Omaha, Somewhere In Middle America

Well . . . I finally broke down and bought my motel room for next weekend's "Woodstock for Capitalists," also known as the annual shareholder meeting of Berkshire Hathaway in Omaha, Nebraska. Price of admission? At least one share of stock. I happen to have 80 shares, so I'm good to go.  Warren Buffett is now 80 years old and has named a successor, so I figure I'd better go now while I have the chance. What is this company called Berkshire Hathaway, and why on earth would its annual shareholder meeting require a sports stadium plus over-flow seeting to handle all the attendees? Berkshire Hathaway is a holding company, which means it owns pieces and whole parts of many different companies, including Wells Fargo, Coca-Cola, See's Candies, Dairy-Queen, Fruit of the Loom, and Geico. Primarily, they're a big insurance company, so they're able to take the premiums paid by their clients and invest them aggressively into stocks and companies that make anything from bricks and paint to dilly bars and men's boxer-briefs. Last time I attended, in 2009, the premiums they don't need to keep locked up in reserve represented a "float" of $57 billion. So, no, you can't really copy Warren Buffett and Charlie Munger's results by simply buying the same stocks they buy. Why not? You don't have a $57 billion float, nor do you know how to calculate a buying opportunity with nearly the precision of these billionaire octogenarians.
I'll write more from Omaha. For now, see if you can download the annual letter to shareholders. Some of my favorite and most informative reading, period.  http://www.berkshirehathaway.com/letters/letters.html

What is "growth investing"?

Value investors like to buy stocks trading at low multiples. Growth investors buy stocks at high price-to-earnings or price-to-book ratios because the companies are hitting all their marks currently. Starbucks still trades at a growth multiple in the 20's because the company keeps opening stores, keeps increasing revenue, and keeps increasing profits. Then again, if you read Starbucks' 10K reports, you will see under the risks section that expectations for future performance are very high and, therefore, the stock price could plummet even if the company is still making bazillions of dollars. That's the problem with growth stocks--more volatile and priced for perfection. They also pay no or low dividend yields. Starbucks only recently started paying a dividend, and today the yield is right around 1.2%. With US Treasury Notes yielding only around 2%, the Starbucks dividend yield sounds pretty good, actually. And, it offers potential for growth, meaning the share price could go up over time. Or not. Nobody knows the future. If you want safety, buy the 10-year Treasury Note and live with 2% interest. If you can live with less income now but the potential for the share price to increase, and the dividend to increase, too, buy the common stock trading as a "growth stock."