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Mint
15-05-2025
- Business
- Mint
Investing pros will miss Warren Buffett. They share what he means to them.
Warren Buffett recently announced that he would step away from his role as CEO at Berkshire Hathaway. His investment returns—5,502,284% over 60 years—are legendary. But he has been a fascinating figure in part because of his transparency and how simple he made it all seem: An educator at heart, Buffett spent decades telling investors to buy high-quality companies at fair prices and hold them for the long term. Unlike most of us, he actually followed through. For this week's Barron's Advisor Big Q, we asked some leaders in the wealth management field to weigh in on the legacy of the Warren Buffett. Callie Cox, chief market strategist, Ritholtz Wealth Management: When I was 8 or 9 years old, I read the newspaper every single morning like clockwork. I would get the newspaper off the porch, pop it in front of me at the kitchen table, and read all the local stories, make my way to the real estate section, and then get to the market section. I remember looking at that page and seeing Berkshire Hathaway's stock, which was $50,000 or so at the time. I asked my dad, 'Why is that one so expensive?" And he said, 'Oh, that's Warren Buffett's company. He does really well for himself." That $50,000 number is one of my earliest memories of learning what Wall Street is like. And it's funny, when I think about Warren Buffett and the legacy he's left, I think he's the antithesis of Wall Street and its well-dressed, Rolex-wearing hedge fund managers who employ impossible strategies to outsmart markets. Warren Buffett is an unassuming investor who just bought and held companies for a very long time, and he was very good at what he did. He's one of the most relatable investors to the everyday investor in that he made money by buying and holding. People focus on the stock-picking aspect of Buffett's success. And he was a great stockpicker; he always had his nose in a 10-K. But people overlook the time aspect. And that's the most applicable part of his investing philosophy to people who don't have the time or the ability to look through 10-Ks 24 hours a day, or to make big strategic investments in companies and then have a say in how those companies operate. We can't do that, but we can buy stocks, and we can hold them for a very long time. Mike Mussio, president, FBB Capital Partners: I think both he and [longtime partner] Charlie Munger just had a unique knack for demystifying investing, cutting through the jargon and the BS and the poker game that is Wall Street and giving investors sage, stable, grounded wisdom. And the timing of their stewardship of Berkshire coincided with an era where household ownership of equities grew dramatically. If you read the letters, if you went to the meetings, if you listened to what he had to say, a lot of it was history lessons on investing. Don't be afraid to not follow the crowd. Don't put all your eggs in one basket. It was the folksy Omaha aspect of Warren and Charlie against Wall Street. And Buffett could be a calming voice. I'll never forget the op-ed he wrote during some of the darkest days of 2008. The headline was, 'Buy American. I Am." He understood that betting on America in the market is not a zero-sum proposition. Because Warren Buffett's wealth is $100 billion some-odd dollars doesn't mean that wealth came at somebody else's expense. He saw the pie growing as being good for everyone, and he saw the opportunity to participate in that by being a shareholder. Jason Hester, managing partner, Balefire: Warren Buffett reshaped estate planning, not through tax strategies, but by challenging families to wrestle with a simple question: How much is enough? His statement about not giving everything to his kids sparked a cultural shift in how we talk about wealth and purpose. When he famously said that he would leave his children enough so that they could do anything, but not so much that they could do nothing, we felt it liberated families from the silent guilt of not giving away. His public stance gave permission to rethink legacy, and he shifted the focus from wealth transfer to purpose transfer. At our firm, the question of how much is enough is a compass point. We help families to find financial independence for themselves, establish healthy boundaries for their children, and craft giving strategies that reflect not just their balance sheet but their values. We now begin with the questions, how much is enough, and what is our purpose? Helping clients define those two things reshapes financial independence. It opens the doors for generational flourishing, and it helps us shape plans that reflect families' values and vision. Buffett opened the door for a deeper, values-based conversation. On a personal note, in the early 2000s, I attended an event where they auctioned off a lunch with Warren Buffett. The winning bid was over $200,000. At the time, that amount felt absurd to me. I remember thinking, who would pay that much for a conversation? But then I realized this wasn't about lunch. It was about access to someone whose thinking shaped industries and transformed legacy planning. For the first time in my life, I realized I wanted to be someone who carried that kind of weight. It marked the moment where I began my own journey of wanting to become a trusted voice in wealth stewardship. Donald Calcagni, chief investment officer, Mercer Advisors: I think he has a legacy at two levels. The first has to do with the outperformance of Berkshire Hathaway over the span of his exceptionally long career. One of the things academics have noticed is that Warren seemed to constantly do better than traditional academic asset-pricing models would predict. That incentivized a lot of financial economists to look more closely at things like earnings and quality earnings and profitability. He incentivized them to push the bounds of financial science. From a broader retail perspective, in a world where investing has become gamified and even cheapened in many ways, Warren Buffett was that grandfatherly figure reminding us that investing isn't a game, that it doesn't have to be overly complex, that you could do very well by building a long-term, diversified portfolio by investing in, for example, the S&P 500 index. He advocated being a buy-and-hold investor in a world that aggressively encourages short-term trading and short-termism in general when it comes to investing. For me he will always be that North Star that we look to and ask ourselves, 'What would Warren do?"
Mint
01-05-2025
- Business
- Mint
Trump tariffs have shaken up markets. How investment pros are playing bonds now.
President Donald Trump's tariff offensive and other nations' responses to it have shaken up the bond market this year, sending yields on Treasury and muni bonds surging and widening the spread between yields on corporate bonds and Treasuries. So for this week's Barron's Advisor Big Q, we asked four fixed-income experts: What adjustments have you made to portfolios? Drew Zager, private wealth advisor, Morgan Stanley Private Wealth Management: We had held a TIPS [Treasury inflation-protected securities] position, and that had done well, and now yields on short TIPS are slightly negative, and so we sold those. We think that corporates are vulnerable, given everything going on with the economy and the trade war. So we have reduced our intermediate- to longer-term corporates, and those we still own are the shorter-duration corporates. We sold out of preferreds. We think they're probably fair value. There's a risk that we think is inherent with the economy and with a number of the financial institutions, particularly the regional banks. We think that Treasuries are probably expensive to fair value. But what we think is way too cheap are longer-maturity municipal bonds, either callable or not callable. Those are yielding north of 4%, tax-free. So depending on your state of residency, if you're in the top tax bracket, the tax-equivalent yield would range between 7% and 9.15%. Municipals have cheapened up for several reasons. It's tax season, when people tell their munis to pay their taxes. In addition, lots of people have margin calls on their stocks, and they don't want to sell their stocks, so they sell their bonds. You've got extreme uncertainty with Trump. And you've got lots of issuance. One reason for that is that lots of municipalities want to issue all they can right now because if something were to happen to munis' tax exemption, their costs would go up. So all that supply has caused munis to trade off, and right now they're about the cheapest they have been since 2011. Brian Huckstep, chief investment officer, Advyzon Investment Management: We reduced high-yield bonds toward the end of last year. We saw that credit spreads were getting tight. When prices go up for fixed-coupon bonds, yields go down. And when people are really comfortable with the market, they bid up prices for things like high-yield bonds, compressing spreads. When we saw that, we decided it was time to cut our high-yield holdings in half across our portfolios. We didn't forecast that something like tariffs was going to be happening, that the market was going to get the shock that it got, but just by virtue of watching valuations, seeing that the market was getting a little too comfortable with risk, we acted defensively. We pivoted into TIPS—Treasury inflation-protected securities—for inflation protection as the conversation about tariffs was starting. That has worked out for us pretty well. We're not making a whole lot of other moves. There are so many crosscurrents right now, especially on the long end of the curve. If inflation does flare up, that's typically bad for long term-bonds. On the other hand, when equity hits a rough patch and markets get risky, people take money out of stocks and put it into Treasury bonds, which increases prices for those bonds. The third current for long bonds is the question about what the government's going to do as the debt balloons. Many investors are getting concerned that the U.S. government might get another credit downgrade. And if that happens, it's bad for prices for long bonds. Kim Olsan, senior fixed-income portfolio manager, NewSquare Capital: We invest longer-term money. We're not looking at our fixed income as market timing in any respect. Over the past 25 years, the 10-year Treasury's average yield is around 3.25%, and we're currently a little more than 100 basis points above that, coming down from close to 5% over the past year or so. So historically, we would see the current market as opportunistic. On the taxable side, there has been a dislocation. Some people want to be defensive and move into money markets. So you get certain credit sectors that might pull back, like corporate bonds, and you may see some credit-spread widening. We've reduced corporate allocations in portfolios to some extent, bringing the overall percentage down 10% or so from where things were at the end of last year. In our model, we invest out to about the 10-year stated maturity date, with a duration of around four years. So within that one to 10 years, we're asking where have pockets of yield opportunity crept in, and how can we take advantage of them? So that might involve looking at categories like CDs, callable agency bonds, maybe some off-the-run govvies [Treasuries that are no longer new issues] where there isn't typically heavy flow but we can buy them a little bit cheaper and pick up some yield that way. Stephen Tuckwood, director of investments, Modern Wealth Management: We've not made any major tweaks in the midst of this market turmoil. That's a function of how we came into the year from a fixed-income standpoint, which was short duration and high up in quality. That's played out reasonably well, specifically given the reaction of fixed-income markets following the tariff announcement on April 2. Those few days following the announcement of tariffs there was a flight to quality, as we've seen historically, as Treasuries rallied for three trading days. But then something concerning did happen, where Treasuries then began to sell off. I think that was the signal to President Trump to ease off. And we obviously got the 90-day pause a few days after that. As we think about allocating to fixed income, there are two things we're looking for: income generation and diversification. And both of those things have come into question in different ways. We obviously went through a zero-rate environment for a long time, where the income was essentially not there but you still added some nice diversification. And then 2022 came around, where a 60/40 portfolio allocated to traditional fixed income didn't really provide the diversification benefit at all. So we have been looking for other diversifiers and sources of return to add to the portfolio versus public equities and fixed income. We're certainly interested in private credit. Spreads have widened a little bit, and of course, these are loans to smaller private companies, so there's some economic exposure, but private credit has been well-behaved so far. Write to
