Asymmetric information is something you must avoid falling prey to as an investor. There are laws protecting individual investors, but there are still ways to get caught on the wrong side of a transaction.
Most people believe they must take risks and take on leverage and do all other kinds of financial wizardry because they’re not as smart as Warren Buffett. But that’s all nonsense. All you must do is buy the biggest and best businesses, in the best industries. That’s all. It’s obvious. And it’s easy.
Perhaps the greatest of all the financial myths out there is that investing in U.S. Treasuries is a risk-free endeavor… The truth is that a U.S. Treasury security with a 10-year maturity is anything but risk-free.
Berkshire Hathaway’s structure guaranteed investment success while Warren Buffett’s personal reputation made investing respectable. The combination showed, beyond any doubt, that capitalism was more effective than socialism. But since the Global Financial Crisis, Berkshire’s track record has been abysmal.
Tomorrow, May 3, is the annual Berkshire Hathaway meeting, and Porter reviews Berkshire’s performance and offers a solution for Warren Buffett that would make shareholders very happy.
Today, Porter explains how he uses the options market to establish major positions in his portfolio, while, at the same time, generating safe cash returns that are vastly more than one can earn in fixed-income securities.