Warren Buffett made a Dow 1,000,000 call this week. He thinks it will be surpassed in the next 100 years.

It’s hard to imagine a century from now. That number might even seem impossible to some people, but the math checks out. It works out to a conservative 3.8% annual return over the next century.

Really, the number is not that important. What is important is Buffett’s faith in America’s ability to offer a competitive advantage for businesses over the next century. And if businesses have the opportunity to do well, workers do well, the country does well, and owner’s of businesses (investors) will prosper. Continue Reading…

Howard Marks came out with a new memo to clarify the last memo he wrote. His latest is a good example of how people – the media – interpret what is said about the markets and reduce it to all or nothing decisions. It never is.

The all in (out) mentality reminds me of a gambler on tilt. They let their emotions drive their decision until they eventually bet everything and walk away from the table with nothing. And yet, investing gets reduced to this binary view too often (which probably has more to do with the misperception people have of investing in general). Continue Reading…

Tiny changes are hard to spot, which makes it difficult to see the potential broader impact down the road.

That’s the message from Professor Bakshi, who wrote a great piece, as it relates to a company’s competitive advantage. Gradual tiny changes can work to strengthen or destroy any advantage a company might have.

But the effect of small changes is not the easiest thing to recognize because management often fails to see the bigger picture. Continue Reading…