Berkshire Hathaway Shareholders Meeting lived up to its hype

Last weekend, we had the opportunity to attend the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska.   “Woodstock for Capitalists” is a bucket list item for many investors and we finally crossed this epic event off our lists. For as long as we can remember, our Investment Team has discussed traveling to Omaha to take part in the Annual Shareholder’s Meeting and have the chance to see and hear Warren Buffett and Charlie Munger in person. Of course, our trip was one year too late, as Munger passed away in November, just one month short of his 100th birthday.    It was the first time any of us had been to Omaha and we thought it would be fitting to have lunch at Buffett’s favorite steakhouse, Gorat’s.  Gorat’s isn’t fancy or modern, but reservations were hard to come by and the restaurant was filled with Berkshire Hathaway shareholders from around the world.  A cut-out of Buffett is just inside the door and we could tell why he likes this place so much.  Since Gorat’s is a popular destination in Omaha, they added lunchtime hours to accommodate more people and featured a special menu on Berkshire Hathaway Shareholders weekend, complete with commemorative merchandise.    The scheduled activities started on Friday afternoon with the Shareholder Shopping Day at the CHI Health Center, which featured unique products from Berkshire Hathaway companies including Benjamin Moore, BNSF Railway, Duracell, GEICO, Jazwares, International Dairy Queen, Nebraska Furniture Mart, Oriental Trading, Pampered Chef, Pilot Company and See’s Candies.  We explored the exhibits, enjoying $1.00 treats from Dairy Queen, taking pictures of the Marmon Wasp, cutouts of Buffett in his Pampered Chef apron, and Buffett and Munger outside the Borsheim’s store.    CHI Health Center was also home to the Shareholders Meeting and because of our proximity, we could walk to the arena Saturday morning.  While the meeting didn’t start until 8:45 am, our adventure started before sunrise as… | Read More »

Weathering storms

April in Wisconsin offers countless opportunities to develop life skills like patience and adaptability. A single spring day could feature a romp through all four seasons, with a couple of extras like gnat and lake fly seasons rolled in. The same daily forecast that allows daffodils to bloom can include measurable snow and a wind so brisk it hurts your face. So, you adjust. You wear layers you can remove when the frost burns off, and boots that won’t wilt in the ensuing mud. You prepare for any weather on any given day. Investing is like that too. Days that begin with sunshine and optimism can end with headwinds and dramatic dips. As inflation updates or corporate report nuances swing sentiment, markets react accordingly. Sometimes, they even act inexplicably in their initial runs. So, we build layers into our portfolios, some conservative allocations designed to protect and some more aggressive positions to take advantage of growth opportunities. We mine sectors and industries for long-term investment opportunities. Our investment team members understand both the seasons they face as portfolio managers, and the seasons our clients move through as they make their way to and through retirement. That understanding informs the investment decisions they make. Harry Chapin wrote about the seasons spinning round again and years that keep rolling by. It’s our job and our privilege as investment managers based in Wisconsin to understand and appreciate the swift passage and specific beauty of each fickle season.

How AI is driving investors toward tech stocks

Artificial intelligence has not only been influencing some of the daily news cycle lately, it also has played a key role in driving investors toward tech stocks. Some analysts estimate AI technology could boost the global economy by $15.7 trillion by 2030, and investors want to take advantage of that trend. AI stocks like Microsoft, which owns part of OpenAI, developer of the chat bot, ChatGPT, is up more than 36% YTD and has helped boost both the tech sector and an otherwise flat overall market in these past several weeks. While our investment team is not chasing these AI-related returns, they do note that their decision to remain invested in tech stocks despite some earlier headwinds, is paying off. In particular, the team has been pleased by the performance of the American Growth Fund of America (GFAFX), which is weighted toward stocks that are participating in the AI investment wave, and Invesco QQQ Trust, which is also heavily weighted toward AI-related stocks. As with any trending investment, it’s important to analyze an individual company’s ability to sustain its growth. This is especially true of investors who want to take advantage of AI technology but may not understand the full breadth of its function and impact on both the markets and the world at large. The key now and always is to build diversified portfolios with an eye on consistent performance and reasonable valuations based on fundamental metrics. It has been fascinating to watch the impact of AI technology on the global economy and we’re only in its infant stages. As we all make our way into this new frontier, we will continue to work hard to sort through both the opportunities and threats it generates and to proceed with analytical resolve.

The difference between a Mutual Fund and an ETF

I can count the number of times I have golfed on my fingers.  Before taking a swing, I look over the various clubs at my disposal.   I think to myself, each club has an extremely important purpose and I must choose very carefully.  No matter which club I choose a triple bogey lies in my future. You can in a sense think of ETFs and Mutual funds as different golf clubs.  They are almost the same tool but can have times when one makes more sense than the other.  Both ETFs and mutual funds are pooled investments that can hold a variety of investments inside of them.  Most ETFs are passively managed, with fewer moves occurring inside relative to Mutual Funds. One difference is that ETFs trade like a stock, so you can buy and sell during the trading day.  Mutual Funds calculate their NAV or Net Asset Value after the close of the market each day.  In golf terms, if a round of nine holes was a trading day and I was a mutual fund, I would only know my score after the round was done.  My friend ETF would keep track as we played. Another differentiator is the cost.  ETFs are cheaper on average than mutual funds.  As you may suspect there is more than just cost to consider here.  Mutual fund’s higher expenses come with the benefit of teams of industry professionals and researchers looking to enhance their fund’s return and protect it from any holdings that become undesirable. In essence, the ETFs take more of a set it and forget it approach.  ETF managers pick a target like a large stock index and try to replicate it as closely as possible.  Mutual Funds can be a little more flexible in their strategy as they are not strictly trying to keep the same weighting as an index. So which fund should I put with which type of… | Read More »

The Witch of Wall Street and her enduring legacy

They called her “the Witch of Wall Street” and Hetty Green didn’t seem to mind. Her singular focus on wringing every ounce of value out of her money made her wealthy and, more importantly, allowed her to maintain control over her own life. “It is the duty of every woman, I believe, to learn to take care of her own business affairs,” she said. While her ideas might have been radical at the time, her investing strategy was not. Hetty believed in research, patience, discernment and value. She claimed she never made a business deal without sleeping on it overnight. “I believe in getting in at the bottom and out on top,” she said. “I like to buy railroad stocks or mortgage bonds. When I see a good thing going cheap because nobody wants it, I buy a lot of it and tuck it away.” Her estimated worth at the time of her death at the age of 82 in 1916 was between $100 million to $200 million (equivalent to $2.35 billion to $4.7 billion today), the vast majority of which was earned via her own efforts. In fact, Hetty had to bail out her husband Edward more than once and left him after she had to put up $500,000 of her own money to cover his losses when his bank failed in 1884. She also bailed out the city of New York with a $1.1 million check in 1907 and negotiated her repayment in short-term bonds. A firm believer in pre-nuptials, Hetty not only made Edward sign one prior to their marriage, she also insisted her daughter’s husband sign one and encouraged all women to protect their assets in marriage. So frugal she wore the same single black dress and, reportedly, undergarments until they fell apart, Hetty remains listed in the Guinness Book of World Records as the greatest miser. However, she also quietly supported many charities and said… | Read More »