We start this week with the Oracle of Omaha, Warren Buffett, who released his annual letter to shareholders. I like listening to Mr. Buffett's interviews displaying his folksy charm, sage advice, and humbled persona. From there we move on to Michael Cohen's testimony, trade talks, earnings, Vladimir Putin, as well as how hot your town may get in 60 years.
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- Warren Buffett Struggling to Beat the Market Returns: In an interview this week, Warren Buffett admitted that Berkshire's stock pickers were lagging the stock market returns. If Warren Buffett and his handpicked stock investors cannot beat the market, is there hope for anyone else? He also released his annual letter to Berkshire Hathaway investors and spoke of the great "American Tailwind." I always enjoy reading the highlights of his annual letter.
- Cohen Testimony: Michael Cohen's testimony in front of the House Oversight Committee captured the media's attention. Committee hearings are often filled with clownish political theater, though the testimony may have important legal or political ramifications. We live in an age where politics, the economy, and markets are strongly intertwined. But it is hard to tell if the hearing will, or will not, have any impact on the markets over time.
- China Trade Talks Continue: The U.S. is asking China's government for structural economic changes which are making trade negotiations difficult. But no one thought they would be easy. The good news is that meaningful talks are occurring over serious issues.
- Companies Had Double-Digit Earnings Growth in Q4 2018: With 89% of S&P 500 companies reporting, 2018 fourth-quarter earnings were up 13.1% and gross earnings increased 6.6% over 2017 Q4. Some may find it ironic that the stock market was spiraling downward as companies' earnings were growing by double digits among solid revenue. But markets are forward-looking and as of now, current 2019 estimates are for earnings to grow only 4.5% on gross revenue growth of 4.9%. Still positive, but much lower than 2018.
- Is the New Tax Law Affecting Charitable Donations? Charitable giving in 2018 was up slightly due to those donating more than $1000 but those donating less than $1000 dropped over 4%. Many are pointing to the new tax law which doubled the standard deduction making itemizing, and donating, less tax advantageous. For filers who are close to the standard deduction, "bunching" is a strategy that may help. Bunching is where a donor combines multiple years of gifts into one year to qualify for itemizing for that tax year. Donor-advised funds work great for this strategy.
- NYC's Loss of AMZN HQ Could be a Big Gain for Other U.S. Cities: When Amazon decided to pull one of their HQ hubs from NYC, the rest of the country may have won big. Twenty-five thousand jobs slated for Brooklyn will probably now be spread out at Amazon sites in over a dozen cities. Those jobs can help cultivate mini-tech hubs and innovation outside of the traditional high-tech areas.
- Who is the real Vladimir Putin? I hate to admit it, but I tend to view Vladimir Putin through the narrow lens of the media headlines. He is an important, albeit controversial world figure. Recently, I heard an interview with Steven Lee Meyer, who was a foreign correspondent in Russia for many years. It provided a much broader perspective of Mr. Putin, as well as why he enjoys so much support from Russian citizens. Mr. Meyer also wrote a book about Mr. Putin called The New Tsar. Digging past the headlines always seems beneficial.
- Financial Freedom: I came across an interview where Daniel Radcliffe, the star of the Harry Potter movies, revealed he has not spent any of the money he earned making the movie series. Those earnings amount to a whopping $94M! He said saving the money has given him the peace of mind and financial freedom to pursue any project he wants. Our goal is to help our clients do the same if we can, though for considerably less!
- Your Town's Future Climate: If carbon emissions stay high, in 60 years it is predicted that the climate of Washington D.C. will be similar to Mississippi today, New York City will be like Arkansas, and Maine will be like Maryland. Here's a map where you can plug in the predictions for over 500 U.S. cities.
- Regional Beard Award Semi-Finalists: Being a foodie, I was thrilled to see some of my favorite restaurants listed as semi-finalists for the Regional James Beard Award, a top achievement for restaurants. Local favorites Black Trumpet and Vida Cantina from Portsmouth are listed, as is Fore Street in Portland. I am unfamiliar with a few establishments listed in Maine – which means I have some serious research to conduct! By the way, Vedge, which may be my all-time favorite restaurant was named on the Mid-Atlantic list. Whenever I go to Philadelphia, I find a way to stop by - absolute wizardry comes out of that kitchen!
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