Warren Buffett, Intel, and Me
There has been a lot of press surrounding the announcement that Warren Buffett bought 57 million shares of IBM to become one of the largest investors in the technology giant. But I am more excited about the 9.3 million shares of Intel that Berkshire Hathaway purchased during the latest quarter.
Why is that you ask?
Because I own shares of Intel!
I think it is immensely exciting to know that the world’s greatest investor and I are thinking alike. It wasn’t like I followed his lead and purchased the stock after hearing about his investment. I bought it in August since I felt that the dividend yield of 4% was awfully hard to beat in a crappy stock market. I don’t see the market doing much over the next few years anyway since the perceptions about the economy are so negative. We could even be in for another lost decade for all I know, so I felt that getting some dividends and growing my retirement portfolio in that fashion was a good idea.
Not an Original Idea
Unfortunately, I have to confess that investing in Intel stock was not exactly my idea. Personally, I suck at stock picking. Rather I compensate for that by buying protective puts on my stocks. After all, you just never know when the market may take a 20% or greater tumble so I want to have some portfolio insurance in place.
No, I got the idea from my engagement in the personal finance blogging community and reading all of the blogs from the different dividend investors. I was able to pick out a certain pattern. Namely, everyone was writing about Intel. So I figured, why not?! I ended up purchasing the stock at $20.30 in August and it has done well since that time.
Getting Ideas for Investing
There are plenty of good ideas out for investing out there. I think the problem comes because there can be too much information for some people to decide. Should I invest in individual stocks or mutual funds or exchange traded funds? Should I use bonds or preferred stocks or CDs for income? How much international exposure should I have? Is now a good time to invest in real estate? Should I allocate a portion of my portfolio to precious metals or did I miss it? What is the best asset allocation to have? Will there be another recession? Is there a risk of inflation or deflation? And on and on and on….
The amount of information can be overwhelming at times. So people just fail to think about it and put off investing. They ignore it altogether and wake up one morning ready to retire (or more likely, downsized) and figure out that they haven’t saved enough when all they needed to do was to get started as early as possible and invest consistently over time.
I get many of my ideas for investing from reading. I read a lot. I read several different investing blogs and investing sites. I used to have a subscription to Forbes and would read it cover to cover but I was getting behind in my magazine reading due to my online activities so I decided to let the subscription expire and save the money. I still get BusinessWeek and read it cover to cover. I am still about 6 weeks behind. Most of my ideas come from these sources. Then I will look to see if the stock has options available. If so, then I will consider it. I refuse to invest without protective puts any more.
Since Intel was a rather large stock with which I was familiar, I felt fairly comfortable investing for the dividend. It seemed like the downside risk of the stock when added with some put options was extremely minimal. It simply was a matter of acting on the available information. I must confess that it is nice to have the conformation that Warren Buffett is a fellow investor.
Readers: Where do you get your investing ideas? Or is the information overload just too much?
I must admit that I don’t actually invest in the stock market. In Australia we have mandatory retirement fund contributions and that does get invested in shares, but not by me. All of my investing to date has been in property as that is where I feel most comfortable. One of these days I’m really going to have to take the plunge.
Shaun @ Money Cactus recently posted..Wealth Creation Online: Interview with Barbara Friedberg
That is interesting that you have mandatory retirement funds. It would probably be a good idea here as well since I doubt that most people save enough.
Like Shaun I do minimal investing. I have a defined benefit pension at work which will be great for when I retire. I do invest in some index funds but this is limited. I am hoping to ramp up my investing more in the future but right now I am working on my savings.
Miss T @ Prairie Eco-Thrifter recently posted..How to Be a Frugal Shopper
I am on my own when it comes to retirement. You are lucky to have a pension.
I’m definitely not a super-active investor. I usually just get general investing strategies from books like Your Money: The Missing Manual. I like index funds these days since they’re relatively easy to manage.
Jeffrey Trull recently posted..Living Without Credit Cards – Update
Nothing wrong with the index funds. I think the most important part is just doing it.
I don’t know if there are many original ideas left anyway. I tend to invest in mutual funds because of the management.
krantcents recently posted..Friday Night Links: Thanksgiving Edition
No, there aren’t too many original ideas. I find that there are more good ideas than I have money.
I haven’t done any investing except for something recommended by a financial planner a few years ago that hasn’t really done much. After we recently met with a different financial planner recently and it was obvious he cared alot more about his bottom line than our financial future, I realize I will have to start learning about investing on my own. It would be interesting to hear what investing blogs you read on a regular basis.
Melissa recently posted..Get Restaurant.com Certificates for as Low as $2
I would have to say that there is no one who cares about your financial future more than you.
I’m doing vanguard index funds for the Ira but in the buy and hold account I’m playing with dividend stocks as well. Like you I started in on intel recently, also have sempra and GE. Looking for high yields over 3%. Next I’m looking at Johnson and Johnson, proctor and gamble or coke
I do alot of reading on blogs as well as motley fool
Jeff @mymultiplestreams recently posted..Online Purchase Lessons and Paypal not Always the Protector
I think all of those stocks you mentioned are worth a look.
I read, read a lot. Magazines, blogs, anything related to finance and I’m on it! I find ideas in unlikely places. I’ve used investing tips from cooking blogs (and worked better than Jim Cramer’s tips!).
Do I have a killer strategy? No. I’m still honing my skills. I too noticed Buffett’s Intel buy. Got drowned in the news about his IBM buy! I thought his Intel play was even more interesting since Intel is a pure technology company unlike IBM, which is a services company.
I like Buffett for precisely this reason. He never stops learning.
Moneycone recently posted..A curious thing happened to my credit score when I took on some debt
Continuous learning is a very good thing.
I enjoy finance, and was riveted by the topic when getting an MBA. In fact, it was one of my 2 majors
Though I’m working a different capacity now, I still enjoy reading on financial strategies.
The thing is, while I enjoy it, there truly is information overload, and limited time. Thus, I’ve been more of an index fund type of investor, though there are some opportunistic situations to take advantage of as well (example: market overreactions to negative events, seasonal/other historical tendencies, etc).
Squirrelers recently posted..How ‘Convenience’ Can Often Cost you more
You could spend (waste) a lot of time researching and studying to come up with a conclusion that could be totally derailed by market or other unexpected forces. Nothing wrong with index funds and using the extra time for golfing.
Reading and Researching on individual stocks takes a huge amount of time. It’s better if you enjoy the process, otherwise it’s best to stick to funds and ETFs.
101 Centavos recently posted..GET RICH WITH PENNY MINING STOCKS!! (not really, it’s just this week’s roundup of worthwhile links)
There definitely has to be some enjoyment. Otherwise, it is an incredible slog to get through a lot of the information that is available.
My investing ideas start from Marketwatch lazy portfolio’s list. I typically try to duplicate one those portfolio’s with the lowest cost alternatives. I’m a long term investor who only reallocates once a year. So, this approach makes sense to me. I simply try to match the market.
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Sounds like a good approach.