Money made the Warren Buffett way

Discussion in 'Wall St. News' started by dealmaker, Jan 12, 2020.

  1. dealmaker


    Money made the Warren Buffett way
    • The Dallas Morning News
    • 12 Jan 2020
    • B.T. H.T., Gainesville, Fla. P.L., Charleston, S.C. How to Read a Financial Report

    My smartest investment has been putting money into an S&P 500 index fund. It has outperformed my other mutual funds and my individual stocks. Warren Buffett is right — but it’s less fun!

    If you don’t have the time, interest or skill to study stocks and carefully select which ones to buy, you can instead choose to invest in a lowfee, broadmarket index fund such as one based on the S&P 500 (an index of 500 of America’s biggest companies).

    That may seem like you’re taking the easy road and settling for slower growth, but you’re not — because, just as your experience suggests, index funds tend to outperform most other mutual funds. Indeed, over the past 15 years (as of the middle of 2019), a whopping 90% of largecap stock funds underperformed the S&P 500.

    Investing in individual stocks can be more exciting: When they’re rising, they will often soar faster than funds do, and it can be fun to cheer on the companies in which you’ve invested. But as you noted, even Warren Buffett has recommended index funds for most investors.

    Even if you have most of your longterm dollars in one or more index funds, you can always invest in some individual stocks for fun and perhaps a chance at great gains. Over long periods, it’s hard to beat the stock market.

    The Fool responds: How and why do companies decide to pay dividends?

    If a company’s management expects reliable cash generation in the years to come, it may reward shareholders by paying a cash dividend — and it won’t want to stop doing so, as that would suggest trouble. That dividend will likely be a portion of earnings, and will typically be a fixed sum paid each quarter.

    Companies may also deploy earnings to pay down debt, buy another company, build more factories, hire more workers, buy more advertising and so on. Young or quickly growing companies often don’t pay dividends but instead reinvest all that money into growth.

    What subjects should I master to become a good investor?

    Gaining a solid understanding of financial accounting will allow you to make sense of companies’ financial statements and spot red flags.

    Books such as

    John Tracy and Tage Tracy (Wiley, $23) can help.

    Reading broadly about psychology, science, history, business and more can also make you a savvier investor. by
  2. Every generation seems to have one decade of slow/no growth in the market. This could correspond to demographic shifts. So Warren buffett wins if you start counting in 2008, but maybe not if you start in 2000
  3. SteveM


    Send this article to the guy who bought the top-tick in the Nikkei in 1989 and is just getting back to breakeven today, or those who bought the S&P in 1920 and have to wait until 1950 to get back to even.
    dealmaker likes this.
  4. newwurldmn


    Send it to the guy who bought in 2009 as well.
    Also send it to the guy who bought it in 2002.

    Not every strategy works all the time. Obviously.
  5. It's not necessarily obvious to the people writing these types of articles.
  6. What a fluff piece of light shit journalism,..
  7. dozu888


    we have officially run out of things to talk about on trading.... haven't seen any interesting topic for weeks.
  8. ironchef


    I have one: Trading is easy. :D

    For you that is and not for me. :banghead:
    dozu888 likes this.
  9. dozu888


    and seriously, what is there to talk about.

    people need to see the big picture.... right now we have a gigantic shift towards permanent low yield for everything, which means SP needs to get to 5000 RIGHT NOW.

    there is nothing to talk about, need to mortgage the house and go all in, TODAY!

    look at the front page - what are people thinking instead... irrelevant stuff.