Re-balance Cycle Reminder All MyPlanIQ’s newsletters are archived here.

Regular AAC (Asset Allocation Composite), SAA and TAA portfolios are always rebalanced on the first trading day of a month. the next re-balance will be on Thursday April 1, 2021. 

As a reminder to expert users: advanced portfolios are still re-balanced based on their original re-balance schedules and they are not the same as those used in Strategic and Tactical Asset Allocation (SAA and TAA) portfolios of a plan.

Average 20% Annual Returns: The Upper Bound Of Stock Investments?!

In this newsletter, we discuss the upper bound or the ceiling of stock investments and relates this with our portfolios. Before we discuss annual returns, we will first review Warren Buffett’s annual shareholder letter. 

Warren Buffett’s annual shareholder letter

This weekend, Warren Buffett released his annual letter for Berkshire Hathaway’s shareholders. As usual, we enjoy reading his writings that are full of wisdom and common sense. Here are some of gems from the letter: 

  • On Berkshire’s stock holdings: “As I’ve emphasized many times, Charlie and I view Berkshire’s holdings of marketable stocks – at yearend worth $281 billion – as a collection of businesses.”. This is perhaps one of the hardest or simplest facts in Buffett’s stock investment philosophy: he doesn’t simply view his stock holdings as some pieces of papers that are valued daily by stock markets. What he cares most is these companies’ businesses or simply put: profits. 
  • Buffett stated that it’s more profitable and enjoyable and far less work to own non-controlling portion of a wonderful business (aka stocks) than struggling with 100% of a marginal enterprise. So owning high quality business stocks is actually better than day to day managing a so-so business. 
  • The best results occur at companies that require minimal assets to conduct high-margin businesses – and offer goods or services that will expand their sales volume with only minor needs for additional capital.” — again, he can’t emphasize enough how important to find a good business that’s highly profitable than being settled with mediocre ones. 
  • Still, investors must never forget that their expenses are Wall Street’s income. And, unlike my monkey, Wall Streeters do not work for peanuts.” — always beware of costly products and services. 
  • in 1959, 11 young Omaha doctors started to invest in a Buffett’s partnership and ever since, they have kept Berkshire’s stocks. Now one turned to 100 and two were in their high-90s. “This group’s startling durability – along with the fact that Charlie and I are 97 and 90, respectively – serves up an interesting question: Could it be that Berkshire ownership fosters longevity?” It’ll be well rewarded if one is able to adhere and being associated with a sound partnership, group, strategy or whatever for a long period of time. 

Though it might seem that what MyPlanIQ advocates: using low cost ETFs and funds and relying on more or less market timing/technical strategies, is totally different from Buffett’s investment philosophy, we actually find there are many things in common: low cost, quality companies, even viewing an index fund as a collection of business, and consistently sticking to a strategy for a long term etc. 

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