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?