Upstart Managers School Sage of Omaha

The pupils are beating the master at Warren Buffett-led Berkshire Hathaway Inc.

Two investment managers, hired by the 83-year-old billionaire in recent years as part of his succession plan, each posted returns last year that outdid both Mr. Buffett's performance as Berkshire's top stock picker and the Standard & Poor's 500-stock index, according to people familiar with the matter.

The 2013 returns mark the second year in a row that the two men beat the broader market gauge, which gained 32% including dividends last year, as well as their boss. The people wouldn't say by how much the two outperformed the market in 2013, but the year before, they each beat the S&P by a double-digit margin, Mr. Buffett said in his 2012 annual letter to shareholders.

Patients’ Costs Skyrocket; Specialists’ Incomes Soar

Kim Little had not thought much about the tiny white spot on the side of her cheek until a physician’s assistant at her dermatologist’s office warned that it might be cancerous. He took a biopsy, returning 15 minutes later to confirm the diagnosis and schedule her for an outpatient procedure at the Arkansas Skin Cancer Center in Little Rock, 30 miles away.

That was the prelude to a daylong medical odyssey several weeks later, through different private offices on the manicured campus at the Baptist Health Medical Center that involved a dermatologist, an anesthesiologist and an ophthalmologist who practices plastic surgery. It generated bills of more than $25,000.

“I felt like I was a hostage,” said Ms. Little, a professor of history at the University of Central Arkansas, who had been told beforehand that she would need just a couple of stitches. “I didn’t have any clue how much they were going to bill. I had no idea it would be so much.”

Ms. Little’s seemingly minor medical problem — she had the least dangerous form of skin cancer — racked up big bills because it involved three doctors from specialties that are among the highest compensated in medicine, and it was done on the grounds of a hospital. Many specialists have become particularly adept at the business of medicine by becoming more entrepreneurial, protecting their turf through aggressive lobbying by their medical societies, and most of all, increasing revenues by offering new procedures — or doing more of lucrative ones.

David Remnick: On and Off the Road with Barack Obama

Obama’s Presidency is on the clock. Hard as it has been to pass legislation, the coming year is a marker, the final interval before the fight for succession becomes politically all-consuming.

The Profits Bubble

KEY POINTS

1.     Corporate profits are at or near an all-time high relative to both GDP and wages and salaries.

2.     Globalization facilitated by a corporatist economic policy is the cause of the upward surge in profits. The resulting degree of income inequality seems socially intolerable.

3.     Rising populism will likely lead to changes in government policy. Expect real earnings per share to grow much more slowly, or even decline, over the next couple of decades.

Neil deGrasse Tyson on Science, Religion and the Universe

Found via The Big Picture.


Link

Romick: No Pay for Play in the Market (video)

Seeing few opportunities that meet their risk-reward criteria, the team at FPA Crescent--winner of Morningstar's 2013 Allocation Fund Manager of the Year award--is sticking to its discipline and letting cash build, says manager Steve Romick.

Stores Confront New World of Reduced Shopper Traffic

Best Buy Co. on Thursday became the latest retailer to chime in with weak holiday results. Like other chains, the electronics retailer blamed the race to offer the deepest discounts, a game of brinkmanship that hurt profit margins and held back revenue.

But there is a deeper malaise at work: A long-term change in shopper habits has reduced store traffic—perhaps permanently—and shifted pricing power away from malls and big-box retailers.

Consumers' rush to e-commerce is a challenge that brick-and-mortar retailers have wrestled with for years. Across a number of retailers, their defensive strategies don't seem to be panning out. Best Buy, for example, overhauled its store layouts and marketing in the past year, even inviting shoppers to "showroom" the electronics retailer—co-opting the term for people who try out products in stores and then buy them for less online.

…

Traffic to U.S. retailers was hurt during the financial crisis and recession, when job losses soared and shoppers kept a tight grip on their dollars. But nearly five years into the recovery, it appears many of those shoppers may never be coming back.

Retailers got only about half the holiday traffic in 2013 as they did just three years earlier, according to ShopperTrak, which uses a network of 60,000 shopper-counting devices to track visits at malls and large retailers across the country. The data firm tracked declines of 28.2% in 2011, 16.3% in 2012 and 14.6% in 2013.

James Dyson on Charlie Rose

The Dyson segment starts about 17 minutes in.

Link to: James Dyson on Charlie Rose

Horizon Kinetics: Q4 2013 Commentary

Thanks to James for passing this along. 

This is not merely the time for the obligatory year‐end review; it also happens to be the beginning of our 20th year. On reflection, one of the most persistently irksome aspects of our business is the often Alice In Wonderland‐like inversions between investment reality as we see it and as reported in the news media—and which is the cause of so much investor reactivity and damage. There really ought to be a law. But there can’t be a law, so there will be some writing; and, taking liberties in our anniversary year, more than the usual amount.

Howard Marks Memo: Getting Lucky

Sometimes these memos are inspired by a single event or just one thing I read.  This one – like my first memo 24 years ago – grew out of the juxtaposition of two observations.  I’ll introduce one here and the other on page seven.  Contrary to my wife Nancy’s observation that my memos are “all the same,” the subject here is one I’ve rarely touched on.