BRK Vs Two Mutual Funds -- April 28, 20242

Locator: 47085INV.

Comparing BRK-B with two mutual funds: 1 year, 5 years, and max (though max doesn't go back very far):

• VTSAX: link here.
  
• TWCUX: link here.

At the links, type in BRK-B or any other ticker you want to compare with the mutual fund.

Personal Investing -- Still Working, Not Retired -- Looking At The Schwab Cartoon, Part 2

Locator: 47084INV.

I'm starting a new series on investing that I can share with my extended family members, most of whom have Schwab accounts but little understanding about investing.

This information is based on lessons learned during thirty-plus years of investing and saving for retirement. This information supplements, does not replace personal reading, research, and professional advice.

Anything I write here is meant only for my extended family members and no other readers. It is a starting point for discussion among the family members. Nothing is written in stone. These posts will be updated as conditions change. They will eventually be collected and linked under the "Personal Investing" tab at the top of the blog. 

This is meant for extended family members who:

• are not retired:
• report less than $250,00.01 annually in earned income to the IRS
• have limited investing experience

This information holds true for the extended family member who has a financial advisor (paid or otherwise).

Likewise, kids or no kids, it does not matter.

****************************
For Extended Family Members Who Are Still Working,
Not Retired

Goal: pay no taxes whatsoever on investments. My attitude: if you are still working and investing, you should be paying absolutely no taxes (capital gains / dividends) on your investments. If you are paying taxes on your investments and making no plans to stop that you are doing things all wrong.

If you max out your retirement accounts and 529s, it's time to start investing in real property but that's a topic for another day.

The Schwab cartoon:

 
Focus on sections A and C. 

Confirm with knowledgeable sources, the numbers change annually, but roughly:
    __ IRA contributions this year (2024): $7,000 per individual = $14,000 per couple
        __ Roth IRAs and not traditional IRAs, we can discuss reasons later
    __ 401(k) contribution: $23,000
    __ 529 contributions; two children; no max; set a goal for each year; as a starting point, I'll recommend $5,000 per child = $10,000
    __ total so far: $47,000 for sections A and C

Bottom line: don't even talk to me about putting "new" money into anything but sections A and C unless you have maxed out sections A and C.

Section B:

• put no new money in section B
  
• "buy and sell" within section B
• any new positions, do not check off the box "automatic reinvestment" 
• there's an argument for automatic reinvestment but generally not a good idea
• this made sense years ago when DRIPs were in fashion to avoid commissions
• there are no commissions any more in Schwab accounts

Section A: this is a biggie

• set up a new self-directed IRA / self-directed spousal IRA in section A
• if you "want" the excitement of trading, do it within a self-directed IRA
• any cash raised through a sale in section B, move that cash into new or existing IRAs in section A
• you can trade willy-nilly in your self-directed IRA and not face tax consequences; trading within section B will result in tax consequences
• you've already incurred a taxable event when you sell something in section B, so why not move it into your self-directly IRA and quit paying taxes on capital gains and dividends
  

Traditional IRA or Roth IRA:

• the only "good" thing that a traditional IRA provides that a Roth IRA does not: a very, very minor tax break
• the tax break makes you feel good
• in fact, the tax break the traditional IRA provides is nothing -- absolutely nothing -- compared to the tax advantages of the Roth IRA
• if you really, really want that tax break that a traditional IRA provides, invest only in a Roth IRA but calculate the taxes you would save by investing in a traditional IRA: I will pay you that amount of savings in cash when you file your taxes
• note: in 2033, RMDs required starting at age 75.  
• Roth IRAs: RMDs never required.
  

Investing Tip Of The Day? AVGO -- April 28, 2024

Locator: 47083INV.

Link here.

Current market cap: $600 billion.

Analysts: the next member of the trillion-dollar club. 

From the linked article:

Semiconductor and technology company Broadcom has seen its stock gain ~122% over the past year, triggered by the AI boom. In comparison, AI powerhouse Nvidia (NASDAQ:NVDA) has seen its stock price gain 220%. This raises the question: can Broadcom emulate Nvidia’s success and potentially join the $1 trillion market cap club? The answer appears to be yes. Given its attractive AI product offerings, solid business fundamentals, and relatively low valuation, I will buy AVGO stock at its current price.

P/E: 50.One-year comparison with AMD? AVGO did better. AMD's P/E: 300. No typo. 300.

Reminder: I am inappropriately exuberant about the US economy and the US market, I am also inappropriately exuberant about all things Apple.

See disclaimer. This is not an investment site.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. 

All my posts are done quickly: there will be content and typographical errors. If anything on any of my posts is important to you, go to the source. If/when I find typographical / content errors, I will correct them.

Reminder: I am inappropriately exuberant about the US economy and the US market, I am also inappropriately exuberant about all things Apple.

Inflation Watch -- Airlines, Tacos, Fast Food -- April 28, 2024

Locator: 47082INFLATION.

DFW to Portland, OR:

• last year, 2023 -- $425.
• last week, April, 2024: $350
• coming up, June, 2024: $265.
  

***********************
Restaurants

1. It's getting very, very expensive to dine out. Period. Dot. 

But that doesn't mean you can't find bargains. #1 mistake: expensive drinks. Seniors (generally, "55+" ) get very, very good deals. Often the "kids eat for free" does not apply when the adult is a senior ordering from the "55+" menu but often (?) the wait staff will over look that, especially if one is a regular.

1a. Restaurants defy predictions of a recession. Link here.

2. Bargains: iHop -- generally speaking, kids under the age of 10 years, eat free, if one adult orders one entree. Drinks are not free. Beware. I assume if iHop is offering this deal, so are others. Recommendation: iHop on weekday afternoons: never on the weekends for breakfast.

3. McDonald's: I still find McDonald's an incredible bargain. 

At the Portland, Oregon, airport yesterday, a Big Mac combo with medium fries, $9.25, total, no tax. That was at the airport, with medium diet Coke. I no longer have a big appetite and that was way more than I needed. Next time: regular hamburger and small fries. I doubt this meal was much less expensive a year ago. Even if only $7.50 last year, a jump from $7.50 to $9.25 is inconsequential when that's your only mean while traveling that day. Stop at the bar, however, waiting for your flight, and one drink -- and who orders just one drink? -- would set you back about $10. That's where the real problem lies.

4. California: sticker shock. Link to WSJ. I might come back to this. From my perspective: a lot of whining. The $20-minimum wage is only fair. Remember: fast food employees are not tipped.

5. Is "taco" the next "pizza"? Link to Texas Monthly. This tells me sit-down restaurants are doing just fine, thank you. 

We have both Torchy's Tacos and Velvet Taco near where we live. We can walk to Torchy's. A five-minute drive to Velvet Taco. We've never been to Torchy's. Will go today to see what it's all about. Velvet Taco is our favorite. Our oldest granddaughter introduced us to Velvet Taco. Tacos went replace pizza for home delivery; they still haven't figured out home delivery for tacos. Someone will. Just a matter of time. But my hunch: pizza is home delivery; tacos are alternative to McDonald's, Wendy's, and Chick-Fil-A. Though adding "Chick-Fil-A" in that last sentence is probably a stretch.

Velvet Taco: founded in Dallas; home-based in Plano, just north of Dallas now.

Torchy's: founded in Austin.

6. Investing: I've removed MCD from my Big Cap "bucket." It was a binary decision. MCD vs CAT? I'm staying with CAT. No recommendation. See disclaimers.

BRK And The Kiplinger Report -- The 13F, 1Q24, Part 2 -- April 28, 202

Locator: 47081BRK. 

Barron's: BRK and Warren Buffett. 

For some 30,000 Berkshire shareholders expected to attend the meeting, the future will be the focus as Buffett fields questions for more than five hours in what could be his only public appearance of the year. Joining Buffett, 93, on the dais will be Vice Chairman Greg Abel, 61, likely tasked with the role of Buffett’s successor as CEO, and Vice Chairman Ajit Jain, 72, who runs the company’s insurance operations. Together they will answer questions small and large: Can the stock beat the S&P 500 index SPX 1.02% ? Why have share repurchases declined since 2021? Can the company’s new management prove anywhere as capable as Buffett? Should Berkshire break up?

The "Warren Buffett watch" is tracked here, tabbed at the top of the blog.  

Recent posts devoted to Buffett:

• February 25, The Letter.
• 13F, 1Q24, part 1.
• March 19, 2024, part 1.
• March 19, 2024, part 2.

Now, for "13F, part 2." 

I finally posted my Buffett update after several iterations. There are probably errors -- content errors and typographical errors. But at least I understand it now. If the Buffett story is important to you, go to the source. Ignore my posts. 

I'm not going to go through it all over but for the past six months or so, there have been a lot of stories on Buffett and Japan:

• why Buffett got excited about Japan; and,
• the huge investments Buffett made in Japan
• how Buffett made a "killing" on his Japanese trades
  

So, let's look at the 13F or the news reports when Buffett jumped in and bought "Japan." These were the holdings (and first mention?) of these Japanese companies, the 13F from September 30, 2023:
the narrative: 

Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo, which are as of June 12, 2023. Tokyo Stock Exchange prices are converted to U.S. dollars from Japanese yen. Mitsubishi shares are adjusted for a 3-for-1 stock split on January 1, 2024.

At that CNBC link, scroll down to see the portfolio, the company, and percent of the BRK portfolio:

• Itochu: 1.4%
• Marubeni: 0.6%
• Mitsubishi: 2.1%
• Mitsui: 1.6%
• Sumitomo: 0.7%.

From Forbes, February 15, 2024:

Because the 13F does not include international stocks, Berkshire Hathaway initially announced the acquisition of about 5% of five Japanese trading companies at the end of August 2020. These holdings are Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co. Ltd., and Sumitomo Corp. Buffett revealed in April 2023 that Berkshire increased its stakes in these companies to 7.4%. Buffett indicated that these were intended to be long-term holdings, and Berkshire may still increase its stake to 9.9%.

If I did the math correctly, the previous "percents" add up to 6.4%. So, apparently the stakes have increased to 7.4%. This doesn't necessarily mean more buying, the stocks could have appreciated that much to affect the "percent of the portfolio."