You Will Learn:
● For 30 Years the Billionaire Investor Outpaced the Market but That All Changed in the Past Decade.
● Social Experiment: What Happens When a $20 Note is Auctioned? (YouTube by National Geographic)
● National Weekly Rent Goes Up to $500 (Auckland $560)
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For 30 Years the Billionaire Investor Outpaced the Market but That All Changed in the Past Decade.
I think you will enjoy this reading. Warren Buffett sat down in his office for a rare newspaper interview, lasting nearly 3 hours!
Property is not the only asset that you should pay attention to. Diversification is the number one rule for your success.
Share market is a good tool if you want to become a wealthy and happy person. It certainly helped me to move closer to my goals!
Buffett invests using a very different formula today. You may want to copy a similar strategy. Although, not many of us can buy whole companies 😀
1: buy whole companies when they can be had for fair prices, sometimes financed with a form of very low-cost debt – the incoming premiums from Berkshire’s vast insurance empire.
2: husband the cash those companies throw off, taking it out of portfolio companies that are not growing and investing it in those that are – all under the Berkshire holding company umbrella, so the transfers are not taxable.
3: invest some of the excess capital in publicly traded, blue-chip stocks.
4: hold the rest in Treasuries and cash, a war chest for when the next deal presents itself.
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Social Experiment: What Happens When a $20 Note is Auctioned? (YouTube by National Geographic)
They’re selling a twenty-dollar bill, but the amount some people are willing to pay for it might make your head spin.
This experiment was summed up as: why would we pay more for something than what it is worth? Unfortunately, this irrational logic often applies to the stock exchange or housing market.
The "bigger fool theory" explains this irrational behaviour. The price of an object is not determined by its intrinsic value (or face value - in this case, $20) but rather by irrational beliefs that there will always be a bigger fool who is willing to pay a higher price.
What can be learnt from this episode?
● Value can be perceived differently in certain situations.
● Thinking something is more expensive ignites the wires in your brain and triggers your pleasure centre so that you enjoy it more. Higher prices assume a higher quality.
● When competitiveness kicks in, there is a reluctance to lose.
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National Weekly Rent Goes Up to $500 (Auckland $560)
Trade Me’s Head of Rentals Aaron Clancy said the country’s rental market was looking very healthy and this was the first time in five months that every region in the country experienced a year-on-year increase.
“There’s a high demand for rentals across the country with a significant 28 per cent increase in the number of enquiries compared to March 2018.
Mr Clancy said Auckland’s high house prices and the growing population had resulted in 24 per cent more enquiries on rentals than March last year and that was keeping prices high.
Nothing has changed here. New Zealand has a big shortage of properties, let alone dry & warm. Therefore, the demand for quality accommodation will be high for the next at least 10 years (!) because we've been talking about it for a long time and fundamentals have not improved.
Read the full TradeMe article here.
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“While not knowing what you don't know is a problem. A far bigger problem is you don't do what you do know." — Keith J. Cunningham.
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Hi, I'm Maxim, the human behind this newsletter.
I research and interview economists, tax advisors, investors etc. to find tools & tactics that YOU can use to save money and time.
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