Berkshire Hathaway (BRK.A) always gets a lot of attention when it make investments or does other kinds of deals. The latest investment by Berkshire in Heinz (HNZ) to take this company private offers some insight that it worth noting. What can be learned about this deal? My overall conclusion is that BRK.A got involved because the terms were OK, but not a screaming deal. Here’s why.
It’s not a good time to be an Apple investor right now. It may be a good time to become an Apple investor. If you are an experienced investor, you likely will get excited when quality companies are sold off, especially for what may be dubious reasons. Since the stock is damaged, you can sit back and take the time to perform a good analysis. You will have time to establish a position, maybe for even lower prices.
The question is, what is the bull case for Apple today, if any? I’m going to look at Apple not how the typical Wall Street analyst or mainstream financial writer looks at it, but as a value investor would who is interested in owning a great business.
Investing is better accomplished with a cool mind, good information and facts. When looking at how investors act in the market, they are far more rational and sane over extended periods of time than they get credit for. If we go back to the past 10 years, the dramatic drops in the stock market correctly occurred because future company earnings went down fast. This wasn’t an irrational response, it was a rational one.
This chart below demonstrates this point well. The earnings for the market (S&P500) were increasing up until the crisis occurred. Once the financial crisis hit, the market predicted future earnings distress. In an orderly fashion, stock prices went down.
Life was easy when I went to college, it was almost like being in the real world yet really having few actual responsibilities or liabilities. When you grow up and take on the responsibilities of adulthood, it becomes necessary to plan financial decisions. I’ve listed here a few that are pertinent to my own personal situation right now. I have been putting these off for a while so this article is a good reminder for me to get moving on these important topics.
These are not time consuming, but they do require an effort on your part to get started. The hardest part is finding competent professionals in some of these cases.
If you are investing on your own – especially an individual stock picker – you need to have a strategy and a plan. Strategy involves deciding how you want to invest and the techniques that you want to use to get there. Once you have a strategy, execute a plan that implements that strategy. Then, your overall results wouldn’t be complete with an honest assessment of how your plan is working out based upon your expectations.
I will write a post in the future on this, but my portfolio strategy involves: