Gasta Update Berkshire Hathaway Inc
Warren Buffett's Berkshire Hathaway Inc. is getting ready to split the company's Class B shares next Thursday as part of its plan to buy Burlington Northern Santa Fe Corp.
The 50-for-1 stock split, which shareholders will vote on Wednesday, will boost the liquidity of Berkshire's stock, and enable Berkshire to offer even small BNSF shareholders Berkshire stock as part of its $26.3 billion cash and stock deal.
The added liquidity Berkshire will have as a result of the split will also increase the chances that the Omaha-based company will join the S&P 500 index. Berkshire's Class A shares, which are the nation's most expensive stock, and its Class B shares have been difficult to trade because of their high prices.
Berkshire's Class A shares, which sold for $97,500 Friday, are not being split.
Class B shares, dubbed "Baby Berkshires," were first issued in 1996 to meet demand from smaller investors and discourage investment firms from reselling pieces of Berkshire's original shares — which became the Class A shares.
Buffett declined to discuss the stock split Friday, ahead of Wednesday's special shareholder meeting in Omaha. Berkshire's board has said in documents sent to shareholders that it supports the split regardless of the BNSF deal.
Next week's split will make the $3,247 Class B shares significantly more affordable: They will be worth $64.94 apiece. That will take the B shares from 1/30th the value of a Class A share to 1/1,500th of Berkshire's Class A shares.
"Now everybody will have access to it," said Andy Kilpatrick, the stockbroker-author who wrote "Of Permanent Value: The Story of Warren Buffett."
The fact that the split may lead to inclusion in the S&P 500 is also significant because so many investors rely on it as a barometer for the economy. For years, Buffett has measured Berkshire's annual performance against the index in his letter to shareholders.
Being included would also generate new investment in Berkshire because trillions of dollars mirror moves in the index, and many funds buy stock in the companies in it.
A Standard & Poor's committee decides which companies to include in the S&P 500 based on a number of different criteria. Spokesman David Guarino declined to comment on the prospect of Berkshire joining the index, but he did explain the factors S&P considers.
Berkshire's market capitalization of $151 billion would easily exceed S&P's requirement that a company be worth at least $3.5 billion in the eyes of the stock market. But in the past, Berkshire has been left out of the index because its shares have been cumbersome to trade. S&P uses a formula comparing the dollar value of stock traded to a company's market capitalization to evaluate liquidity.
Buffett's charitable plans are another factor that will increase the number of Class B shares available to trade in the future. Buffett has pledged to convert all his Berkshire holdings to B shares and donate them to charity over time. Buffett pledged in 2006 to gradually give 10 million B shares to the Gates Foundation, 1 million B shares for the Susan Thompson Buffett Foundation named in honor of his deceased first wife, and 350,000 shares for each of the three foundations run by his three children.
Morningstar analyst Bill Bergman said any company that gets added into the S&P 500 always sees a boost in its stock, but he thinks many investors have already factored that into Berkshire's shares. So becoming part of the S&P 500 may not mean much to Berkshire's share price.
"It's an interesting development, but as far as the value of the shares go, it doesn't mean much," Bergman said.
The Class B split was a key part of the BNSF deal when it was announced in December. Berkshire agreed to pay $100 per share in cash and stock for the 77.4 percent of BNSF shares that it didn't already own. The purchase will be the largest ever for Buffett's company.
Saturday, January 23, 2010
Friday, January 22, 2010
Gasta Finance: Warren Buffet 10 top tips for Investment success.
Gasta Search Network Investment Advice
Warren Buffets 10 Tips For The Successful Long-Term Investor
While it may be true that in the stock market there is no rule without an exception, there are some principles that are tough to dispute. Let's review 10 general principles to help investors get a better grasp of how to approach the market from a long-term view. Every point embodies some fundamental concept every investor should know.
Sell the losers and let the winners ride!
Time and time again, investors take profits by selling their appreciated investments, but they hold onto stocks that have declined in the hope of a rebound. If an investor doesn't know when it's time to let go of hopeless stocks, he or she can, in the worst-case scenario, see the stock sink to the point where it is almost worthless. Of course, the idea of holding onto high-quality investments while selling the poor ones is great in theory, but hard to put into practice.
Don't chase a "hot tip"
Whether the tip comes from your brother, your cousin, your neighbor or even your broker, you shouldn't accept it as law. When you make an investment, it's important you know the reasons for doing so; do your own research and analysis of any company before you even consider investing your hard-earned money. Relying on a tidbit of information from someone else is not only an attempt at taking the easy way out, it's also a type of gambling. Sure, with some luck, tips sometimes pan out. But they will never make you an informed investor, which is what you need to be to be successful in the long run.
Don't sweat the small stuff
As a long-term investor, you shouldn't panic when your investments experience short-term movements. When tracking the activities of your investments, you should look at the big picture. Remember to be confident in the quality of your investments rather than nervous about the inevitable volatility of the short term. Also, don't overemphasize the few cents difference you might save from using a limit versus market order.
Granted, active traders will use these day-to-day and even minute-to-minute fluctuations as a way to make gains. But the gains of a long-term investor come from a completely different market movement - the one that occurs over many years - so keep your focus on developing your overall investment philosophy by educating yourself.
Don't overemphasize the P/E ratio
Investors often place too much importance on the price-earnings ratio (P/E ratio). Because it is one key tool among many, using only this ratio to make buy or sell decisions is dangerous and ill-advised. The P/E ratio must be interpreted within a context, and it should be used in conjunction with other analytical processes. So, a low P/E ratio doesn't necessarily mean a security is undervalued, nor does a high P/E ratio necessarily mean a company is overvalued.
Resist the lure of penny stocks
A common misconception is that there is less to lose in buying a low-priced stock. But whether you buy a $5 stock that plunges to $0 or a $75 stock that does the same, either way you've lost 100% of your initial investment. A lousy $5 company has just as much downside risk as a lousy $75 company. In fact, a penny stock is probably riskier than a company with a higher share price, which would have more regulations placed on it.
Pick a strategy and stick with it
Different people use different methods to pick stocks and fulfill investing goals. There are many ways to be successful and no one strategy is inherently better than any other. However, once you find your style, stick with it. An investor who flounders between different stock-picking strategies will probably experience the worst, rather than the best, of each. Constantly switching strategies effectively makes you a market timer, and this is definitely territory most investors should avoid. Take Warren Buffett's actions during the dotcom boom of the late '90s as an example. Buffett's value-oriented strategy had worked for him for decades, and - despite criticism from the media - it prevented him from getting sucked into tech startups that had no earnings and eventually crashed.
Focus on the future
The tough part about investing is that we are trying to make informed decisions based on things that are yet to happen. It's important to keep in mind that even though we use past data as an indication of things to come, it's what happens in the future that matters most.
A quote from Peter Lynch's book "One Up on Wall Street" (1990) about his experience with Subaru demonstrates this: "If I'd bothered to ask myself, 'How can this stock go any higher?' I would have never bought Subaru after it already went up twentyfold. But I checked the fundamentals, realized that Subaru was still cheap, bought the stock, and made sevenfold after that." The point is to base a decision on future potential rather than on what has already happened in the past.
Adopt a long-term perspective
Large short-term profits can often entice those who are new to the market. But adopting a long-term horizon and dismissing the "get in, get out and make a killing" mentality is a must for any investor. This doesn't mean that it's impossible to make money by actively trading in the short term. But, as we already mentioned, investing and trading are very different ways of making gains from the market. Trading involves very different risks that buy-and-hold investors don't experience. As such, active trading requires certain specialized skills.
Be open-minded
Many great companies are household names, but many good investments are not household names. Thousands of smaller companies have the potential to turn into the large blue chips of tomorrow. In fact, historically, small-caps have had greater returns than large-caps; over the decades from 1926-2001, small-cap stocks in the U.S. returned an average of 12.27% while the Standard & Poor's 500 Index (S&P 500) returned 10.53%.
This is not to suggest that you should devote your entire portfolio to small-cap stocks. Rather, understand that there are many great companies beyond those in the Dow Jones Industrial Average (DJIA), and that by neglecting all these lesser-known companies, you could also be neglecting some of the biggest gains.
Be concerned about taxes, but don't worry
Putting taxes above all else is a dangerous strategy, as it can often cause investors to make poor, misguided decisions. Yes, tax implications are important, but they are a secondary concern. The primary goals in investing are to grow and secure your money. You should always attempt to minimize the amount of tax you pay and maximize your after-tax return, but the situations are rare where you'll want to put tax considerations above all else when making an investment decision.
Conclusion
There are exceptions to every rule, but we hope that these solid tips for long-term investors and the common-sense principles we've discussed benefit you overall and provide some insight into how you should think about investing.
The Millionaire's Mindset
When your grandparents lamented that a dollar just isn't a dollar anymore, they weren't just bellyaching. Inflation attacks the value of a dollar, reducing it as time goes by so you need more dollars as time goes on. That is one of the reasons that $1 million is often thrown around as a retirement goal. Back in 1900, a $1 million retirement would include a mansion and a bevy of servants, but now, it has become a benchmark for the average retirement portfolio. The upside is that it is easier to become a millionaire now than at any time before. While you won't be buying islands, it is still a goal worth shooting for. Read on for 10 ways to make your first million.
Warren Buffets 10 Tips For The Successful Long-Term Investor
While it may be true that in the stock market there is no rule without an exception, there are some principles that are tough to dispute. Let's review 10 general principles to help investors get a better grasp of how to approach the market from a long-term view. Every point embodies some fundamental concept every investor should know.
Sell the losers and let the winners ride!
Time and time again, investors take profits by selling their appreciated investments, but they hold onto stocks that have declined in the hope of a rebound. If an investor doesn't know when it's time to let go of hopeless stocks, he or she can, in the worst-case scenario, see the stock sink to the point where it is almost worthless. Of course, the idea of holding onto high-quality investments while selling the poor ones is great in theory, but hard to put into practice.
Don't chase a "hot tip"
Whether the tip comes from your brother, your cousin, your neighbor or even your broker, you shouldn't accept it as law. When you make an investment, it's important you know the reasons for doing so; do your own research and analysis of any company before you even consider investing your hard-earned money. Relying on a tidbit of information from someone else is not only an attempt at taking the easy way out, it's also a type of gambling. Sure, with some luck, tips sometimes pan out. But they will never make you an informed investor, which is what you need to be to be successful in the long run.
Don't sweat the small stuff
As a long-term investor, you shouldn't panic when your investments experience short-term movements. When tracking the activities of your investments, you should look at the big picture. Remember to be confident in the quality of your investments rather than nervous about the inevitable volatility of the short term. Also, don't overemphasize the few cents difference you might save from using a limit versus market order.
Granted, active traders will use these day-to-day and even minute-to-minute fluctuations as a way to make gains. But the gains of a long-term investor come from a completely different market movement - the one that occurs over many years - so keep your focus on developing your overall investment philosophy by educating yourself.
Don't overemphasize the P/E ratio
Investors often place too much importance on the price-earnings ratio (P/E ratio). Because it is one key tool among many, using only this ratio to make buy or sell decisions is dangerous and ill-advised. The P/E ratio must be interpreted within a context, and it should be used in conjunction with other analytical processes. So, a low P/E ratio doesn't necessarily mean a security is undervalued, nor does a high P/E ratio necessarily mean a company is overvalued.
Resist the lure of penny stocks
A common misconception is that there is less to lose in buying a low-priced stock. But whether you buy a $5 stock that plunges to $0 or a $75 stock that does the same, either way you've lost 100% of your initial investment. A lousy $5 company has just as much downside risk as a lousy $75 company. In fact, a penny stock is probably riskier than a company with a higher share price, which would have more regulations placed on it.
Pick a strategy and stick with it
Different people use different methods to pick stocks and fulfill investing goals. There are many ways to be successful and no one strategy is inherently better than any other. However, once you find your style, stick with it. An investor who flounders between different stock-picking strategies will probably experience the worst, rather than the best, of each. Constantly switching strategies effectively makes you a market timer, and this is definitely territory most investors should avoid. Take Warren Buffett's actions during the dotcom boom of the late '90s as an example. Buffett's value-oriented strategy had worked for him for decades, and - despite criticism from the media - it prevented him from getting sucked into tech startups that had no earnings and eventually crashed.
Focus on the future
The tough part about investing is that we are trying to make informed decisions based on things that are yet to happen. It's important to keep in mind that even though we use past data as an indication of things to come, it's what happens in the future that matters most.
A quote from Peter Lynch's book "One Up on Wall Street" (1990) about his experience with Subaru demonstrates this: "If I'd bothered to ask myself, 'How can this stock go any higher?' I would have never bought Subaru after it already went up twentyfold. But I checked the fundamentals, realized that Subaru was still cheap, bought the stock, and made sevenfold after that." The point is to base a decision on future potential rather than on what has already happened in the past.
Adopt a long-term perspective
Large short-term profits can often entice those who are new to the market. But adopting a long-term horizon and dismissing the "get in, get out and make a killing" mentality is a must for any investor. This doesn't mean that it's impossible to make money by actively trading in the short term. But, as we already mentioned, investing and trading are very different ways of making gains from the market. Trading involves very different risks that buy-and-hold investors don't experience. As such, active trading requires certain specialized skills.
Be open-minded
Many great companies are household names, but many good investments are not household names. Thousands of smaller companies have the potential to turn into the large blue chips of tomorrow. In fact, historically, small-caps have had greater returns than large-caps; over the decades from 1926-2001, small-cap stocks in the U.S. returned an average of 12.27% while the Standard & Poor's 500 Index (S&P 500) returned 10.53%.
This is not to suggest that you should devote your entire portfolio to small-cap stocks. Rather, understand that there are many great companies beyond those in the Dow Jones Industrial Average (DJIA), and that by neglecting all these lesser-known companies, you could also be neglecting some of the biggest gains.
Be concerned about taxes, but don't worry
Putting taxes above all else is a dangerous strategy, as it can often cause investors to make poor, misguided decisions. Yes, tax implications are important, but they are a secondary concern. The primary goals in investing are to grow and secure your money. You should always attempt to minimize the amount of tax you pay and maximize your after-tax return, but the situations are rare where you'll want to put tax considerations above all else when making an investment decision.
Conclusion
There are exceptions to every rule, but we hope that these solid tips for long-term investors and the common-sense principles we've discussed benefit you overall and provide some insight into how you should think about investing.
The Millionaire's Mindset
When your grandparents lamented that a dollar just isn't a dollar anymore, they weren't just bellyaching. Inflation attacks the value of a dollar, reducing it as time goes by so you need more dollars as time goes on. That is one of the reasons that $1 million is often thrown around as a retirement goal. Back in 1900, a $1 million retirement would include a mansion and a bevy of servants, but now, it has become a benchmark for the average retirement portfolio. The upside is that it is easier to become a millionaire now than at any time before. While you won't be buying islands, it is still a goal worth shooting for. Read on for 10 ways to make your first million.
Monday, January 18, 2010
Gasta Tech News: Gasta optomistic about online ad spend increase in 2010
Gasta optomistic about online ad spend increase in 2010
The news inthe Online Marketing Industry is starting to look a bit more positive lately. The velocity at which ad spending declined over the last two years has gone from outright crash to crawl, with the expectation that we'll start seeing increases in late 2010 and into 2011. "The economic cycle has reached bottom -- at least for the online ad industry," said David Hallerman, eMarketer senior analyst and author of the new report, "US Ad Spending." He notes that although the Interactive Advertising Bureau and PricewaterhouseCoopers indicated that spending in the first three quarters of 2009 fell by 5.3 percent, eMarketer's estimates indicate a smaller loss of 2.5 percent during Q4.
If you live in pockets of the traditional advertising space, such as radio and print, the news will continue to be bleak for longer, with projected declines of greater than 4 percent in 2010 for newspapers and magazines. However, TV and outdoor are actually forecasted to increase slightly next year (approximately 2 percent), with internet leading the charge at a bump of 11.6 percent (source: ZenithOptimedia).
This particularly good news for those of us on the interactive side simply quantifies what many of us who live here day-in and day-out have experienced this year: continued growth. While most experts and researchers have announced that the trough is bottoming out, many of us have seen quite a bit of sunshine through the general advertising clouds. The overall picture is a $440 billion global industry, and internet advertising still represents less than 14 percent of that mark. We have a lot more room to grow.
What follows are a few signs that I witnessed in the latter part of 2009, from a small corner of the U.S. in San Diego, that might resonate with you and provide some optimism for recovery in 2010. I am sharing these as my own observations to open the dialog with others who might share what they've witnessed, positive or negative, as a digital imprint of what we were thinking as we enter into a new decade.
Clients are investing in social media
Brands are not just starting Twitter accounts and Facebook pages -- they're embracing social media as an influencing business practice. Most seem to understand that they need to listen to customers and react to what they're saying; among customer service gripes and viral contests, there is actually useful information. Companies are employing a variety of tactics within the social media construct to change the way they do business both internally and externally. What's more is that they're talking about it, therefore influencing others who will mirror effective social media strategies this year.
Shifting budgets rather than outright canning them
Discussions in the boardroom have gone from "what can we cut?" to "why are we spending on this ineffective tactic and not that effective one?" Earlier in the year, there were a lot of broad-stroke cuts made in budgets. We might hear, "All my budgets were cut 15 percent!"
Now that the dust has settled a bit, I have witnessed more productive discussions around moving money from areas that either weren't measurable or didn't produce to those that are effective in moving the needle. Next year, as we see more efficient use of budgets through Q1 and Q2, we hopefully can get some executives to spend more to get more in the latter part of the year.
Found money
Some clients "magically" found money left in their budgets at the end of 2009. No doubt clients were frugal throughout the year. But in December, they found some money to put into 2010 initiatives. For those clients, we should see some of that work come online quickly, which may encourage others to follow suit.
By Reid Carr
The news inthe Online Marketing Industry is starting to look a bit more positive lately. The velocity at which ad spending declined over the last two years has gone from outright crash to crawl, with the expectation that we'll start seeing increases in late 2010 and into 2011. "The economic cycle has reached bottom -- at least for the online ad industry," said David Hallerman, eMarketer senior analyst and author of the new report, "US Ad Spending." He notes that although the Interactive Advertising Bureau and PricewaterhouseCoopers indicated that spending in the first three quarters of 2009 fell by 5.3 percent, eMarketer's estimates indicate a smaller loss of 2.5 percent during Q4.
If you live in pockets of the traditional advertising space, such as radio and print, the news will continue to be bleak for longer, with projected declines of greater than 4 percent in 2010 for newspapers and magazines. However, TV and outdoor are actually forecasted to increase slightly next year (approximately 2 percent), with internet leading the charge at a bump of 11.6 percent (source: ZenithOptimedia).
This particularly good news for those of us on the interactive side simply quantifies what many of us who live here day-in and day-out have experienced this year: continued growth. While most experts and researchers have announced that the trough is bottoming out, many of us have seen quite a bit of sunshine through the general advertising clouds. The overall picture is a $440 billion global industry, and internet advertising still represents less than 14 percent of that mark. We have a lot more room to grow.
What follows are a few signs that I witnessed in the latter part of 2009, from a small corner of the U.S. in San Diego, that might resonate with you and provide some optimism for recovery in 2010. I am sharing these as my own observations to open the dialog with others who might share what they've witnessed, positive or negative, as a digital imprint of what we were thinking as we enter into a new decade.
Clients are investing in social media
Brands are not just starting Twitter accounts and Facebook pages -- they're embracing social media as an influencing business practice. Most seem to understand that they need to listen to customers and react to what they're saying; among customer service gripes and viral contests, there is actually useful information. Companies are employing a variety of tactics within the social media construct to change the way they do business both internally and externally. What's more is that they're talking about it, therefore influencing others who will mirror effective social media strategies this year.
Shifting budgets rather than outright canning them
Discussions in the boardroom have gone from "what can we cut?" to "why are we spending on this ineffective tactic and not that effective one?" Earlier in the year, there were a lot of broad-stroke cuts made in budgets. We might hear, "All my budgets were cut 15 percent!"
Now that the dust has settled a bit, I have witnessed more productive discussions around moving money from areas that either weren't measurable or didn't produce to those that are effective in moving the needle. Next year, as we see more efficient use of budgets through Q1 and Q2, we hopefully can get some executives to spend more to get more in the latter part of the year.
Found money
Some clients "magically" found money left in their budgets at the end of 2009. No doubt clients were frugal throughout the year. But in December, they found some money to put into 2010 initiatives. For those clients, we should see some of that work come online quickly, which may encourage others to follow suit.
By Reid Carr
Gasta Tech News: Oxford University bans Spotify for Using too much bandwidth
Spotify which owes most of its online popularity in Ireland to Gasta.com and its music search engine http://www.audiojet.com has been banned by Oxford University.
TechCrunch reports
Oxford University has taken a fairly drastic measure against music spartup Spotify. It’s banned it.
The University’s computing services, OUCS, says the service is using too much bandwidth for their networks to handle. But no warning was given and students are understandably rather anoyed.
Finola Holyoak, a first-year student at Lincoln college says “I was shocked when I realised there was a total ban.”
Given that universities have traditionally been a hotbed of file-sharing (Napster was famously created when Sean Fanning was at college), one might think that Oxford University would want to promote a service that legally allows students to listen to a very large catalogue for free – rather than swapping eachother’s MP3 files.
TechCrunch reports
Oxford University has taken a fairly drastic measure against music spartup Spotify. It’s banned it.
The University’s computing services, OUCS, says the service is using too much bandwidth for their networks to handle. But no warning was given and students are understandably rather anoyed.
Finola Holyoak, a first-year student at Lincoln college says “I was shocked when I realised there was a total ban.”
Given that universities have traditionally been a hotbed of file-sharing (Napster was famously created when Sean Fanning was at college), one might think that Oxford University would want to promote a service that legally allows students to listen to a very large catalogue for free – rather than swapping eachother’s MP3 files.
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