Decoding Wall St.: Warren Buffett Never Really Stops Making News

Warren Buffett made all sorts of headlines earlier in the week, firing back at plump New Jersey Governor Chris Christie and uttering that he would buy millions of empty homes if feasible. These words of wisdom will very quickly fade into the background as hotter business news surfaces, only to reappear in the future should Buffett change his opinions. What won’t ever go away are the guiding principles to investing this man has used for decades and shares with those that are interested in reading his annual letter to Berkshire Hathaway shareholders. We have had a field day decoding Buffett’s journal entry from the latest edition of Fortune magazine, so here is part II in that fun exercise.

Buffett giving the finger to investors in gold:

“A century from now the 400 million areas of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops, and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to investors and will also hold assets worth more trillions. The 175,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.”

Decoded: Not knowing any idea how Buffett likes to invest would have left your head scratching if coming across this passage (and if you have never bought a stock in your life, we hope you at least did a short Wikipedia review of Buffett following the Monday newsletter!). However, this passage is 110% Buffett; he buys assets that could be touched only if they produce strong profits 5, 10, 20 years from when he invests. If investors do not foresee this happening on a particular company, but Buffett does, he simply loves it; he is able to buy the stock at a cheaper price. Specific to the Exxon Mobil reference, Buffett has an affinity for it as the company mails checks to shareholders every three months (sound smart: dividends) while still whipping the asset base to earn profits, which leads to higher check payments longer term. It doesn’t get any better than this scenario in Buffett land!

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Based on the book co-authored by former CNBC anchor Nicole Lapin and Wall Street analyst Brian Sozzi, Decoding Wall St., the daily Decoding Wall St. newsletter is a lifeline to unlocking, and acting upon, an endless array of hidden financial and world news clues. On FaceBook and Twitter, Decoding Wall St. releases unique streaming content daily, as a compliment to the newsletter, to help get you through interviews right on down to after work cocktail parties.  For more information, including to join the movement, please visit www.decodingwallst.com.