Current Commentary

Washington Turns to the Dark Side
With economic recovery too slow to save Democrats running for re-election, a wholesale verbal and strategic assault on the pillars of a sound economy is underway. Despite this the stock market, a good predictor of the future, is holding up relatively well. 

I consumed two fat books on the life and investment strategies of Warren Buffet this past year, both of which improved my already considerable knowledge of his approach.  Buffet sniffs at index investing, and especially at trend followers.  His does the challenging work of company-by-company financial analysis. Consider that while the S&P was losing 20% over the past 10 years, [...]

UNEMPLOYMENT TOOK A SURPRISING TURN DOWNWARD WITH LAST MONTH'S REPORT RELEASED ON FRIDAY.  GIVEN THE STATISTICAL MANIPULATION (SEASONAL SMOOTHING) AND REVISIONS THAT HAPPEN REGULARLY, THE REPORT IS TO BE TAKEN WITH SOME GRAINS OF SALT. STILL, WE MAY HAVE SEEN A MEANINGFUL DECELERATION IN THIS IMPORTANT NEGATIVE TREND.  RISING EMPLOYMENT IS THE CORNERSTONE OF A LASTING ECONOMIC RECOVERY.  THE STOCK [...]

IRA ConversionsIf you're a high-income earner and haven't been able to contribute to a Roth IRA to date, you'll soon get your chance. Beginning next year, investors of all income levels will be able to convert a traditional IRA to a Roth, thereby ensuring tax-free withdrawals and no required minimum distributions in retirement. Individuals who earn too much to make [...]

 The Financial Times (ft.com) features a podcast that discusses a unique concept: refunding to clients the trailing commissions paid to brokers. Many investors with traditional brokerage firms may not be aware that their advisor receives Section 12B-1 fees from certain mutual funds.  Should this money be refunded to you, the investor?Well,apparently in Great Britain, this is an option.  Here is the [...]

Berkshire Hathaway, Warren Buffet's investment vehicle announced today it would take 100% control of one of the nation's largest railways, Burlington Northern Santa Fe (BNI).Trusted Financial holds, in most client portfolios, a position in Berkshire Hathaway, and this commentator has personally held a position in the company for some 12 years. Today's acquisition, Berkshire's largest is not something I applaud, but it is revealing when one considers the evolution of investment style of the greatest investor of our Age. As a child in Omaha, Nebraska, Warren Buffet commented to a friend who lived on a busy thoroughfare, that he wished they could find a way to erect a toll booth and collect money for every car that passed.  Buffet's desire to own businesses that have an effective monopoly, like a toll bridge, has been chronicled in books like Roger Lowenstein's "Warren Buffet, the Making of an American Capitalist", a 1995 work that I am in the midst of re-reading.  Earlier this year I read the massive "The Snowball" (Alice Schroeder,(C) 2008, Bantam Books).  From what I've learned of this focused capitalist,  I'm not surprised by today's announcement, but as one who tends to subscribe to a purer form of Graham-Dodd value investing, the choice worries me.