In February, Berkshire Hathaway CEO and 86-year-old billionaire investor Warren Buffett, known as the “Oracle of Omaha,” published his annual shareholder letter. This yearly narrative is widely recognized not just for its predictive precision, but for his ability to share investment insights in terms the average person can understand.
This year’s letter offers the following insights:1
Respond appropriately to your concerns
In the past, Buffett has stated, “Be fearful when others are greedy and greedy when others are fearful.” This year, he reminds investors that acting on your concerns is appropriate only in certain contexts. Widespread concern can present investment opportunities, but personal concern can cause you to miss them.
Increase profit margin
When gains are volatile, investors can still produce investment results by reducing expenses charged by some securities products and service providers.
Buy and monitor
While Buffett enjoys a traditional buy-and-hold reputation, his colleagues note that he does not hold indiscriminately — he constantly reviews and monitors to ensure value is sustained.
Buffett has historically been reluctant to invest heavily in the technology sector because he believes in investing in companies with products or services that can be described simply to a child. However, this year he has increased his company’s holdings in Apple. The billionaire himself doesn’t own an iPhone, but it’s likely he’s seen parents hand them over to small children to keep them entertained.
America will persevere
Buffett has unfailing belief in America’s growth prospects, based largely on the country’s relative success since its beginnings 240 years ago. While the current presidency and corresponding legislative, judicial and economic landscape may appear somewhat volatile and unpredictable, he believes the governmental and market systems put in place will sustain growth over time. Presidents and politicians come and go, yet the United States continues to persevere.
Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. It’s important to consider any investment within the context of your own goals, risk tolerance, investment timeline and the composition of your overall portfolio. This information is not intended to provide investment advice.
1 Kira Brecht. The Ticker Tape. March 1, 2017. “5 Key Takeaways from Warren Buffett’s Annual Letter.” https://tickertape.tdameritrade.com/investing/2017/03/warren-buffett-annual-letter-takeaways-31027. Accessed May 11, 2017.
Content prepared by Kara Stefan Communications.
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