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

Men Unlikely to Marry Women with Large Debts

There was an article three weeks ago in The New York Times that began with the following paragraph: Nobody likes unpleasant surprises, but when Allison Brooke Eastman’s fiancé found out four months ago just how high her student loan debt was, he had a particularly strong reaction: he broke off the engagement within three days. [...]

from Joshua Kennon

My Birthday In Pictures

The birthday festivities began around midnight.  Most of my family was over visiting going over some details of something we needed to discuss.  Then, later that night (er … morning) I got an email from Molly, who sent me a charitable gift card to Kiva, a wonderful organization. I woke up to one of my [...]

from Joshua Kennon

How to Solve the Trade Deficit – Part IV

This is part of my special on How to Solve the Trade Deficit. You can read Part I, Part II, or Part III if you missed them. The Increased Competition for Jobs Is Domestic, As Well You mention that standards of living have fallen, despite gains in things like iPods with 25,000 songs and the [...]

from Joshua Kennon

How to Solve the Trade Deficit – Part III

This is Part III of my special on How to Solve the Trade Deficit.  If you missed the earlier parts, you can read Part I or Part II first. How to Solve the Trade Deficit – Knowledge Workers vs. Manual Workers In many ways, your question about the trade deficit has very little to do [...]

from Joshua Kennon

How to Solve the Trade Deficit – Part I

I received a question from a reader named Adam, who asked about the threat the United States trade deficit poses to our long-term financial health. It was an excellent, intelligent, well-articulated question that happened to arrive at the precise moment I was in the mood to talk about such an issue. The result is a [...]

from Joshua Kennon

In Honor of Warren Buffett’s 80th Birthday Today …

In honor of Warren Buffett’s 80th birthday today, I decided to personally sit down and examine all of the receipts at one of our operating businesses and look for any additional costs that could be cut.  We work hard to make sure expenses don’t get out of control and everything is justified but it is [...]

from Joshua Kennon

Where Do Millionaires Invest Their Cash to Keep It Safe?

I’ve been having a conversion about investing and money with the reader “Frat Man” in the comments section of another post.  He asked: I also had one other question I have always wondered. Where do millionaires keep their money? In the sense that FDIC insurance only covers $250,000 at the bank and SIPC only covers [...]

from Joshua Kennon

Mental Model: Social Loafing

If you were starting a project or business, common sense would tell you that you could produce 5x as much output if there were five people working on your goals than if there were just one person.  If you are running a counseling program, ten counselors should be able to do 10x the work as [...]

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

The Cult of the Majority (or You Don’t Have a Right to Vote for the President of the United States)

Countless Americans mistakenly believe that the constitution says we are a nation, “of the people, by the people, and for the people”.  They don’t realize that line came halfway through the nation’s history in the Gettysburg Address by President Lincoln and isn’t part of our constitutional framework at all. Consider, for a moment, that people [...]

from Joshua Kennon

How to Marry a Millionaire – An Economic Update on the 1953 Film

In 1953, a great movie starring Lauren Bacall, Bette Grable and Marilyn Monroe was released called How to Marry a Millionaire.  I got curious as to how much money it would take to equal the same net worth today so I did an inflation adjustment because I wanted to know how big their motivation was [...]

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

The Coming Collapse of the Middle Class – A Lecture by Elizabeth Warren

Want to know why the middle class is disappearing despite families now having two people in the work force instead of one? Here is Elizabeth Warren discussing in an hour-long lecture at Berkeley. She is the author of The Two Income Trap. The only thing I really take issue with is the fact the savings [...]

from Joshua Kennon

Coco Chanel Only Owned 10% of Her Business – Intelligent or Stupid?

I am going to start reading several biographies of Coco Chanel before long, so I made a run to a department store today to pick up some Chanel products (I have a habit of wanting tangible representations of whatever I’m studying around the office, which is why we need “investing cabinets”, which contain things like [...]

from Joshua Kennon

Limited Liability Companies LLCs vs. Limited Partnerships LPs

I am in the process of publishing several dozen new investing articles about limited liability companies and limited partnerships over at About.com, a division of The New York Times. The idea came to me a few weeks ago when a reader wrote and pointed out that millions upon millions of people will never own a [...]

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

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 Success of the iPad Will Come Down to App Development

Five days or so into my experience with the iPad and it continues to exceed expectations (by far). I’ve spent somewhere between $120 and $150 in the Apple iTunes App store, which compared to my previous purchases of apps (read: $0), means there is more cash flowing into Steve Jobs’ coffers. The overwhelming indication continues [...]

from Joshua Kennon

The Best Habit I Have …

Another batch of books arrived from Amazon.com following my book buying binge at Borders the other night.  That’s typically how it goes, though … I buy a few dozen books at a time, mostly in business, philosophy, psychology, investing, finance, history, and biography (all non-fiction – I’m not a big fiction reader). Early in my [...]

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

Our Value Investing Research Process for Stocks

A week or two ago, I wrote an article called Understanding Stock Repurchase Plans for About.com, a division of The New York Times, which discussed Sonic Restaurant and the massive stock buy back program that had taken place over the past few years. In it, I walked the readers through a lot of the math [...]

from Joshua Kennon

The 5 Levels of Building Wealth

Early in life, I developed a theory that there were five levels of building wealth that most self-made men (and women) go through to reach financial independence.  It was started by my love for Carl Barks Scrooge McDuck comics.  When I started reading the Federal Reserve reports of consumer wealth, empirical studies, and other sources [...]

from Joshua Kennon

Business Should Be Fun … If It’s Not, You’re Doing Something Wrong

When I talk about the idea of tap dancing to work, in the words of Warren Buffett, I’m not kidding or making a joke.  You should wake up every morning and jump out of bed because you can’t wait to spend your time focusing on something that makes every part of you – physically, mentally, [...]

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

Walter Schloss Value Investing Strategy

Walter Schloss, a legendary value investor who learned directly from Benjamin Graham, the father of value investing, never graduated from college and was hired as a runner on Wall Street in 1934, at the age of 18. Schloss enrolled in the New York Stock Exchange Institute, where he took courses from Benjamin Graham on how [...]

from Joshua Kennon

Benjamin Graham Value Investing Strategy

In addition to penning several of the most important value investing books in history, Benjamin Graham, the father of value investing, was one of the two partners in the Graham Newman Corporation, the investment fund through which he put money to work. It was at this firm that Warren Buffett worked early in his career, [...]

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

Why Income Inequality Will Always Exist as Part of the Post-Industrial Revolution Global Economy

First: Before we begin, the education system in the United States over the past few decades has done such a poor job teaching basic logic that by virtue of the headline alone, it is statistically likely that you have already made a decision about whether or not this short essay on pay inequality is “good” [...]

from Joshua Kennon

DeLong Sportswear Files for Chapter 7 Bankruptcy

If you are involved in the sporting goods industry, you probably know that there are only a handful of companies that manufacture letterman jackets in the United States.  Among the biggest was a company called DeLong Sportswear, headquartered in Grinnell, Iowa.  A few months ago, rumors are that DeLong went into Chapter 7 bankruptcy and [...]

from Joshua Kennon