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Yahoo
16-05-2025
- Business
- Yahoo
Elite CEOs Don't Need Earnings Guidance
This column originally appeared in the WSJ's Markets A.M. newsletter. to receive it in your inbox every weekday. Et tu, Walmart? Meta Battles an 'Epidemic of Scams' as Criminals Flood Instagram and Facebook Walmart's Price Hikes Open Door to Increases From 'Everybody Else' America's Love Affair With Posh British Cars Is Under Threat Despite Trade Deal Berkshire Sells Financial Stocks, Doubles Constellation Stake, Holds Steady on Apple Meta Is Delaying the Rollout of Its Flagship AI Model Analysts covering the world's largest retailer will have to sharpen their pencils now that it has joined several other companies in scrapping quarterly earnings guidance (it kept it for the full year). Leaving forecasters guessing is rarely seen as a good thing, but the blue chip got the benefit of the doubt from the market Thursday. When social-media company Snap did the same a few weeks ago, its shares fell more than 12%. 'Uncertainty' is practically a dirty word on Wall Street. After competitors scrapped their public forecasts, United Airlines instead took the unusual step last month of publishing two scenarios—one for a recession and another for an expansion. That was bold, but imagine if its chief executive had been even bolder by telling the investing community that he would stop giving guidance altogether. Unfortunately, that is a luxury mainly available to elite CEOs who are extremely secure in their jobs: Apple's Tim Cook, JPMorgan Chase's Jamie Dimon and, of course, Warren Buffett, who recently announced his impending retirement after six decades running Berkshire Hathaway. It is a shame because avoiding the short-termism of Wall Street's expectations game might be a good thing for more companies. An earlier generation of successful bosses were even greater iconoclasts. Some had little use not only for guidance but even accounting profits. 'I used to go to shareholder meetings and someone would ask about earnings, and I'd say, 'I think you're in the wrong meeting,'' said John Malone, who made investors a fortune at his complicated web of cable and entertainment companies by focusing only on cash flow. He's credited with popularizing 'Ebitda,' which is a financial measure some companies now use to mask weak results. Henry Singleton might be the greatest example of an executive who delivered with minimum regard for what Wall Street thought. Teledyne, the conglomerate he founded and ran for almost three decades, was a hot stock in the 1960s. It used that currency to become a serial acquirer of dozens of companies. When Teledyne shares turned ice-cold in the 1970s, Singleton shocked analysts by selling off many of its pieces and repurchasing the vast majority of its stock before buybacks had become more common. Teledyne's annualized returns exceeded 20%, handily beating the market. He was 'the smartest businessman I ever knew,' said the late Charlie Munger, who was vice chairman of Berkshire Hathaway. There are some smart people in C-suites today, too, but incentives matter. To have them act like owners, much executive compensation is in stock options. Disappointing Wall Street hammers their value and endangers a stream of future income if they get fired. By contrast, those old-school managers who focused on long-term returns acted like they owned the business, even when they often didn't own much of it at first. If the CEO of a company you have invested in wants to stop giving guidance, he or she might be a keeper. Write to Spencer Jakab at Powell Steers New Strategy for a World Where Very Low Rates Are No Sure Thing Walmart Becomes Biggest Retailer Yet to Pass Through Tariff Price Increases First-Time Home Buyers Are Struggling. That's Bad News for Builders. Coinbase Says Cybercriminals Stole Customer Data, Sought Ransom Japan's Economy Shrinks for First Time in a Year
Yahoo
06-05-2025
- Business
- Yahoo
You're More Like Warren Buffett Than You Think
Warren Buffett at the world premiere of the HBO film 'Becoming Warren Buffett' in 2017. - Nancy Kaszerman/Zuma Press This column originally appeared in the WSJ's Markets A.M. newsletter. to receive it in your inbox every weekday. Suggesting you can invest like Warren Buffett sounds crazy. Most Read from The Wall Street Journal The man has been an epic compounding machine, turning a dollar invested at the start of his professional career into about $365,000 today. Buffett's ferocious intelligence, preternatural patience and long run—during a great time to own U.S. stocks—make it basically impossible for anyone else to match his record. But, compared with professional investors, it is much easier for a little bit of that magic to rub off on your portfolio. Buffett was never about making a quick buck, and everyday investors can play the same long game. The fact that Buffett wasn't a portfolio manager, strictly speaking, after the late 1960s gave him incredible freedom. He made concentrated bets like Coca-Cola and Apple. He ignored critics who said he had lost it, such as during the tech bubble. He shrugged when flash-in-the-pan managers like Cathie Wood were anointed the 'new Warren Buffett.' It hasn't just been a straight ride higher. During his six-decade run atop Berkshire Hathaway, Buffett has trailed the market a third of the time and lost money in 11 years. It surely bothered him, but much less than it would a pro fund manager facing career risk. Likewise, he never faced pressure to own the Nifty Fifty, Cisco, Nvidia or other fashionable stocks. An attendee at the Berkshire Hathaway annual meeting Saturday. - Brendan McDermid/Reuters It is well known that 90% of mutual-fund managers will lag behind their benchmark over a decade. Less known is that investors in their funds do even worse, trailing their return by 1.1 percentage points, on average, according to Morningstar. On the other hand, a value-stock portfolio—those in the waters where Buffett has fished—has beaten the broad market by an average of 2.7 percentage points a year over the decades. Not only don't you have to cave to the pressures faced by the pros. You also can buy and hold the dull stocks, or index funds owning them, while ignoring the market's fads and gyrations. Consider two 21-year-old college graduates who each save $3,000 a year until they turn 65. One succumbs to typical emotional-timing errors and return-chasing behavior. The other instead captures just half of the long-run value premium that enhanced Buffett's returns (it isn't what it used to be).
Wall Street Journal
05-05-2025
- Business
- Wall Street Journal
What's News in Earnings: Consumer Shakiness Worries Food and Drink Companies - What's News
Bonus Episode for May 5. Consumers are in belt-tightening mode. Many are buying less, reconsidering their purchases and feeling rattled by volatile markets and the Trump administration's shape-shifting tariff policies. For soda makers like Pepsi and restaurant chains like McDonald's, those are worrisome developments. So how are they responding? WSJ reporter Laura Cooper discusses w hat companies are saying in earnings reports and analyst calls. Chip Cutter hosts this special bonus episode of What's News in Earnings looking at what's going on under the hood of the American economy. Sign up for the WSJ's free Markets A.M. newsletter.
Wall Street Journal
05-05-2025
- Business
- Wall Street Journal
You're More Like Warren Buffett Than You Think
This column originally appeared in the WSJ's Markets A.M. newsletter. You can sign up here to receive it in your inbox every weekday. Suggesting you can invest like Warren Buffett sounds crazy.
Wall Street Journal
01-05-2025
- Business
- Wall Street Journal
Could Shipping Woes Make Trump Blink on Tariffs?
🔎 This is an online version of our Markets A.M. newsletter by Spencer Jakab. Get investing insights in your inbox each weekday by signing up here—it's free. 📧 Smart people up and down Wall Street have been trying to figure out the 'Trump put.' Was it child's play all along? There have been a handful of occasions since Inauguration Day, when President Trump announced plans for sweeping tariffs, that he wound up blinking. Delays and exemptions have sent stocks higher each time. The most powerful instance was on April 9 when the Dow Jones Industrial Average had a 3,500-point intraday swing—a respectable gain for a full year.
