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The World’s Greatest Investor – Current Thoughts
Berkshire Hathaway last week had their Annual General Meeting where the world’s greatest investor Warren Buffett shared his thinking on many issues.
Of particular note I believe the following are interesting for anyone investing at the moment.
Commodities and Gold
Buffett answered why he does not own commodities including gold as he said he owns assets based on what they produce not the fact that their rising prices creates excitement itself.
Buffet went onto say investors that are getting into gold are “silly people”. “People like to get in on things that are rising in prices. Over time, it has not been the way to get rich”. Buffet also questioned the utility of gold saying that all you could do was admire it a point which was reinforced by his colleague Charlie Monger who said gold investors “preyed on fear” due to it being a safe haven investment.
Buffet said that over time he believed intelligent people can make more money from productive assets than speculating in commodities.
US Dollar and US debt
Buffett said that the US dollar purchasing power will reduce over time but the question remains at what rate. He said that he would rather invest in the US right now more than any other period of time in history. He said the US will not have a debt crisis as long as they issue debt in their own currency.
Nuclear Power
Buffett believes that notwithstanding the Japan disaster that Nuclear energy will remain an integral part of our energy mix due to the negative factors surrounding the alternatives.
If you want to take a peak of the WSJ live blog of the meeting it is located here http://blogs.wsj.com/deals/2011/04/30/live-blog-the-berkshire-hathaway-annual-meeting/
Of particular note I believe the following are interesting for anyone investing at the moment.
Commodities and Gold
Buffett answered why he does not own commodities including gold as he said he owns assets based on what they produce not the fact that their rising prices creates excitement itself.
Buffet went onto say investors that are getting into gold are “silly people”. “People like to get in on things that are rising in prices. Over time, it has not been the way to get rich”. Buffet also questioned the utility of gold saying that all you could do was admire it a point which was reinforced by his colleague Charlie Monger who said gold investors “preyed on fear” due to it being a safe haven investment.
Buffet said that over time he believed intelligent people can make more money from productive assets than speculating in commodities.
US Dollar and US debt
Buffett said that the US dollar purchasing power will reduce over time but the question remains at what rate. He said that he would rather invest in the US right now more than any other period of time in history. He said the US will not have a debt crisis as long as they issue debt in their own currency.
Nuclear Power
Buffett believes that notwithstanding the Japan disaster that Nuclear energy will remain an integral part of our energy mix due to the negative factors surrounding the alternatives.
If you want to take a peak of the WSJ live blog of the meeting it is located here http://blogs.wsj.com/deals/2011/04/30/live-blog-the-berkshire-hathaway-annual-meeting/
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Finance - Why use Centre Capital versus Going to the Bank?
Advisory is back!
Why use Centre Capital versus Going to the Bank
First of all, what’s the difference?
A finance broker/adviser is an independent agent who acts as your representative when shopping for a mortgage loan, and who can guide you through the process, helping you get the right loan and features for your circumstances.
Approximately 40% of home loans secured in Australia have been arranged through brokers/advisers and this statistic will grow. Finance brokers and advisers are not exclusive to any particular bank or lending institution – rather are out to find you the best possible deal on your mortgage
What are the Benefits?
So give our team a go, you won’t be disappointed.
Why use Centre Capital versus Going to the Bank
First of all, what’s the difference?
A finance broker/adviser is an independent agent who acts as your representative when shopping for a mortgage loan, and who can guide you through the process, helping you get the right loan and features for your circumstances.
Approximately 40% of home loans secured in Australia have been arranged through brokers/advisers and this statistic will grow. Finance brokers and advisers are not exclusive to any particular bank or lending institution – rather are out to find you the best possible deal on your mortgage
What are the Benefits?
- Saves you significant time and effort sorting through the many lenders, products, structures and scenarios out there on the market
- Unbiased and independent advice to assist you along the way, as opposed to having one bank selling you its own products
- We are highly qualified, and are proud holders of a Australian Financial Services Licence and an Australian Credit Licence
- We’ll evaluate your needs and financial capabilities, including helping to establish your borrowing power, determining the equity you have in existing properties, and the most tax effective strategies
- Save you money by sourcing the best deal, structure, and at times better than market offers due to our volume and relationships with Lenders
So give our team a go, you won’t be disappointed.
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The Consequences of Tragic Events in Japan on World Economy
The tragic events in Japan are the latest where mother nature is putting us on notice.
Whilst the people of Japan have the impact of massive loss of lives and property it is unlikely that this event will derail the world economy. Notwithstanding the fact that Japan accounted for US$5.4 trillion, or 8.7 percent, of world GDP in 2010, according to numbers provided by the IMF. Being the world’s 3rd largest economy any impact on Japan’s economy will feed through to the world economy. However, most believe that it will have small consequences including an increase in government spending to rebuild the country’s infrastructure. In fact a small dip in Japan’s economy may be a positive as far as the global economy is concerned as it would reduce the strain on inflation as a result of rising oil and material prices.
Sectors that will be directly impacted will be in the area of insurance companies given the huge scale of costs which may be up to US$100 Billion. Reinsurance companies will be looking to pick up an estimated US$15 Billion of this with the rest to come from increased government spending by Japan. Naturally, building companies and other companies that will benefit as having to “rebuild” the country will have a positive impact to their respective businesses.
With the explosion at Tokyo Electric Power Co.’s Fukushima Daiichi No. 1 reactor after its cooling system failed there may be fallout for the Nuclear industry which has been staging a renaissance of late. Currently there are 442 reactors worldwide that supply about 15 percent of the globe’s electricity, according to the London- based World Nuclear Association. There are plans to build about 150 additional reactors, most of them in Asia, and 65 reactors are currently under construction. In the wake of the 1979 partial meltdown at the Three Mile Island reactor in Pennsylvania there was a massive psychological impact upon people which halted the progress of nuclear power.
Whilst the people of Japan have the impact of massive loss of lives and property it is unlikely that this event will derail the world economy. Notwithstanding the fact that Japan accounted for US$5.4 trillion, or 8.7 percent, of world GDP in 2010, according to numbers provided by the IMF. Being the world’s 3rd largest economy any impact on Japan’s economy will feed through to the world economy. However, most believe that it will have small consequences including an increase in government spending to rebuild the country’s infrastructure. In fact a small dip in Japan’s economy may be a positive as far as the global economy is concerned as it would reduce the strain on inflation as a result of rising oil and material prices.
Sectors that will be directly impacted will be in the area of insurance companies given the huge scale of costs which may be up to US$100 Billion. Reinsurance companies will be looking to pick up an estimated US$15 Billion of this with the rest to come from increased government spending by Japan. Naturally, building companies and other companies that will benefit as having to “rebuild” the country will have a positive impact to their respective businesses.
With the explosion at Tokyo Electric Power Co.’s Fukushima Daiichi No. 1 reactor after its cooling system failed there may be fallout for the Nuclear industry which has been staging a renaissance of late. Currently there are 442 reactors worldwide that supply about 15 percent of the globe’s electricity, according to the London- based World Nuclear Association. There are plans to build about 150 additional reactors, most of them in Asia, and 65 reactors are currently under construction. In the wake of the 1979 partial meltdown at the Three Mile Island reactor in Pennsylvania there was a massive psychological impact upon people which halted the progress of nuclear power.
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What is Currently Good Value?
Currently we are in the middle of reporting season where all the companies on the stock market are releasing their financial information. This is important as we can see how these businesses are performing and we can assess the valuation of those businesses.
Assessing the valuation means we look at the amount of profit they are making relative to what we have to pay to own a stake in that business. Valuation is a different concept to that of the financial strength or appeal of a business. For example you can have a pretty poorly run business but if it is really cheap it may be a great investment. Alternatively, you can buy the best run company in the world but if you pay too much for it you will be waiting a long time to get a suitable return on your investment.
Speaking of valuations our favourite asset class or investment, residential property, is displaying some worrying signs in regards to valuation.
The Demographia International Housing Affordability Survey for 2011 found Sydney was the second most expensive city in a survey which included countries such as US, China, Australia and Canada. When using the measurement of median property price divided by Median household income a multiple of 9.6 times is the result. It should be noted that the long term average for this measure is closer to 3 times. A similar survey conducted by HIA puts Australia’s ratio of house prices to household income at 4.1 times. When they started the survey in 1995 this measure was only 2.5.
For those looking to buy their first home or an investment property how does this fit into their thinking?
Assessing the valuation means we look at the amount of profit they are making relative to what we have to pay to own a stake in that business. Valuation is a different concept to that of the financial strength or appeal of a business. For example you can have a pretty poorly run business but if it is really cheap it may be a great investment. Alternatively, you can buy the best run company in the world but if you pay too much for it you will be waiting a long time to get a suitable return on your investment.
Speaking of valuations our favourite asset class or investment, residential property, is displaying some worrying signs in regards to valuation.
The Demographia International Housing Affordability Survey for 2011 found Sydney was the second most expensive city in a survey which included countries such as US, China, Australia and Canada. When using the measurement of median property price divided by Median household income a multiple of 9.6 times is the result. It should be noted that the long term average for this measure is closer to 3 times. A similar survey conducted by HIA puts Australia’s ratio of house prices to household income at 4.1 times. When they started the survey in 1995 this measure was only 2.5.
For those looking to buy their first home or an investment property how does this fit into their thinking?
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Centre Capital offers a broad range of services and is appropriately qualified through Australian Financial Services Licensee Centre Capital Securities Pty Ltd to give advice in the following areas:
- Tax Optimisation
- Investment Advice
- Retirement Planning
- Home and Investment Loans
- Risk Management
- Estate Planning
- Business Succession
- Superannuation Administration
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