Weekend Reading: Buffett’s Annual Shareholder Letter Edition

Warren Buffett is a living legend in the world of investing and each year he issues, on behalf of his company Berkshire Hathaway, a widely anticipated letter to shareholders. Berkshire stock was up 23 percent in 2016, more than double that of the S&P 500 index. The Oracle of Omaha has still got it!

Buffett’s annual shareholder letter is always filled with interesting nuggets and folksy wisdom. This year’s letter was no exception and Forbes dug out the seven best quotes and shared them here.

For someone who makes a living searching for undervalued companies to buy, Buffett sure loves to tout the benefits of indexing for everyone else. He writes at length about Vanguard founder Jack Bogle (“He is a hero to investors and to me.”), his million dollar bet that an S&P 500 index fund would beat a group of hedge funds over a ten year period (annual returns for the past nine years: 7 percent for the index fund and 2.2 percent for the hedge funds), and about Wall Street “helpers” and their high-fee funds.

Here’s the full 29-page letter for your enjoyment.

This Week’s Recap:

On Monday I wrote about the insidious practice of closet indexing – a high fee mutual fund that has zero chance of beating the market it tracks.

On Wednesday Marie suggested how to boost your retirement income with regular income streams.

And on Friday Marie opened up the mailbag and answered a question from a reader who doesn’t make enough money to start a savings plan.

Join 3,400 other Boomer & Echo fans who follow us on Facebook for more insightful money links and commentary.

Weekend Reading:

Downtown Josh Brown dishes some solid advice on managing your portfolio in a raging bull market:

“It’s tempting to get rid of everything that’s not rallying right now. It’ll feel good today, but it will probably cost you big tomorrow.”

Canadians love to complain about the tax they pay on RRSP withdrawals. John Heinzl explains to RRSP bashers how the math really works.

Advocis, the lobby group representing financial advisors, is stepping up its fight against a proposed ban of embedded commissions on mutual funds. The one point I’ll give them is that the insurance industry, and in particular segregated funds, shouldn’t be left off the hook when it comes to protecting Canadian investors.

Last month I wrote about using Monte Carlo Simulations in your retirement planning to account for different outcomes. Michael James says these retirement simulators may give too wide a range of outcomes. Here’s why:

“It turns out that the stock market has a tendency to revert to the mean faster than random chance would suggest. A string of years with poor returns are somewhat more likely to be followed by good returns than more poor returns, and vice-versa. When we randomize the order of the annual returns, we eliminate this effect.”

Frugal Trader from Million Dollar Journey explains how and why asset allocation works.

Jonathan Chevreau reveals some tax strategies for using spousal RRSPs.

Your kids have completed their post-secondary education and you still have $54,000 in unused RESP money. Jason Heath explains what to do next.

An American perspective but an interesting read nonetheless: An Ivy League professor who spent 4 months working in a south-Bronx check-cashing store says we’re getting it all wrong.

This CBC reporter had to leave her downtown Toronto apartment when her rent shot up nearly $1,000 per month.

What to do when retirement funds run out? This licensed insolvency trustee sees cash-strapped seniors every day. But one client sticks out in her memory.

“A gentleman of 86 came in and threw a pile of credit cards down on the table. When I asked him what the problem was, he said, ‘The problem is I’m still alive.’ ”

Finally, some lessons the tooth fairy can’t teach. Author Robin Taub says allowances can help kids learn to be financially savvy.

Have a great weekend, everyone!

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