Warren Buffett’s not done yet

In a couple of weeks, I’ll be joining investors from all around the world who are making a pilgrimage to the US mid-western city of Omaha, Nebraska.
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I – and 40,000 other like-minded people – will file into a sports stadium to watch two octogenarians field questions from the audience for 5 hours. The two men in question are investing legends Warren Buffett and his business partner Charlie Munger.

‘Buffett Has Lost It’… again…

There’s a reason we at The Motley Fool are fans of the man known as The Oracle of Omaha and the whip-smart Munger.

Buffett, who has compounded book value at his company, Berkshire Hathaway (NYSE: BRK-A, BRK-B), at an astonishing 19.7% per year for almost 50 years, is the greatest investor of our time, and likely of all time.

That doesn’t stop people forecasting his demise. I don’t know whether it’s some sort of tall poppy syndrome, or a form of self-interest that has pundits hoping to make a name for themselves by hoping to ‘predict’ Buffett’s decline and eventually being right.

What I do know is that every doubter for five decades has been wrong.

Brave or crazy?

I’ll give those pundits something, though… they’re brave. Warren Buffett has an astonishing track record. He’s managed to absolutely trounce the benchmark index by a long, long way during his career.

Of course, there’s brave and there’s ‘crazy brave’. Or maybe just crazy.

If you’re old enough — and have been investing long enough — you’ll remember the tech boom of the late 1990s. Even the humble former government telco Telstra (ASX: TLS) wasn’t immune. Its share price was hitched to the dot南京夜网 bandwagon, allowing the then-government to launch the second tranche of its privatisation at $7.40 in 1999!

Those were crazy times, and Warren Buffett was on the nose.

‘What’s Wrong, Warren?’

On December 27, 1999, The Wall Street Journal carried a story titled ‘What’s Wrong Warren?’, which neatly summed up investor sentiments of the time.

It started boldly:

“After more than 30 years of unrivalled investment success, Warren Buffett may be losing his magic touch.”

Oh dear…

It went on:

“To be blunt, Buffett, who turns 70 in 2000, is viewed by an increasing number of investors as too conservative, even passe. Buffett, Berkshire’s chairman and chief executive, may be the world’s greatest investor, but he hasn’t anticipated or capitalized on the boom in technology stocks in the past few years.”


My favourite was:

“Indeed, Buffett has even started taking flak on Internet message boards. One contributor called Berkshire a ‘middlebrow insurance company studded with a bizarre melange of assets, including candy stores, hamburger stands, jewellery shops, a shoemaker and a third-rate encyclopaedia company [the World Book].’”

The shares were around US$54,000 a piece. Today, even after the 5 or 6 ‘lost’ years of the GFC, Berkshire shares are, ahem, US$183,200.

Once bitten, twice… bitten!

So pundits learned their lesson, right? Wrong.

This headline was from 2008, on Reuters: Is Warren Buffett losing his touch?

Then this, in 2010, at Nasdaq南京夜网: Has Warren Buffett lost his mojo?

Now, in 2014, we have a Slate南京夜网 article asking: Should investors still have faith in Warren Buffett?

Buffett is fallible. He makes mistakes. Maybe — eventually — one of these pundits might be right. But try telling that to the people who baulked at Berkshire in 1999 and have regretted it ever since.

Yet there remain those who would have us simply give up on trying to mirror the Oracle of Omaha’s investment success.

Those in the ‘don’t bother’ camp seem to suggest that unless we can match Buffett’s record, we shouldn’t try. Which is, as you’d know, complete rubbish. Investing isn’t a ‘winner takes all’ event. This isn’t Survivor: Wall Street, where everyone else gets voted off the island.

Getting a Buffett-like return is the equivalent of batting like Bradman. So should Tendulkar, Ponting, Pietersen, Clarke et al have never bothered playing test cricket, because they couldn’t hold a candle to The Don? Of course not — such thinking is ridiculous. Well, it would be, if some commentators weren’t implying exactly that!

One well known commentator offered this opinion last week:

“There is no Warren Buffett Way for other investors, there is just picking stocks that go up in price and to do that you would be well advised to rely on yourself, just you, with your understanding, your time horizons, your risk profile and your expectations. Not Warren Buffett’s. Forget Warren. You are not Warren.”

Foolish takeaway

He’s entitled to that view. But if you’re not going to try to emulate Warren Buffett — the greatest living investor, who shares his investing advice freely to anyone who wants to listen — just where are you going to get your investing compass from?

From your broker, who makes money when you trade, not when you make money? From your financial advisor, who gets paid a chunk of your hard-earned, regardless of whether he or she makes money for you? From your cabbie? Your mate at a barbecue?

Warren Buffett isn’t the only investor worth paying attention to, or learning from. But in the absence of a better alternative, the guy with the 50-year track record beats the pants off anyone else I can think of! I can’t be Warren Buffett, but I can sure as heck try — and be better off as a result.

Attention: Foolish, dividend loving investors and BusinessDay readers alike who are looking for Australian investing ideas can click here to request a Motley Fool free report entitled Secure Your Future with 3 Rock-Solid Dividend Stocks.

Scott Phillips is a Motley Fool investment advisor. He owns shares in Berkshire Hathaway and Telstra. You can follow Scott on Twitter @TMFGilla. The Motley Fool’s purpose is to educate, amuse and enrich investors. We hope you’ve worked out that we’re only attempting to fulfil two of those aims today! This article contains general investment advice only (under AFSL 400691).

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Arowana lodges Intueri Education IPO prospectus

Arowana International managing director Kevin Chin says the company’s pure play education spin-off is poised for growth on the back international students demand and the move to online only study.
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The company lodged a prospectus on Tuesday for the initial public offering of Intueri Education Group, as flagged by Street Talk, which values the company between $NZ243 million and $NZ293 million ($224 million to $270 million).

Intueri will seek to raise up to $NZ234 million. About $NZ60 million will be used to buy the Quantum Education Group. Arowana, which has a market value of $142 million, will retain a 25 per cent stake in the education spin-off.

Intueri is the largest vocational training provider in New Zealand, with 5,950 students in 2013. It operates six private colleges that offer a range of courses including hairdressing, hospitality, fine arts and commercial diving. It also has a 50 per cent stake in Online Courses Australia, a digital-only provider of a range of vocational courses that had total enrolment of 2,182 in 2013.

Assuming the Quantum acquisition is completed and taking into account the OCA stake, Intueri is forecast to grow pro-forma revenue of $NZ76.9 million in 2014 to $NZ86.4 million in 2015 (12.4 per cent). Similarly, pro-forma earnings before interest, tax, depreciation and amortisation is expected to rise 18.5 per cent from $NZ25.4 million in 2014 to $30.1 million in 2015.

Encouraging outlook

Mr Chin said the outlook for the education sector in Australia and New Zealand was promising, due to both countries being attractive to Asian students. “New Zealand, in particular, has always been an attractive market for education for safety and affordability reasons,” he said.

The move to flexible, online study would also drive growth in the sector, he said. But Mr Chin said he was not worried by the rise of free university subjects being offered as MOOCs – massive open, online courses – on websites such as Coursera.

Mr Chin said the MOOCs were too large and available to be taken seriously by employers. But he also added completion rates in some cases was as low as 10 per cent, which raised questions about the MOOCs’ quality. “The term massive is a misnomer,” he said.

He said the key to building value in the online education business is to ensure courses are relevant to employers. “We as Intueri, have to have a course that an employer will look at… and know it’s legitimate,” he said.

Arowana, which also has businesses in the events and diagnostics, made its first investment in the New Zealand private education sector in 2010, when it bought a college in Christchurch. The strategy was initially plagued with bad luck, given the city was struck by two earthquakes.

Mr Chin said Arowana would use some of the proceeds to move into primary and secondary education in Asia. “We’re not getting out of education.”

Intueri, which will be dual listed on the Australian and New Zealand exchanges, will compete with Navitas and Vocation, which have market values of $2.6 billion and $468 million respectively. Navitas shares have gained 43 per cent in the past year. Vocation shares have gained 19 per cent since they listed in December.

The company will undertake a bookbuild on May 6 and subject to Arowana shareholder approval, Intueri shares are expected to commence trading on May 23.

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Raiders welcome back Edwards

Joel Edwards will return to the NRL this weekend after mssing last week after several consecutive concussions.Canberra centre Jarrod Croker has launched a passionate defence of Jack Wighton’s displays at five-eighth, insisting he has been one of the Raiders’ best players, and a key factor in his own superb start to the season.
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Croker has been Canberra’s most dangerous player playing outside Wighton in its slow start to the year, and backed the 21-year-old when asked his opinion of his progress by coach Ricky Stuart on Monday.

Wighton moved from the centres to the no.6 jersey this season and is viewed as a long term prospect there by Stuart.

“Stick [Stuart] asked how I thought he was going and I said I’m enjoying having him there,” Croker said, who has scored five tries in six games this year.

“He’s got a long way to go and Jack knows that, but I think he’s been great for us and he’s given me plenty of good early ball.

“There’s no reason to panic. He’s showing some great signs already, so imagine what it will be like in the back end of the season and years to come.”

Croker was subject to criticism of his defence early in his career, but has developed into one of Canberra’s most pivotal players.

He urged Wighton to ignore the outside judgement and focus on continuing to improve against Melbourne at Canberra Stadium on Sunday.

“I copped a lot early on in my career about defence, I thought it’s been pretty good this year and Jack has a lot to do with that,” he said.

“We all know Jack’s a strong defender and he gives me that confidence having him there beside me on that left edge.”

He said he’d be happy to counsel Wighton if he needs self-assurance.

“It [criticism] can get you down and it can get frustrating, but he has no right to be upset about his game this year,” he said.

“Anyone would struggle with confidence if you’re thrown into a position where you haven’t played any first grade games.

“He was probably doubting himself a bit at the start, but the way he’s played the first six weeks he’s got no reason to.”

Commentator and former Queensland Origin five-eighth Ben Ikin this week backed Canberra’s decision to persist with Wighton in the halves, despite Canberra’s disorganisation in attack in last week’s home loss to Newcastle.

“I agree with Benny saying it’s the subtlety of the position he has to learn, and the only way to learn is by playing,” Stuart said.

“It would be very easy to put him in another position but I’ve got to think about the end of the season, next season and the future for Jack Wighton going forward.

“We’re breaking down in attack on the back end of sets which we need to get better at, but his game on the weekend was strong and his kicking game was good.”

Stuart was adamant fullback Anthony Milford isn’t playing under duress, despite wearing heavy strapping on his left knee for the past two games.

He said the 19-year-old is nursing a minor medial strain.

“He’ll shake it off, I wouldn’t play him if there was a risk,” Stuart said.

The Raiders welcome back second rower Joel Edwards from concussion, who replaces Jarrad Kennedy in the only team change.

Melbourne is likely to be without centre Will Chambers after he was cited for a shoulder charge by the judiciary on Dragons fullback Josh Dugan in Monday night’s win at AAMI Park.

Chambers can accept a two match ban if he takes the early plea, but will risk three weeks if he fights the charge and loses.

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We got full-time call wrong: NRL

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Time out … the clock shows 80 minutes before Melbourne’s Young Tonumaipea plays the ball on the final play. Photo: FoxSports

The NRL on Tuesday announced it is investigating new procedures to prevent a repeat of the referees’ decision on Monday night that allowed the Melbourne Storm to score a match-winning try against the St George Illawarra Dragons after fulltime should have been called.

Referees’ boss Tony Archer said that a full review of Monday night’s finish using freeze frame technology showed that the playing of the ball by Storm winger Young Tonumaipea and the fulltime siren occurred almost simultaneously.

The NRL rules state that end of play is to be called “If time expires in either half when the ball is out of play or a player in possession has been tackled and the ball has not been played the referee shall immediately blow his whistle to terminate play”.

Replay of the final seconds of the match show that Tonumaipea had not placed his foot on the ball before the siren sounded, with the clock on the television broadcast expiring a few seconds before he was even tackled.

“The siren and the play the ball were all but simultaneous,” Archer said.

“But, technically, the siren sounded a split second before the Melbourne player ‘heeled’ the ball. So, in that sense, the referee’s call was wrong and the final play should not have proceeded.

“We were only able to work this out by going through the final moments of the game frame by frame so you can appreciate how difficult it would be for a referee to make a call with that degree of accuracy out in the middle.”

From the final play, the Storm then retained possession from a cross-field kick, keeping it alive until the ball eventually ended up back in the hands of Tonumaipea, who crossed in the corner to seal a controversial victory.

“We were courageous tonight but the footy gods weren’t on our side,” Dragons coach Steve Price said after the game.

The NRL’s Head of Football, Todd Greenberg, said they would looking at a number of options to prevent a repeat of the incident including linking the official time clock to that used by the television stations covering the game so fans have an accurate countdown to the final siren and the video referee and timekeeper may also give the on-field referees a verbal countdown through their earpieces during the final seconds of the game.

“This might help in some cases but I don’t think you can ever guarantee that the correct call will be made when the siren goes at virtually the same time as the play the ball,” Greenberg said.

It isn’t the first time the siren has caused controversy in the NRL this season.

Only a fortnight ago Tigers skipper Robbie Farah blew up at the match officials after Manly were allowed to score a try after the half-time siren had sounded.

That came a week after the Warriors were also allowed to play the ball after the siren in a game against the Tigers in Wellington, in which they also scored.

Farah said it wasn’t long before a blunder would cost a team two premiership points, which it did on Monday night.

“They can’t just keep coming up with those errors week in, week out,” Farah said in the post-match press conference after the win against Manly.

“They’ve got to be better. We were lucky today that it didn’t cost us but it’s going to cost a team a big game. It’s just not good enough, they just have got to be better. Not hearing it is not a good enough excuse.”

To rub salt into the wound of the gallant Dragons on Monday night, they played the final 90 seconds with 12 men.

Back-rower Joel Thompson had been taken from the field mid-way through the second half for a concussion test, and under the new NRL rules the Dragons are allowed a free interchange if Thompson was to return within 15 minutes.

However Thompson was unable to make it back on the field and the Dragons had used up all of their 10 interchanges.

It meant Thompson’s replacement had to be taken from the field with just over a minute remaining, which Price later described as “gut-wrenching”.

smh南京夜网.au with Michael Chammas and Michael Carayannis

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Demon Jack Trengove out for the season

Former Melbourne captain Jack Trengove will miss the rest of the season with a broken foot.
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Scans have confirmed Trengove has suffered a fractured navicular bone. Trengove had been dropped to the VFL and reported soreness in the foot after the Casey Scorpions game at the weekend.

Scans on Monday confirmed the fracture of the navicular and he will now have surgery this week to repair the problem.

He will miss four months which will rule him out for the rest of the season but should see him return for the start of pre-season

“Jack’s attitude has been outstanding this year,particularly in recent weeks whilst playing in the VFL – and for this to happen to him is really unfortunate,” Melbourne football manager Josh Mahoney said.

“He is a resilient character. At Melbourne, we’ve had two examples of players who have had this type of injury inColinGarland andJackGrimes and they both made full recoveries. We expect Jack to make a full recovery,and be available for day one of pre-season training.”

Trengove previously suffered a stress fracture in the foot in December 2012 an injury that cost him the pre-season and ensured that while he was back for the first game last year he was hampered throughout the season.

Trengove, who gave up the captaincy at the end of last season, was dropped after round two this year. He looked to be struggling to cover the ground, a fact that may be better explained now by the foot injury.

Former Melbourne captain Jack Trengove being chased by Collingwood’s Ben Sinclair at the MCG in Round 11 on June 10, 2013. Photo: Sebastian Costanzo. The Age.

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