Latest news with #Warren Buffett
Yahoo
2 days ago
- Business
- Yahoo
Warren Buffett Warns Inflation Turns Business Into ‘The Upside-Down World of Alice in Wonderland' But Weeds Out ‘Bad Businesses'
Warren Buffett, chairman and CEO of Berkshire Hathaway (BRK.B) (BRK.A), is known for his clear-eyed assessments of economic forces and their impact on business fundamentals. In his 1981 shareholder letter, Buffett addressed the distorting effects of inflation on corporate behavior, writing: '...inflation takes us through the looking glass into the upside-down world of Alice in Wonderland. When prices continuously rise, the 'bad' business must retain every nickel that it can. Not because it is attractive as a repository for equity capital, but precisely because it is so unattractive, the low-return business must follow a high retention policy. If it wishes to continue operating in the future as it has in the past — and most entities, including businesses, do — it simply has no choice.' More News from Barchart China, Chips, and Chaos: Where Smart Investors Are Putting Their Money Now Alphabet Had a 'Standout Quarter.' Should You Buy GOOG Stock Here? The Saturday Spread: Leveraging Practical Math to Extract Alpha in Hidden Places Markets move fast. Keep up by reading our FREE midday Barchart Brief newsletter for exclusive charts, analysis, and headlines. This observation came at a time when the U.S. economy was grappling with high inflation and rising interest rates, conditions that posed unique challenges for both investors and managers. Buffett's metaphor of an 'upside-down world' captures the counterintuitive reality that, in inflationary periods, even companies with poor returns are forced to reinvest heavily just to maintain their existing operations. Unlike high-quality businesses that can generate surplus cash and reward shareholders, low-return enterprises must retain capital simply to keep pace with rising costs of inventory, receivables, and fixed assets. Buffett's authority on this subject is grounded in decades of experience navigating different economic cycles. Since taking control of Berkshire Hathaway in the 1960s, he has consistently emphasized the importance of investing in businesses with durable competitive advantages and strong pricing power — traits that allow companies to pass rising costs on to customers and maintain profitability in inflationary environments. By contrast, businesses with weak economics are forced into a perpetual cycle of capital retention, leaving little room for dividends, growth, or debt reduction. This insight has enduring relevance for investors and corporate leaders. Even as inflationary pressures ebb and flow over time, the underlying principle remains: capital allocation decisions should be based on the ability of a business to generate real returns above the rate of inflation. Buffett's warning also serves as a caution against being misled by headline earnings or reported profits during inflationary periods. What matters most is not the nominal growth in revenues or assets, but the true economic value created for shareholders after accounting for the 'silent tax' of inflation. Buffett's 1981 letter to investors continues to be studied for its timeless lessons on business quality, capital allocation, and the dangers of inflation. His ability to distill complex macroeconomic realities into practical guidance has made his annual letters essential reading for investors seeking to build resilient, value-driven portfolios in any market environment. On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on
Yahoo
4 days ago
- Business
- Yahoo
Warren Buffett Warns ‘Many Managerial Princesses Remain Serenely Confident About the Future Potency of Their Kisses'
Warren Buffett, chairman and CEO of Berkshire Hathaway (BRK.B) (BRK.A), is known for his ability to blend sharp financial analysis with memorable storytelling. In his 1981 shareholder letter, Buffett offered a vivid metaphor to describe the pitfalls of acquisition-driven optimism: 'Many managements apparently were overexposed in impressionable childhood years to the story in which the imprisoned handsome prince is released from a toad's body by a kiss from a beautiful princess. Consequently, they are certain their managerial kiss will do wonders for the profitability of Company T(arget).' He continued, 'In other words, investors can always buy toads at the going price for toads. If investors instead bankroll princesses who wish to pay double for the right to kiss the toad, those kisses had better pack some real dynamite. We've observed many kisses but very few miracles. Nevertheless, many managerial princesses remain serenely confident about the future potency of their kisses — even after their corporate backyards are knee-deep in unresponsive toads.' More News from Barchart NVDA Broken Wing Butterfly Trade Targets A Profit Zone Between 150 and 160 Is Opendoor Stock a Buy at New 52-Week Highs? Billionaire Peter Thiel is Betting Big on Stablecoins. Should You Buy the "MicroStrategy of Ethereum," Too? Tired of missing midday reversals? The FREE Barchart Brief newsletter keeps you in the know. Sign up now! This analogy is more than just colorful language; it encapsulates Buffett's skepticism toward high-premium mergers and acquisitions. Throughout his career, Buffett has observed that many executives are driven by a belief that their leadership can transform underperforming companies into market leaders simply through managerial effort. This 'prince and toad' optimism, he argues, often leads to overpaying for acquisitions and disappointing results for shareholders. Buffett's authority on this subject comes from decades of disciplined investing and capital allocation. Since taking the helm at Berkshire Hathaway, he has steered the company away from empire-building and toward investments rooted in intrinsic value. Rather than chasing deals for the sake of growth or prestige, Buffett has consistently prioritized businesses with strong fundamentals, competent management, and reasonable purchase prices. His approach stands in contrast to the common corporate impulse to pursue acquisitions as a shortcut to expansion, regardless of whether the economics justify the premium paid. The 1981 shareholder letter's message is especially relevant in any era of heightened merger activity or market exuberance. Buffett's warning that 'investors can always buy toads at the going price for toads' serves as a reminder that the stock market offers direct access to most businesses at fair value, without the need for costly and speculative takeovers. When companies pay significant premiums in the hope of miraculous turnarounds, the odds are seldom in their favor. Buffett's enduring influence is rooted in his ability to distill complex financial truths into accessible lessons. His fairy tale analogy continues to resonate with investors and executives alike, showing the importance of humility, discipline, and realism in corporate strategy. As markets evolve and new opportunities arise, Buffett's counsel remains clear: economic substance, not managerial bravado, is the foundation of lasting value. On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 days ago
- Business
- Yahoo
GoPro Stock Wants to Be the Next Big Meme Investment. Why You Shouldn't Touch GPRO with a 10-Foot Pole.
GoPro (GPRO) shares rallied as much as 70% on Wednesday morning as retail investors on online forums, including Reddit, lit up with enthusiasm for the struggling camera brand. Meme stock enthusiasts went after GPRO this morning as nearly 10% of its float was sold short heading into today. Plus, the nostalgic brand appeal added fuel to the speculative fire as well. More News from Barchart Nvidia Stock Warning: This NVDA Challenger Just Scored a Major Customer Warren Buffett Has $347.7 Billion in Cash Because Growing an 'Empire' Just to Grow Makes 'the Citizenry Poorer' Dear Microsoft Stock Fans, Mark Your Calendars for July 30 Our exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today! While GoPro stock has since reversed intraday gains, it was seen trading at about 5x its price in early April at market open. Risks of Owning GoPro Stock Amid Meme Stock Frenzy Today's price action in GPRO shares sure is tempting for momentum chasers, however, caution is warranted as meme stock rallies fueled by social media hype often lack staying power. Since it wasn't strategic developments or earnings strength that caused the stock to soar this morning, GoPro remains in limbo in terms of offering long-term conviction. Therefore, for investors, jumping into GoPro stock now could be like chasing a runaway train – exciting, but potentially disastrous if sentiment turns. As history has shown numerous times with meme stocks, what goes up fast can come down even faster. Profitability Remains a Challenge for GPRO Shares Investors are recommended caution in owning GoPro shares amid the meme stock frenzy as the action camera maker's financial health remains a major concern. GPRO stock has traded well below $1 for much of this year, reflecting broader skepticism about its growth prospects and profitability. Additionally, revenue has stagnated (down 14% on a year-over-year basis in Q1) due to stiff competition in the consumer electronics space as well. In short, for long-term investors, the disconnect between price and performance of the San Mateo-headquartered firm should serve as a huge red flag, irrespective of how meme stock enthusiasts are treating it. Wall Street Sees a Massive Crash in GoPro Ahead Another reason why you shouldn't touch GoPro stock with a 10-foot pole is Wall Street's view on the Nasdaq-listed firm. The consensus rating on GPRO shares currently sits at 'Strong Sell' with one analyst in coverage. That analyst has a price target of $0.30 only, indicating downside potential of more than 80% from current levels. On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on
Forbes
21-07-2025
- Business
- Forbes
4 Signs You Have Too Much Investing Risk And How To Fix It
A contrarian strategy can limit your exposure to the scenario no investor wants: a major downturn ... More when you're heavily concentrated in high-risk positions. Investors have more risk in their portfolios right now, according to monthly survey by Bank of America, as quoted in Investment News. Higher allocations to U.S. and European stocks, including volatile technology stocks, are creating the riskiest portfolios since 2001. Admittedly, 2025 is a difficult time not to bet heavily on growth stocks. After all, AI chipmaker Nvidia recently became the world's most valuable company. And, the S&P 500 and the tech-heavy Nasdaq Composite are fresh off new highs. The investing climate is largely rewarding risk—and most investors are happy to accept the gains. In these millionaire-making times, the approach of Omaha's Oracle Warren Buffett comes to mind: "we simply attempt to be fearful when others are greedy and to be greedy when others are fearful." This contrarian strategy can limit your exposure to a major downturn when you're heavily concentrated in high-risk positions. 4 Signs Your Portfolio Is Too Risky Risk is a funny thing for investors. The thresholds for too much or too little risk are mostly set by your personality and preferences. You may tolerate a 90% allocation to stocks, while your neighbor resists having a single dollar in equities. This makes it tough to define a risk test that applies to everyone. Even so, there are signs you may be stretching the boundaries of your risk tolerance. Four are below. How To De-Risk Your Portfolio Safely Sticking to a conservative investment approach long-term can produce better results than deviating from an aggressive strategy. This is why aligning your portfolio risk with your tolerance is so important. If you need to de-risk your portfolio, do it by taking profits, changing the allocation on new investments or pausing your dividend re-investments. Investment Risk FAQs Here are the answers to the questions retail investors are asking about investing risk. Yes, investing has risk. Any invest-able asset with the potential to increase in value also has the potential to decline. You can manage the risk by holding a diverse mix of investment types for long periods. Your portfolio should be only as risky as you can handle. Conventional wisdom says you should take on more risk when you are younger and less as you age, but this rule isn't universally appropriate. The right risk level for you is conservative enough that you will stick to your strategy even in the worst of times. Too much risk makes for a volatile portfolio. Big value declines can work against your long-term returns, because it takes a larger gain to make up the lost ground. Say you have a $100,000 portfolio that dips by 25%. Now it's worth $75,000. To get back to $100,000, you need a 33.3% increase—since you are starting from a lower base.
Yahoo
14-07-2025
- Business
- Yahoo
The No. 1 Key To Wealth, According To Wahei Takeda, the ‘Warren Buffett of Japan'
In the U.S., every serious investor is familiar with Warren Buffett, who built his $143 billion fortune primarily through investing. Though Buffett's influence isn't limited to the U.S., he's not necessarily the most iconic financial figure in other countries. In Japan, the late entrepreneur Wahei Takeda is a legend in the investing space. According to Ken Honda, a Japanese financial expert whose 2019 book 'Happy Money' was translated into 15 languages, Takeda is sometimes called the 'Warren Buffett of Japan.' Find Out: Read Next: In 2021, Honda published a story on CNBC Make It about Takeda, describing him as 'one of the most remarkable individuals I've ever met.' In the piece, Honda discussed Takeda's philosophy about success, happiness and wealth. Sit back and relax — this is probably the least stressful advice about personal finance you've read in a while. Takeda's philosophy focused on living in a state of 'maro.' The word 'maro' has a few meanings in Japanese; the interpretation Takeda was referring to is the one short for 'magokoro' which in Japanese means a sincere heart. 'You could say that your maro is strong if you have pure intentions and lead an upright life,' Honda wrote. Essential to the concept of maro is the sense of inner contentment and gratitude. Learn More: To practice and embody maro, you must be genuinely positive. This positivity will, according to Takeda and Honda's beliefs, emanate from you in a magnetic way, attracting other positive things. 'This surrounds you with good people and things you truly care about, which then creates a cycle of happiness and abundance,' Honda wrote. Part of having a sincere heart is having passion and honoring that passion by always being in touch with your intuition. This enables you to make the best choices for you and your future. To put it more basically, you follow your passions and do what you love. Doing so 'constantly opens doors to exciting new opportunities,' Honda wrote. A main pillar of maro and the ultimate key to building wealth is gratitude — something any of us can tap into, regardless of whether we're presently happy or pursuing our passion. 'Since gratitude is contagious, others start to express gratitude and welcome more abundance into their lives as well,' Honda wrote. 'In a money-obsessed society, the simplest way to reach a state of maro to express gratitude and give to others, instead of always wanting or asking for more.' More From GOBankingRates Mark Cuban Warns of 'Red Rural Recession' -- 4 States That Could Get Hit Hard How Much Money Is Needed To Be Considered Middle Class in Your State? The 10 Most Reliable SUVs of 2025 This article originally appeared on The No. 1 Key To Wealth, According To Wahei Takeda, the 'Warren Buffett of Japan'
