Warren Buffett is a canny investor and seems to be something of a Svengali, as he has manage to convince Bank of America to take money from him that they do not need and to pay him 6% for the privilege, whereas Joe Bloes like everyone else has to make do with 0.5%. The man is truly a genius !

Warren Buffett may have earned $1.3 billion in one day on his $5 billion investment in Bank of America Corp.

The 25 percent first-day return — more than 9,000 percent on an annualized basis — shows the premium Bank of America Chief Executive Officer Brian T. Moynihan was willing to pay to attract Buffett as an investor. As Berkshire’s CEO, Buffett has garnered a reputation as one of the world’s best investors, with shareholder returns over the past decade that are more than double those of the Standard & Poor’s 500 Index.

Under the terms of the deal, Omaha, Nebraska-based Berkshire will invest $5 billion in Bank of America, the Charlotte, North Carolina-based bank said today in a statement.

Preferred Dividend

In exchange, Berkshire will receive 50,000 perpetual preferred shares with a liquidation value of $100,000 each, according to the statement. The preferred shares pay a dividend of 6 percent per year, and are redeemable at any time by Bank of America at a 5 percent premium. The dividends are cumulative, meaning Bank of America would have to catch up if it skipped any payments.

Berkshire also will get warrants — a type of options — to buy 700 million common shares at a strike price of $7.14 each. Investors who value warrants weigh a company’s stock price, share volatility and the expiration date.

Warren Buffett ‘s first rule of investing is “don’t lose money” his second rule is “don’r forget the first rule”.  In this day and age he might like to consider a third rule “don’t have your identity stolen” !

Identity theft is big business and inolves someone using your personal information, e.g. name, credit card number, etc… without your permission, and committing fraud or creating credit card and bank accounts in your name.

The FTC reckons that up to 9 million Americans are victims of ID theft each year. The first you will know about it is when you receive an unpleasant credit report or statement and discover charges you didn’t make.

Thieves can steal your identity in many ways, on the Internet of course, but also outside your own home by “dumpster diving”, which involves sifting through your trash to find the bills or statements that you throw away. It is essential therefore that you protect yourself against people getting hold of your trash, and that you shred any information, either by hand or using a home or office shredder.  Shredders  don’t cost much – decent ones start at around $50

Once people get hold of your personal information they can do a number of things with it such as:-
open new credit card accounts in your name.
change the billing address on your credit card so you don’t receive the bills, and then charge purchases to your account.
open a phone or wireless account in your name
use your name to get services such as electricity, heating, or cable TV, online stock trading.
create counterfeit checks in your name.
open a bank account and write bad checks.
clone your ATM or debit card and drain your accounts.
take out a loan in your name.
get a driver’s license or official ID card issued in your name but with their picture.
use your name and Social Security number to get government benefits.
file a fraudulent tax return using your information.
get a job using your Social Security number.
rent a house in your name.
get medical services in your name
give your name to police during an arrest.

scary stuff, but easy enough to protect against – just destroy your statements, by hand or by burning them, or if you have a lot of statements then get a paper shredder – click here for more info -> paper shredders.

Warren Buffett has lived in the same house forever. It’s in Omaha and it’s worth around $100K, not much for a billionaire. If he wanted to buy something a bit larger he might like to consider remortgaging

ING Direct have launched a remortgage with a fixed interest rate of 3.69% for the next five years. This is one of the cheapest remortgage deals you are likely to find. Although still a lot higher than the interest rates of the cheapest SVR and tracker loans.

Refinancing their home loan is something most people face at some point and as interest rates are very low it may seem like a good idea. Rates may also start moving up again soon so this may be a good time to be locking in a good fixed rate.

The Nationwide and C&G have standard variable rates of 2.5% well below ING’s remortgage rate. But if rates start to rise again this could change.

If a higher mortgage rate is likely to cause you problems then a fixed rate would be a good idea.

Obviously whether a fixed rate remortgage or a standard variable rate is good for you depends on many things such as the stock market – see stock market for beginners – when interest rates start going up. If your current rate is low then you will want to stay with it as long as possible.

John Charcol mortgage brokers say a good idea is to read the last few paragraphs of the minutes of meetings of the BoE’s monetary policy committee, as these generally contain indications about future rates. They also tell clients when fixing rates would be a good idea, and they haven’t done that yet.

For good free advice mortgages and remortgaging then check out the free mortgage guides at moneysavingexpert.com/mortgages/best-mortgages-cashback#step1 for further information on the stock market and remortgage deals check out – remortgage deals

People like to wonder who will be the next Warren Buffett.

It turns out that Mr Buffett has in fact hired a relative unknown Todd Combs to assist with deciding which stocks to buy . Todd Combs has been in charge of Castle Point Capital Management, a hedge fund with only $400m under management. Berkshire Hathaway has over $100 billion under management and Mr Buffett has said that Combs would control of a “significant portion” of that amount, initially taking on an amount he felt comfortable with, and assuming more control over time.

The suggestion is that Combs will become CIO at Berkshire Hathaway once Warren Buffett finally calls it a day, which could yet be a long way off. Buffett himself has said that Combs is the frontrunner, but no final decision has yet been made.

Warren Buffett seems appreciate the fact that Combs is good at managing downside risk. He knows how to preserve capital, and, said Vidak Radonjic of Beryl Consulting Group, was “able to navigate a difficult 2008 when other hedge-fund managers didn’t.” According to Jena McGregor on Washingtonpost.com Combs shares Buffett’s thorough approach, reads 500 pages a week and does his own research. Does he own a computer we wonder ?

Warren Buffett has said his job would be split in three when he retires – Chairman, CEO and CIO. Rumor has it that the leader for the chief executive role, is David Sokol, 53, currently chairman of Berkshire-owned MidAmerican Energy Holdings.

Warren Buffett’s investment philosophy is surprisingly simple – buy shares in a good company at a reasonable price and wait ! By reinvesting dividends you get the benefit of compound interest and over time shares go up, you also avoid trading costs by not trading. You do of course need to be patient so it helps to have a day job while you are waiting. But Buffett was a millionaire by his early thirties, and he started from a relatively low base. If you can’t be bothered figuring out yourself which companies to buy you can be a coat-tail investor and buy the stock s that Warren Buffett buys – see here Warren Buffett Stocks.

If you had invested $1K in Berkshire Hathaway 45 years ago when you were 20 then, it would now be worth $4.3 million. You of course would be 65, but that it an extreme example of getting rich slowly, as mentioned above Buffett was a millionaire in his early 30s.

Combs was introduced to Warren Buffett by Charlie Munger (Mr Munger certainly seeems to do a lot of introducing). He set up Castle Point five years ago and has achieved cumulative returns of 34% since the fund launched, over the same time the S&P 500 fell by 5.1%.

Warren Buffett told the New York Times that Combs has “always been enamoured with Berkshire. I know he’ll be good, but he’s the right type of guy. We don’t want someone who’s trying to figure out if they can make $100m with us or $200m with the next guy.”

James Armstrong, President of Henry H Armstrong Associates, said it was unusual for Buffett to make a public announcement like this. “The fact that he’s come public with one of the names means he must be pretty confident in Mr Combs, or why release the name? It’s not been his practice. It’s not a name I’ve heard before, and I’ve been studying Berkshire for 25 years.”

Warren Buffett uses a vast wealth of information to help him make his investment decisions, but in an interview for CNBC Becky Quick asked him which is his favorite indicator, i.e.  if he was on a desert island and could only use one indicator which would he use, his answer was freight car loadings as published by the America Railcar Association – which is a particularly good idea as he also owns a railroad company.

You can see the video interview with CNBC here – Warren Buffett Favorite Indicator-

In a recent statement about the BP oil spill Mr Buffett has said he doesn’t think Tony Hayward should continue as CEO of BP. In furthe BP developments it appears that the oil spil may be capped by Monday 12 July – we shall see – to see the live video of the oil spill at the bottom of the Gulf of Mexico take a look here – oil spill live vode feed.

Warren Buffet has also just donated $1.93 billion to charitym including $1.60 billion to the foundation established by Bill Gates, according to a filing with the U.S. Securities and Exchange Commission.

Bufett has said that most his vast wealth will be left to charity both during his lifetime and after his death. HE has also urged more wealthy people in the US to donate some of their money to charity saying they should give at least half of their assets to charity, in a commentary co-written with Bill Gates..

For beginners in a hurry to make money on the stock market technical analysis is probably the faster way than the Warren Buffett way.

Technical analysis is used more by short and medium-term stock traders  – using a time frame of anything from a few days to a few months. It involves interpreting stock charts and buying stocks when certain levels are reached and then selling them when you have made the profit you were intending to make (or selling them qucikly if they start  going down instead of up).

Why do people use stock charts in stock trading ? Basically because stock charts are a reflection of human behaviour. 

Stock charts cause people to act even when there is no obvious news. When a stock reaches a certain level people will sell for the simple reason that a certain level has been reached thus creating more selling and a self-fulfilling prophecy. If you are a beginner to stock trading and have no desire to really understand the fundamentals of every company you may invest in, then you really owe it to yourself to understand the basics of stock charts. Professionals use them all the time so you are at a disdvantage if you don’t know how the professionals are likely to react to certain situations.

As a stock market beginner the first thing to understand are the concepts of support and resistance and moving averages. Moving averages show the average price of a stock over a given time period. The 200-day moving average is particularly important. If a stock falls below its 200 day moving average then this is interpreted by many people as a clear sell signal, which of course drives the price down.

Support and resistance levels are the levels at which stocks fall or rise to before turning round. This is known as trending and many traders make a living by buying at the bottom of a trend and selling at the top. They then wait for the stock price to fall back to the bottom and start all over again.

Some traders say that this is all they use.

For such traders, known as swing traders, another basic rule they often apply is to never buy a share if the 5-day moving average is heading down.

These are the most basic concepts of technical analysis but if you are a beginner to stock trading it is important to get to grips with such concepts, even if you choose to ignore them, as they are used by many thousands of traders and their behaviour will influence the price of the stock you are considering trading.

Warren Buffett is probably the most successful investor the world has ever seen, but it appears that his lack of knowledge of technology has can have serious consequences as it is said that he could have saved Lehman’s if he had known how to use his mobile phone.

At the time of the Lehman’s crisis, Bob Diamond, the head of Barclays Capital came up with a plan that involved Buffett providing insurance that might make the plan work. It was too complicated for a quick phone call, so Buffett asked Diamond to fax him over the details. When Buffett got back to his hotel room later that night he found no fax waiting. Lehman collapsed and the rest is bunk as Mark Twain would say.

It turns out however that some time later Buffett noticed an indicator on the screen of his cell phone he asked his daughter Susan if she could figure out what it was. It turned out it was the message from Diamond that Buffett had been waiting for. Stranger things have happened.

It’s a pity this all hapened too late to make it into Warren Buffett’s biography “The Snowball” by Alice Schroeder. The first print run was 1 million copies, exceptional by any standards. If Warren Buffett has signed any copies they would make a nice investment as signed first-editions.

Alice Schroeder benefitted from unprecedented access to Warren Buffett which allowed her to explore his life and work with him, and those closest to him. The result is a complete biography of the richest man in the world known as the Oracle of Omaha.

Buffett spent over 300 hours answering questions and giving complete access to his family, friends and business associates.

We learn that at the age of 7 he vowed to be a millionaire before the age of 35 (which he was) and at the age of 10 he determined to be the richest man in the world, which he also was.

He is of course famous for his very careful, long-term approach to investing and back in 2002 he was already describing derivatives as ‘toxic’ and potential “time bombs”. His friend and associate Charlie Munger, was rather more forthright when he stated “To say derivative accounting in America is a sewer is an insult to sewage.”

If you want to understand Warren Buffett “The Snowball” will undoubtedly be seen as the definitive biography as it is unlikely that anyone else will write one that is so complete. Why is it called The Snowball ? Well Warren Buffett likes to say “Life is like a snowball. The important thing is finding wet snow and a really long hill”.

The biography covers the Bear Stearns collapse and Buffett’s views on the current economic crisis.

“It could all end on a dime if they flooded the system with enough liquidity, but there are consequences to doing that. If dramatic enough, the consequences would be the immediate expectation of huge inflation. A lot of things would happen that you might not like. The economy is definitely tanking. It’s not my game, but if I had to bet one way or another – everyone else says a recession will be short and shallow, but I would say long and deep.”

It is worth pointing out that Warren Buffett has recently bought $5bn of preferred stock and would invest a further $5bn in common shares over the next five years. He has also invested £3 billion in GE and has a 9.4% stake in Wells Fargo, which has just blindsided Citigroup in a bid for Wachovia. It is highly unlikely that Mr Buffett was unaware of the deal.

Since Warren Buffett took these stakes back in October 2008 the stock markets have recovered, and his investments are looking pretty good.

About the Author
Over twenty years experience trading stocks and investing – for further information and tips check out Online Stock Trading or Warren Buffett

Warren Buffett has been subpoenaed to testify before a panel examining the reasons for the 2008 financial crisis. Mr. Buffett was not keen but he was subpoenaed to appear on June 2, so he didn’t have much choice.

He he also been busy reducing his investments the quarterly SEC filing shows he reduced his stake in 13 holdings, and got rid of 4 stocks altogether.

His largest sales were Kraft and Procter and Gamble

Warren Buffett Share Buys

Becton Dickinson and Co: 1.74 million shares, up from 1.5 million shares last quarter and 1.2 million before three months earlier.
Iron Mountain: 7.79 million shares, up from 7 million shares last quarter and 3.37 million before.
Republic Services: 10.83 million shares, up from 8.29 million.

Stocks Dumped

Sun Trust Bank: zero from 2.4 million shares.
Travelers Cos: zero from 27,336 shares.
UnitedHealth: Cut to zero from 1.18 million shares.
Wellpoint: Cut to zero from 1.34 million shares.
 
Stock Holdings Reduced

Carmax: 7.72 million shares, down from 8 million shares last quarter and 9 million shares the quarter before.
ConocoPhillips: 34.17 million shares, down from 37.7 million last quarter and from 62.49 million at the end of June 2009.
Costco Wholesale: 4.33 million shares, down from 5.25 million.
Gannett: 1.74 million shares, down from 2.2 million shares last quarter and down from 3.4 million last year.Johnson & Johnson: 23.9 million shares, down from just over 27 million shares before. At one point in 2008 the share holding was 62 million
Kraft Foods: 106.7 million shares, down 25% from over 138 million.
M&T Bank: 5.56 million, down from 6.71 million.
Moody’s: 30.83 million shares, down from 31.8 million and 39.2 million a quarter before.
Procter & Gamble: 78.32 million shares, down from 87.5 million.

Stock Holdings Unchanged

American Express: Unchanged – Over 151.6 million shares.
Bank of America: Unchanged. – 5 million shares.
Coca Cola: Unchanged. – 200 million shares
Comcast: Unchanged – 12 million shares
Comdisco: Unchanged – About 1.5 million shares
Exxon Mobil: Unchanged  – 421,800 shares.
General Electric: Unchanged – 7.77 million shares.
GlaxoSmithKline: Unchanged 1.51 million shares.
Home Depot: Unchanged 2.76 million shares
Ingersoll-Rand: Unchanged 636,600 shares
Lowe’s: Unchanged 6.5 million shares.
Nalco: Unchanged – 9.0 million shares
Nestle: Unchanged – 3.4 million shares
Nike: Unchanged – 7.64 million shares
Sanofi Aventis: Unchanged – 3.9 million shares.
Torchmark: Unchanged 2.82 million shares.
US Bancorp: Unchanged 69 million shares.
USG: Unchanged 17.07 million shares. .
United Parcel Service: Unchanged 1.43 million shares.
Wal-Mart: Unchanged – 39 million shares.
Washington Post: Unchanged 1.72 million shares..
Wells Fargo: Unchanged – 319.5 million shares.
Wesco Financial: Unchanged – 5.703 million shares.

I’ve been wondering whether BP was a good investment now and discovered this – oil spill live video feed

Could it be time to get back into the stock market ? If you have been wondering just what is happening with the stock markets and why they have been so boring since January then you may be interested to know that there are those who think we may be finally about to head back uo in a meaningful manner. After the correction of January and February the markets could be headed higher – possibly up to 1290 in the S&P, an increase of over 10% sometime this year. 1150 was seen as a significant resistance on the S&P,on the FTSE in the UK 5654 is also a significant level.

It may well therefore be time to buy stocks again, after the markets have been going nowhere in particular since January, as they seem to have finally broken out convincingly to the upside.

Beginners to stock trading need understand the basics of technical analysis, to determine whether it is time to buy stocks on the dips or sell them on the rallies. It is in fact short-term stock market traders that ensure market volatility, not everyone likes to buy stocks and hold them for 10 years like Warren Buffet, if they did nothing would ever happen !

There have been many predictions that the markets would crash again last October and November but it appears that these predictions were wrong. The markets now seem to be headed back up and even if they do move down this will only represent a chance to buy stocks on the dips.

It is also important of course to set stop losses to ensure that if your stock buying proves erroneous then at least you will only lose around 5%. It is in fact an essential part of any stock market trading strategy to ensure that you preserve your capital and not get wiped out by one or two bad trades.

Warren Buffett is the 3rd richest person in the world. He has achieved this by following a straightforward investing method. He buys shares in great companies at good prices and then hangs onto them. Over time his investments rise – very simple. The stock market rises over the long-term he says, and it is also a means of transferring money from the impatient to the patient.

As he has made $47 billion doing this – it might be worthwhile listening to his advice.

1. Always have plenty of cash

It’s not a good idea to need to rely on the kindness of strangers. Mange your affairs so that any cash requirements are dwarfed by your own liquidity.

High risks and high returns aren’t everything, cash gives low returns but it is also low risk. So try and build up a healthy cash pile.

2. Fear is your friend
“Be greedy when others are fearful and fearful when others are greedy” is one of Warren Buffet’s favorite sayings.

He also says “When it’s raining gold, reach for a bucket, not a thimble”, as he did back in October 2008 and so far he’s been proved right.

Buy in bear markets not when everyone else is buying in a roaring bull market.

3. Don’t believe the headline news

Warren Buffett watches CNBC, but he always looks beyond the headlines:

In his annual letter for example he said “We are certain, that the economy will be in shambles throughout 2009 – and probably well beyond – but that conclusion does not tell us whether the market will rise or fall.”

News channels however only quoted the first part of the sentence and totally ignored the end.

Buffett sees this as terrible journalism, he wasn’t predicting at all what would happen to the stock market.

The financial media has one purpose – to entertain or terrify you to get you to watch so they can charge more for advertising (hell that’s what people do with blogs!).

4. You will make mistakes

You will never get everything right:

Don’t waste time blaming others just try to learn from your mistakes.

5. Appreciate your good fortune

Some people who try to get wealthy become bitter about others who have already made it, or judgemental about the poor.

Warren Buffett says he has been very lucky – he was born in America; had wonderful parents who gave him a good education; has had a great family and health; and has a “business” gene that lets him prosper in a disproportionate manner to many people who contribute just as much or more to society.  He probably still doesn’t know how to buy stocks online thoug as he isn’t at all interested in short-term trading.