Welcome to the end of the week and another edition of Happy Hour! Just sit back, relax, and enjoy your end of the week roundup of all things interesting in the land of money.
The image of the end is nigh with the sequester is playing out on news channels today. The heart string are being pulled. And the political ploys and threats of government agency shutdown and closure abound. But should you really be worried? In the grand scheme of things, the answer is…no. Will it impact the economy? Sure. It won’t end it. As the Tax Foundation so eloquently puts it:
If you make $50,000 a year ($137 a day), the sequester is like you deciding to cut $3.40 a day from your budget. That’s it. Too bad the President is asking us to choose between not paying rent or cutting the electricity, instead of cutting out a cup of Starbucks. – Tax Foundation
If you want to know more about the sequester and its potential effects for 2013, the Washington Post put out a great Sequester FAQ earlier this week. The reality is, this whole thing is just short-term speed bump on a very long highway.
The Berkshire Hathaway annual report and Buffett’s letter to shareholders is a big event each year. As always, there is a whirlwind of speculation around it. This year it’s all about a dividend. Buffett has had a longstanding belief that dividends should only be considered when companies can no longer reinvest that money and achieve adequate returns.
Which makes sense.
If Buffett or any other CEO can put that money to work and generate a higher ROI than a dividend payout can, the shareholder is better off. And Buffett is a master at generating a better ROI. That said, he has alluded to discussing future dividend policy in this shareholder letter. If you’re not the least bit interested in dividend policy, read it for its investing wisdom.
You can find this year’s shareholder letter, along with past year’s letters, at the company’s website. It should be available at the end of market close today.
- Why It’s Smart to Be Reckless on Wall Street – great explanation of Wall Street compensation and why risk taking won’t end anytime soon.
- Are You an Investor or a Speculator? (Part One) – the concept of investing vs speculating has been going around lately. Part one looks at it through the eyes of Ben Graham.
- Are You an Investor or a Speculator? (Part Two) – follow-up on how history has defined investing and speculating and how it should be viewed today.
- Market & Investing Wisdoms – there has been an abundance of investing tips, lists, and rules posted the past few weeks. I was going to post them all here today until I ran across this post that did it already.
- Wall Street Junk Kings Selling Debt Poised to Lose Value – It was only a matter of time before corporate borrowing jumped to take advantage of these low rates. That doesn’t mean bonds are an attractive investment.