Word: buffett
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...Warren Buffett, the investor and head of Berkshire Hathaway, noted some of these trends two years ago, when his Geico insurance subsidiary doubled its projected 4% profit margin because the number of claims was decreasing. Last year margins were well over the target again. Buffett warned that such stellar results would not persist because they would soon invite competition. That's what has happened, and now he expects the industry's margins to contract as insurers cut prices to battle for market share--bad news if you own the stocks but not if you're a policyholder...
REITS, WE SAID Can Warren Buffett pull chronically depressed real estate investment trusts out of their recent doldrums? The Oracle of Omaha (apparently following an earlier recommendation on this page) has jumped into REITs in the past few weeks, taking sizable stakes in MGI Properties, Tanger Factory Outlet Centers and Town & Country Trust and spurring investors to make similar bets. While REITs haven't completely rebounded from the 17% hit they took in 1998, they have made a strong showing of late, gaining a healthy 11% in the past two weeks alone...
Stocks, however, particularly name-brand stocks, have taken on the aura of a high-interest annuity, to the point that "conservative" moneymen like Warren Buffett bank on stocks with 30 and 40 price-to-earnings multiples, like Disney and Coke and Gillette. Being fully invested, once the province only of the biggest bozos and wild-eyed optimists, now seems to be the duty of every red-blooded American, no matter what age or income bracket. Even more amazing, there is a whole new class of equity holders that regards regard Buffet's buy-and-hold strategy as boring--too safe...
...Buffett, the fabled investor and CEO of Berkshire Hathaway, refuses to split Berkshire's A shares, which traded last Friday for $72,500 each. If stock splits add lasting value to a company, as today's fervor suggests, it's a wonder that Buffett is held in such high regard. His reputation, though, wasn't built by pandering to passing fads...
...that's easy to explain. Splits naturally occur in the best stocks--the ones that go up. The split signals management confidence, but the heavy lifting is done by management execution that delivers earnings. Do that, and the stock will go up whether it splits or not. Just ask Buffett--whose shares have risen, on average, 28% a year since...