Thursday Rant: 2008? Huh? What!?

Posted on May 23, 2013 by 1500
This won't end well

This won’t end well…

Just 5 years ago, the economies of the world were in free fall. Financial institutions all over the globe were collapsing and had to be bailed out by taxpayers. People lost their jobs left and right. It was a bad time. Did people learn from this?

Nope. I read a couple articles recently that illustrate the short term thinking that leads people to financial messes.

The first was about the rate of savings in the US. Predictably, there was a spike in savings right after the the crisis happened. People got smart, at least for a bit and started piling more money into their bank accounts. Did it last? Hell no! Savings rates have dropped back down to where they were in 2006: Continue reading →

Posted in Bad Role Models, Rants | Tagged , , | 19 Comments

Ducks! Ducks!! Ducks!!!

Posted on May 22, 2013 by 1500

Finally, the time has come! This week, I’ll be giving away two Warren Buffett/Charlie Munger duck sets. The first one will be given away to a lucky commenter. I have a number in my  mind. If your comment is that number, you get a set! Couldn’t be easier than that! As for the other set, scroll to the bottom for the details.

Duckie Travels

We recently completed a whirlwind of the Midwest. My younger sister graduated college and we went to Memphis to attend the ceremony. After that, we headed north to Chicago. Finally, we spent some time in Madison Wisconsin, visiting with more relatives. Warren Duck and Charlie Duck accompanied us on all of our adventures. Continue reading →

Posted in Something Completely Different | Tagged , , | 22 Comments

My Weekend with Warren Buffett, Part 3

Posted on May 21, 2013 by 1500

IMG_4603This is part 3 of a 3 part series about my weekend at the Berkshire Hathaway annual meeting. Part 1 was an overview of the meeting while in part 2, I discussed the famous question and answer session. Today’s post is about what I felt was the big lesson of the weekend.

Ducks!

Remember to tune in tomorrow for the duck giveaway. I have 2 sets to hand out. One set will go to a random commenter while the other set will be given away in a contest. Johnny Moneyseed will serve as the guest judge and will pick the winner.

The Big Lesson

Whenever I tell people that I went to the meeting, the first thing people ask is “What were Warren’s predictions?” This was also the most common question at the meeting. People repeatedly asked Buffett and Munger to ‘read the tea leaves’ and let them know what’s in store for the economy. Buffett’s and Munger’s answers could be summed up in 3 words:

We don’t care. Continue reading →

Posted in Good Role Models, Saving and Investing Money | Tagged , , , | 21 Comments

Ask the Readers: What would you do if you held the sole winning ticket?

Posted on May 20, 2013 by 1500

Hi there, Mrs. 1500 again.

Last week, I asked about your grocery budget. What do you spend on groceries, and how many people are you feeding? The answers I received were all over the board. It seems that most people are spending between $200 and $300 for 2 people per month. That doesn’t seem excessive to me.

Jacob from Cash Cow Couple spends less than $100 a month, by buying everything on sale and having a stockpile of deer meat. Michelle at Shop My Closet Project recently planted a garden to help offset grocery bills. This is an excellent way to trim food costs, and even small container gardens can provide tons of produce for you to enjoy. I can’t wait to move and plant a garden!

__________________________

Not the sole winning ticket. I especially like the part where I didn’t even match one number…

We were traveling last week, on a whirlwind Midwest road trip. It seems every state we drove through takes part in one of those giant, multi-state lotteries. The jackpot, in case you missed the story, was the ridiculous amount of $600 Million!

With very little effort, I can purchase a ticket and then convince myself that I possess the winning numbers. I daydream of what I would do if I won, and then when my numbers are not called, I feel real disappointment that I didn’t win. (I have also entered the Pillsbury Bake Off this year, and have similarly convinced myself that they will announce my name as the winner of the million dollar prize.)

I know many of you do not play the lottery, and that is fine. I only buy a ticket when it is “worth it” (as though if they called my numbers for a pitiful jackpot of “only” $10 million I would say “no thanks, not worth my time.”) and I only buy one ticket (~$5/year). Purchasing more than one ticket does not significantly increase your odds of winning. Purchasing 100 tickets doesn’t, either. While the chances of you winning are extremely low, they are infinitely higher than if you didn’t buy a ticket at all.

But imagine that you did hold that winning lottery ticket. That you are now $600 million richer. What would you do if you held that sole winning ticket? Some questions to ponder:

  • Would you conceal your identity? Not all states require winners to be publicly identified.
  • Who would you tell?
  • Would you keep working? If not at your current job, what?
  • Many lottery winners’ lives end up in ruin. What would you do to avoid this?
  • Finally, what on earth would you do with all of that money?
Posted in Ask the readers | Tagged , | 33 Comments

Thursday Rant: Three Ridiculous Retirees

Posted on May 16, 2013 by 1500
The world is big and there is much to see. Make sure you take some time to check it out.

The world is big and there is much to see. Make sure you take some time to check it out.

I hardly ever go to the doctor, but since having kids, I’m not quite as healthy as I used to be. Children bring home bugs from school that they then pass on to me. These new kiddy-critters give my body fits for brief amounts of time. A couple months ago, a particularly nasty one really got a hold of me, so I begrudgingly made an appointment to see the general practitioner.

The truth is that I don’t mind doctor visits because I love to read. Doctor’s offices are usually filled with a treasure trove of magazines of all types. This past visit, I thought I really hit the magazine lottery when I spotted one about money. Better yet, it was their Special Retirement Issue! Wooo! Doctor, please make me wait an hour so I can read through this.

However, what I read made me feel even worse. There was an article that detailed three couples on the verge of retirement. All three seemed to be making some horrible decisions, but the author didn’t call them out. So now, I’m going to. Continue reading →

Posted in Bad Role Models, Rants | Tagged , , | 62 Comments

My Weekend with Warren Buffett, Part 2

Posted on May 14, 2013 by 1500

This is part 2 of a 3 part series about my weekend at the Berkshire Hathaway annual meeting. Part 1 was an overview of the meeting while part 3 will be about what I feel was the big lesson. Today’s post is about the Question and Answer session that is the real meat of the meeting. 

Ducks!

Warren and Buffett looking ducky

Warren and Charlie looking ducky

The upcoming duck giveaway has generated excitement and I’m going to change things up just a little bit. The ducks will get their own post on Wednesday, 5/22. At that time, I’ll give away 2 sets of ducks. One set will go to a random commenter while the other set will be given away in a contest. Johnny Moneyseed will serve as the guest judge and will pick the winner.

Questions and Answers

The Geico lizard was a bit scary in real life

The Geico lizard was a bit scary in real life

The Question and Answer session is the most famous part of the Berkshire Hathaway meeting. Journalists, analysts and the public are allowed to ask anything they like. Buffett and Munger do not know the questions ahead of time. Most questions are submitted prior to meeting day, however attendees can also drop their name in a box. If your name is picked, you get to ask a question at one of 10 microphones set up around the facility. It was really neat to hear Buffett and Munger talk. Their answers were little windows into their minds. Despite their advanced ages, both were sharp and funny.

One unusual thing about this year’s meeting was that Buffett chose to invite a prominent Berkshire critic to ask questions. Doug Kass, a hedge fund manager and long time Berkshire naysayer, was chosen as the challenger. Continue reading →

Posted in Good Role Models, Saving and Investing Money | Tagged , , , | 27 Comments

Ask the Readers: What is your grocery budget?

Posted on May 13, 2013 by 1500

OK, last week I asked “Who do you love?” What investment advice or general money advice has really hit home with you, who do you recommend without hesitation?

themillionairenextdoor

Our favorite personal finance title.

I was happily surprised at the number of responses this post generated. I heard some names I have never heard before, probably because they are always off the shelf at the library when I peruse the finance section.

Mrs. Bookworm was the first to mention The Millionaire Next Door by Thomas Stanley and William Danko. (Bonus points for using the correct book title attribution method. But what else would I expect from someone calling herself a bookworm?) This is the title we give as a wedding or graduation present to all our friends/relatives/acquaintances, etc. We really like this book. I didn’t mention it in the original post because I wanted to see if anyone else mentioned it. Didn’t want to salt the mine… It was also mentioned by Mrs. PoP, JC at Passive Income Pursuit, Canadian Budget Binder, and CJB from Relatively-Speakin. All these great finance minds can’t be wrong! Continue reading →

Posted in Ask the readers | Tagged | 42 Comments

10 Questions with Net Worth Snowball

Posted on May 11, 2013 by 1500
NWS

NWS

Today is the 5th edition of our periodic guest post series called 10 Questions and a Pizza Place. (The 1500′s are pizza fanatics.) We have a list of 17 questions we pose to fellow financial bloggers, and they are free to pick and choose 10 or answer all 17. Let us know if you would like to be featured in a future edition of 10 Questions.

Today’s edition features Net Worth Snowball. This guy has some great tips on how to save money. We are definitely on the same page regarding vehicles and many other things. I like his style. He is also kicking butt financially. This guy is 27 and already has a net worth of 300K. I wish I thought more like him when I was 27.

I’ll apologize ahead of time to the cat people out there, but his response to the Dogs or cats question made me laugh out loud. Continue reading →

Posted in 10 Questions | Tagged , , | 15 Comments

Thursday Rant: You’re majoring in what?!?

Posted on May 9, 2013 by 1500

This weekend, we’re going to Memphis for my younger sister’s graduation. She worked hard and picked a good major, so she has a sweet gig lined up. However, the job market hasn’t been so hot since 2008 for a lot of people. Many college graduates come out of school to find themselves underemployed if employed at all. However, this is only half of the story. There are actually lots of jobs, it’s just that kids have no interest in them. I like to use myself as an example.

I’m a computer programmer and there are about a bajillion jobs in this field. I put my resume on Dice recently along with my phone number. It was a Monday morning and the first call came in under 5 minutes. The phone rang constantly for 8 hours straight (Mrs. 1500 thought the phone was broken before I told her what was going on). By the end of the day, I had over 200 calls and emails. I must admit that it felt really nice to be this wanted. However, I have yet to meet a relative who has gone into computer science or even an engineering field. A conversation with the sister of a childhood friend, while an extreme example, epitomizes the problem:

  • Friend: What do you do for work?
  • Me: I’m a computer programmer.
  • Friend: Ha ha, you computer geek! Nerd! Nerd!! Nerd!!!
  • Me: Hmmm, what do you do for work?
  • Friend: I work at a day care center, but at least I’m not a nerd!
  • Me: I like being a nerd.
  • Friend: Pppphhhhtt, whatever.
  • Me: No, it’s true. My income has allowed me to live my dreams. I’ve run with the bulls in Pamplona. I’ve farted around in France and seen things that most only dream about. I’m only 32 and most people never get the chance to do any of this. However, the best part is that I truly enjoy what I do. I get to do something for 40 hours a week that I’d continue to do even if I had all the money in the world.

She shut her mouth after that.

<Mr. 1500 note: As I’m typing this, yet another recruiter called. Really, I couldn’t make this stuff up.>

I think about college choices all the time and always ask my younger relatives what they plan on studying. I have yet to talk to one who has mentioned a computer related field or engineering.

I was reading the newspaper last year and they had a story about a public school in Colorado called the School of Mines. It’s a school where everyone graduates as an engineer. However, the point of the story was that students come out of this school making more money than kids at Ivy League schools.

Fast forward to a couple weeks ago. I was out and about and I see a guy with a School of Mines shirt on. I chatted him up and it turned out he was a professor at the school. I mentioned the newspaper article and he let me know that two of the graduates in the most recent class had attained jobs starting at $240,000/year. One was at the oil sands in Canada and another was in a hot, remote part of Australia, so no one wanted these jobs. This blew my mind. Again, these are 22-year-olds with a 4-year degree. He went on to say that these were extreme examples, but that the lowest starting salary in the mine engineering program was still over $100,000.

Again, the School of Mines is a public institution. The tuition costs are the same as any other public college in Colorado. The tuition is usually a moot issue anyway since companies tend to offer to pay the students’ tuition in return for committing to a job upon graduation.

In contrast, a relative is going to a fancy pants liberal arts college where she is majoring in communications*. The education is going to cost about $200,000 over four years.

Now, the communications major may turn out to be a world beater, but my money is on the School of Mines graduate.

Why don’t many kids want to pursue careers in math or science? Is it because we’re taught to pursue happiness and studying math and science doesn’t sound like fun? Is Barbie to blame? I don’t know. What I do know though is that Bill Gates is a nerd and he seems to have a pretty good life.

 

*I debated whether to include the story of the communications major. In the case of this person, she was listless and the major just seemed like a default choice. To spend 200K and not have direction seems silly to me.

My core belief is that hard work trumps all. Some of the most successful people of our time don’t even have degrees. Bill Gates, Michael Dell and Steve Jobs are all examples. At the Berkshire Hathaway meeting, someone asked for career advice. Charlie Munger replied with, “Keep plugging along, stay rational and energetic. Find out what turns you on and work hard at it.” Awesome advice.

Posted in Uncategorized | 59 Comments

My Weekend with Warren Buffett, Part 1

Posted on May 7, 2013 by 1500
Warren and Charlie looking ducky

Warren and Charlie looking ducky *see end of post for details on upcoming duck giveaway

If you pay any attention to financial media, you should know that the Berkshire Hathaway annual meeting took place this past weekend. This is a shareholder meeting unlike any other. ‘Circus’ may be a better way to describe it. It is a 3 day event with a party, question and answer session, cookout, chess Grandmaster and even a 5K race. I’ve been a long time shareholder of Berkshire Hathaway and a Warren Buffett forever. Going to this meeting has always been on my bucket list, so Mrs. 1500 and I decided to go this year.

Friday night party, you've never seen so many rich people go nuts for free food

Friday night party, you’ve never seen so many rich people go nuts for free food

To host the Saturday part of the meeting, Berkshire rents out the CenturyLink Center in Omaha which has a capacity of 17,000. When the main presentation started, this thing was filled to capacity. There were overfill rooms with TVs for those who couldn’t find a seat in the main arena. The atmosphere was electric. Really, I felt like I was 17, attending my first rock concert (AC/DC). Where else are you going to be able to sit in a room with at least 3 billionaires (Buffett, Charlie Munger and Bill Gates) and be able to ask 2 of them questions?

You may be asking yourself why you should read this if you don’t follow Buffett or Berkshire Hathaway? I’ll throw out 3 good reasons:

  • Berkshire Hathaway has beaten the S&P 39 out of 48 years. This is absolutely incredible performance. Buffett and Munger are truly two of the greatest investors of our time.
  • Buffett has a 10 year bet against hedge funds and halfway through, he is winning. Buffett’s philosophies and management styles couldn’t be more different from a hedge fund. He’s beating some of the smartest brains in the business.
  • I believe that Buffett is a genuine and good person. One thing that came up at the meeting is that he owes much of his success to treating others well (more on that next week). Also, he is giving away 99% of his wealth.

I can’t possibly do this event justice with one post, so I’m splitting it up into 3:

  1. Overview: Today’s post will be an overview of Berkshire Hathaway, a description of the shareholder meeting and some high level observations of the event.
  2. Buffett Wisdom: The meat of the meeting is the question and answer session with Buffett and Munger. I took 20 pages of furious notes. On 5/14, I’ll discuss some of the more interesting questions and Buffett’s/Munger’s answers.
  3. The Big Lesson: There was a common theme that kept coming up in Buffett and Munger’s answers. I think it’s a very important lesson for any investor and I look forward to writing about it on 5/21. I’ll go out on a limb and say it’s probably the most important lesson to investors.

What is Berkshire Hathaway?

Berkshire Hathaway is a holding company. A holding company doesn’t produce any goods or services itself, but owns other companies in part or whole. You may be surprised at some of the companies owned by Berkshire: Dairy Queen, Brooks, Borsheim’s, See’s Candy and Geico are all wholly owned under the Berkshire umbrella. Additionally, Berkshire owns shares of companies including American Express, Coke, IBM and Wells Fargo.

What is the shareholder meeting like?

Buffet, Munger, Gates and my finger

Buffet, Munger, Gates and my finger

In short, it’s pretty incredible. This isn’t your average shareholder meeting. Of course there is the corporate governance stuff. But you can also challenge a blindfolded chess Grandmaster who takes on 5 other people simultaneously. You can challenge a world champion ping pong player. Best of all, you can ask Buffett and Munger a question if your name is picked.

Friday

Friday night kicked off with a cocktail reception at Borsheims, a jewelry store that Berkshire owns. There was live music along with free drinks and food. This was a zoo as people came out in force to attend. There were people dressed up in suits and there were hipster looking people with purple hair.

Saturday

The main meeting is an all day event. It opened up with a movie that was a combination of commercials for various Berkshire companies and short movies. One of the movies features Arnold Schwarzenegger. Another featured the guys from Breaking Bad. They had decided to stop cooking drugs in favor of peanut brittle and Buffett came calling to buy their company. It was hilarious, especially the part when Munger uttered  ”brittle bitches!”

The movie concluded with a Berkshire take on the YMCA song. BKHA/BKHB replaced the traditional letters “We love our managers at B – K – H – A!” At some point, Buffett came out on stage and started dancing, doing the letter thing with his arms. For 82, this guy is in shape!

Next, there was a 5 hour question and answer session with a break for lunch. Shareholders and financial journalists alike get to ask questions. Buffett and Munger do not know the questions ahead of time. The answers were fascinating and I’ll discuss some of them next week. This year, Buffett invited a famous Berkshire Hathaway bear, Doug Kass, to ask questions. I thought it was pretty neat that someone with a dissenting view was invited as a challenger.

After the meeting was over, there was a cookout at Nebraska Furniture Mart, another Berkshire company. The weather was cold and rainy and this was an outdoor event, so we skipped it.

Sunday

On Sunday, there is a 5K race. I would have loved to participate, but my two torn knees advised otherwise.

Random observations

  • I'm a sucker for a clever t-shirt

    I’m a sucker for a clever t-shirt

    First and foremost, if you ever have a chance, ATTEND THIS MEETING. All you need is one B share (currently trading at $110) to be able to go. Also, do it soon. Buffett is 82 and Munger is 89. They won’t be around forever.

  • Buffett was very sharp. He cracked jokes off the cuff frequently and was quick with his answers. I can see him going strong for a bit longer.
  • Munger was funny too. At one point, Doug Kass asked a very long winded question challenging Berkshire to a bet that he could beat their returns. Charlie’s answer was terse and quick: “The answer is no.” The crowd cracked up.
  • Some people asked really dumb questions. Someone asked when the A shares would be split. Anyone who knows Buffett knows that this isn’t going to happen; that is what the B shares are for.
  • There were people of all ages and from all over the world. While the average age skewed high, it was neat to see young people there, some with their children.

Stay tuned for next week when I’ll review some of the more interesting parts of the Q and A session.

 

*At the end of the 3rd post in this series, I’ll give away a new set of Warren/Charlie ducks. These ducks are only available at the Berkshire meeting and are still in their original packaging. Tune into posts 2 and 3 for more details!

Posted in Good Role Models, Saving and Investing Money | Tagged , , | 44 Comments