality businesses, even if the price were higher, because those businesses could be held [...]

from Joshua Kennon

Bill Ruane Value Investing Strategy

In 1950, William Ruane, or Bill Ruane as he was known, took a course on value investing taught by Benjamin Graham and David Dodd at Columbia University despite having graduated from Harvard Business School.  One of his classmates was Warren Buffett, with whom he formed a friendship.  Years later, when Buffett dissolved his investment partnership, [...]

from Joshua Kennon

Asset Allocation Rebalancing

One of the cornerstones of asset allocation is the concept of rebalancing.  Done correctly, rebalancing forces you to buy certain investments when they are undervalued (cheap) and sell when they are overvalued (expensive).  In effect, it makes the owner of the portfolio a value investor without the need to analyze individual companies.  It can even [...]

from Joshua Kennon

Asset Allocation Basics 101

Asset allocation is one of the most important concepts you must learn as an investor.  By practicing it, you can balance your portfolio against adverse market conditions, keeping more capital in your account so you can take advantage of the market crashes that will happen as an inevitable result of human nature. That is why [...]

from Joshua Kennon

The Psychology of Human Misjudgment by Charlie Munger

By Charlie Munger (Warren Buffett’s partner at Berkshire Hathaway) Speech at Harvard Law School (1995) Transcription of The Psychology of Human Misjudgment, comments [in brackets] by Whitney Tilson.  Note from Joshua Kennon: I’ve written a lot about Charlie Munger over the years, especially the influence he has had on my life and how we run [...]

from Joshua Kennon