He’s nothing like Leo DiCaprio.
Our newsroom for November 8th 2018: Warren Buffet’s next big trade, economic wars that could get ugly, and microbes that can change farming forever. Welcome to our newsroom for November 8th 2018.
The Yoda of investing.
Warren Buffet is a very rich man. He built a £66 billion fortune by investing in a variety of businesses through his holdings company, Berkshire Hathaways.
What’s his style? Mr. Buffett is the don of “value investing” meaning he invests in companies that have sound fundamentals but are undervalued at the time. His 12 principles are laid out here.
Nothing like Leo. He’s notoriously frugal and is the furthest thing from Leo Dicaprio in the Wolf of Wall Street. He cruises in a second hand Cadillac and lives in the same home he bought in 1958 for £24,000. He doesn’t splurge on brekkie, admitting that he spends no more than £2.40 on a morning meal (This is for real).
Every guru has his disciples. Mr. Buffett’s track record has made him a legend. At Berkshire Hathaway’s annual convention, over 40,000 people pack a stadium in Nebraska to hear him speak. The roaring crowds stare at the podium and giggle at his quirky remarks, but they’re all itching to know where the guru will invest next…
And what’s his next big trade? He’s investing in himself. He’s using his spare cash to buy back shares in his own company. It’s called a share buy-back.
What’s a share buy back? When companies are sitting on spare cash and unsure how to deploy it, they can buy back shares from existing shareholders.This gives them greater control and ownership of their business, and means they’ll get a bigger piece of the pie when dividends are being paid or if the company’s value increases.
That’s right. Mr. Buffett is buying back shares in his own company, signalling that there might not be any good deals in the near-term but backs himself to keep doing his magic in the long term. And when that magic unfolds, and the profits come pouring in, he wants to share it with as few people as possible.
Fair enough, Warren. Fair enough.
It’s a war out there.
Jack Ma, the founder of Alibaba, is not pleased with trade tensions between China and the USA. The Chinese tycoon went as far as recently saying “Trade war is the most stupid thing in this world”.
Mr. Ma isn’t the only anti-war advocate out there. Politicians and leaders from Washington to Tokyo are unhappy with these tit-for-tat trade wars that America has sparked with the likes of China, Canada and the European Union.
But free trade feels so right. The world’s economies are more intertwined than ever. And many fear that trade wars will harm economic growth. By any means, free trade has proven to be like a rising tide that lifts all boats. It leads to more affordable goods and competitive economies that have grown in unprecedented strides. We all win, so we’re told.
Well, not all of us. Many think tariffs are long overdue because global trade has neglected certain industries and geographies — like manufacturing in Northern England or rural America. Opponents of free trade argue that emerging economies have “unfair” advantages like cheap labour that take jobs away from workers in the UK, Europe and the USA. Since 2000, the U.S. has shed 5,000,000 manufacturing jobs whilst the UK has lost 600,000 in the past decade.
What do investors think of these shenanigans? These trade tiffs are challenging the economic order that we’ve grown accustomed to in the past 25 years. These uncertainties have been one of the ugly sticking points of 2018 in financial markets. The STOXX50E (Europe) is down nearly 8% this year and the FTSE100 (UK) is down 1%, whilst the S&P500 (USA) is up 3% but has been considerably volatile in recent months.
The future awaits.
The world is changing and cutting-edge startups are leading the way. From drones that can deliver life saving medicines, a new kind of childcare center for big cities, and microbes that could eliminate the need for pesticide on corn.
If you love futuristic tech and curious to hear about new businesses that are shaking things up, check out these 6 companies that are aiming for the stars. Courtesy of our friends at Inc. Read it here.
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This was originally sent to members of our waitlist on Thursday November 8th and prepared by the talented team at Fountain’s London office. Every week, we deliver three amazing stories from the world of business and investing.
