Latest
Recommended
Published: Mon, February 27, 2017
Economy | By Melissa Porter

Warren Buffett upbeat on USA business growth

Warren Buffett upbeat on USA business growth

Buffett's letter is always well-read in the business world because of his successful investing track record over more than five decades and his talent for explaining complicated business subjects in entertaining terms.

Buffett believes most stock investors are better off with low-priced index funds than paying higher fees to managers who often underperform.

Yet Buffett said most stock investors are better off with low-priced index funds than paying higher fees to managers who often underperform. And he again praised the country's market system for its ability to allow Americans to continue building "mind-boggling amounts" of wealth over time.

Buffett, the chief executive officer of Berkshire Hathaway, said that USA businesses will be worth a lot more in the future.

But he did praise "a tide of talented and ambitious immigrants" in helping the U.S. economy to prosper.

For the fourth quarter, Berkshire's net income rose to $6.29 billion, or $3,823 per Class A share, from $5.48 billion, or $3,333 per share, a year earlier, helped by a $1.1 billion increase in gains from investments and derivatives.

Berkshire said it had previously classified such Treasury bills as cash equivalents, noting that they are highly liquid and not that sensitive to interest-rate changes.

Buffett's remarks build on what he said at the annual meeting for his company past year in Omaha, Nebraska. Known to fans as "the Oracle of Omaha", he estimated that the search for outperformance has caused investors to "waste" more than $100 billion over the past decade.

"When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients", Buffett said in his annual letter to shareholders.

In his 2016 letter, Buffett took special aim at hedge funds, which in recent years have faced persistent outflows of investor money because of poor performance, stubbornly high fees, and a broad move toward cheaper, passive options like index funds and exchange-traded funds.

During the financial crisis, Buffett bet a founder of the asset management company Protege Partners LLC $1 million that a Vanguard S&P 500 index fund would outperform several groups of hedge funds over years. Both sides picked a charity that would get at least $1 million.

The Omaha, Nebraska-based conglomerate - which owns The Press of Atlantic City - released its latest results Saturday along with Buffett's annual letter to shareholders.

We spoke with Business Reporter Steve Jordon and he gave some insight on Warren Buffett's letter and outlook on America's future.

Berkshire, which has stakes in Kraft Heinz, Coca-Cola and a number of other companies, and recently invested in Apple, has benefited from the Wall Street rally after Trump's election.

Like this: