Finance
Chris Farrell: Warren Buffet’s annual wisdom sharing full of personal finance advice
Warren Buffett’s 2023 annual letter to shareholders of Berkshire Hathaway is, like his previous letters, worth reading several times.
Buffett, 93, is a legendary investor who bought his first stock on March 11, 1942. Along with his close friend, the late Charlie Munger, his intellectual and investing partner, Buffett established a remarkable investment track record. The letter opens with a touching memoriam to Munger.
“Charlie never sought to take credit for his role as creator but instead let me take the bows and receive the accolades,” he wrote. “In a way, his relationship with me was part older brother, part loving father. Even when he knew he was right, he gave me the reins, and when I blundered he never — never — reminded me of my mistake.”
There are several themes in the letter, and I want to focus on three with personal finance implications. Yes, Berkshire Hathaway is the seventh-largest U.S. company with a market capitalization of nearly $900 billion. Still, the lessons are worth reflection.
First, embrace financial conservatism for safety and opportunity. Buffett (and Munger) have long emphasized the diversified company’s financial strength. One reason is its huge pile of cash and its equivalents (currently $167.6 billion). The cash buffer is “far in excess of what conventional wisdom deems necessary,” yet Buffett extolled the virtues of “extreme financial conservatism.” The hoard allows the company the means to cope well during financial crisis and economic downturns (think 2001, 2008 and 2020) and to seize opportunities when they emerge. The analogy to building a healthy margin of household financial safety is compelling.
Second, invest for the long haul. Frequent trading is hazardous to your wealth. He notes Wall Street thrives on the marketing opportunities feverish activity creates. Rather than chase financial fads, he recommended sticking with quality long-term investments.
“Thanks to the American tailwind and the power of compound interest, the arena in which we operate has been — and will be — rewarding if you make a couple of good decisions during a lifetime and avoid serious mistakes,” he wrote.
Most of us own equities through retirement savings plans, and his long-term framework resonates with a low-fee low-turnover broad-based index fund strategy.
Third, find your purpose (or purposes). Buffett delighted in detailing his investing mistakes but quickly added “managing Berkshire is mostly fun and always interesting.” He loves what he does at 93. Personal finance is about designing money strategies that support the kind of life you want to live.
Chris Farrell is senior economics contributor, “Marketplace”; commentator, Minnesota Public Radio.
Finance
Las Cruces finance director gets national honor for ‘exceptional contributions’
EL PASO, Texas (KTSM) — The City of Las Cruces’ finance director has received a national honor recognizing “exceptional contributions to public finance and local government service,” the City said.
Finance Director Lesley Doyle was selected by the Government Finance Officers Association (GFOA) to receive the organization’s “Recognition for Outstanding Public Service.”
The award recognizes Doyle’s leadership during a critical financial period for the City.
She stepped into the role of finance director as the City’s FY25 audit identified a projected beginning balance shortfall of more than $10 million in a community of nearly 120,000 residents, the City said.
Doyle led a coordinated effort to communicate the financial situation clearly to City departments, executive leadership, and the City Council, while working with the budget team to close the gap without reducing essential services.
Josie Trevino, assistant finance director, credited Doyle with building a culture of trust and collaboration between the Finance Department and other City departments from the beginning of her tenure.
Doyle came to municipal government after a career in public education, transitioning from a school district into City finance leadership.
“In her first year, she met the challenge with confidence, emphasizing open communication, transparency, and proactive problem-solving. Her leadership has helped strengthen relationships across the organization while fostering a positive and supportive workplace culture within the Finance Department,” the City of Las Cruces said.
“The balance of technical skill and genuine care for people is what makes Lesley’s leadership unique,” Trevino said.
The GFOA has published Doyle’s recognition on its website, and her story will also be highlighted during the upcoming GFOA newsletter and highlighted at the annual GFOA conference.
Finance
Former top Treasury adviser warns that HMRC plans to track personal finances with AI
A former senior Treasury adviser to Gordon Brown has warned that HMRC is on the cusp of using artificial intelligence to track people’s and businesses income and expenditure without them knowing.
Dr Chris Wales, who was a member of Mr Brown’s Council of Economic Advisers for more than six years, has sounded the alarm while launching a chilling book on the conduct of the Spanish tax authority, Agencia Tributaria.
He is set to join former Labour Treasury minister Baroness Dawn Primarolo at an event next week flagging up how the Spanish model of dealing with tax evasion is about to arrive in the UK suggesting that the door is opening for a “surveillance state.”
In a preview of the future, Dr Wales has claimed that confidentiality in personal life – not just finances – “will simply go out of the window” and asks whether there are adequate safeguards in the UK to prevent HMRC from emulating its Spanish counterpart.
He said: “From 1 January, every single invoice will go through the tax agency in Spain. The Inspector can already obtain all your utility bills and will soon find out which clinic and pharmacy you use and what you buy there, which restaurants you eat at, where you purchase wine and groceries, what kind of car you have, how far you drive and where you park, what flights you take and which hotels you use. Information security? A thing of the past.”
He went on: “I am far from being a libertarian, but I see great danger in the direction in which tax authority powers are going, particularly because the process doesn’t seem to involve our active consent. There is little parliamentary debate about it. In Spain it is simply out of control. In the UK, let’s see.”
Highlighting the CONNECT AI program already used by HMRC in the UK, Dr Wales claimed that the UK is now close to following Spain’s lead.
He said: “HMRC has been using sophisticated information technology for years including an AI system called CONNECT which, as early as 2023, was said to contain more than 55 billion taxpayer-related data items.
“It will be much bigger today with these billions of pieces of information about taxpayers capable of being sorted quickly by AI.”
Dr Wales, who is now senior research adviser at International Centre for Tax and Development, added that HMRC also declines to say what algorithms it uses, under the pretext that if you publish them people will “game the system”, a claim that he suggests does not stand up to scrutiny.
“The system is understood to be used to target evasion. For tax authorities, everyone is a potential tax evader. This means that they believe they have a legitimate reason to collect data about all of us,” he said.
Finance
Boyle Heights warehouse fire: Where neighbors, victims can seek financial assistance
More than two weeks after a fire broke out inside the Lineage warehouse in Boyle Heights, many neighbors have received N95 masks and air purified while mobile health clinics are set up in their area.
But some neighbors said the massive fire that sent toxic fume into the air and created a horrendous stench of rotting food has cost them out of pocket.
Neighbors said they missed days of work while spending extra money on property cleanup. One woman said she spent hundreds of dollars on air purified before they became more widely distributed.
Lineage, the company that operates the burned warehouse, donated $2 million to the California Community Foundation (CCF) so the money can be distributed to the community. The organization said it’s split the money between different organizations.
At least 10 of them are listed as providing financial assistance.
The Boyle Heights Chamber of Commerce said it’s offering small business grants funded, in part, by the group, Inclusive Action for the City.
“We’re hoping that for brick and mortars: it would be up to $3,000. And then for our vendors, it would be up to $1,000,” Miriam Rodriguez with the Boyle Heights Chamber of Commerce said, adding the application is “very straightforward.” “It’s intentionally made that way so that there’s not a lot of requirements. We’re not asking for legal status. We’re not asking for pages of documentation.”
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