Warren Buffett Speaks...

When Warren Buffett speaks, people listen. With Wall Street in panic mode along with the housing and credit markets, it’s always nice to get feedback from the Oracle of Omaha. The following are excerpts from the Fortune Magazine article titled: "What Warren Thinks…"

"Q: How do you get your ideas?

A: I just read. I read all day. I mean, we put $500 million in PetroChina. All I did was read the annual report. (Editor’s note: Berkshire purchased the shares five years ago and sold them in 2007 for $4 billion.

Q: What advice would you give someone who is not professional investor? Where should they put their money?

A: Well, if they’re not going to be an active investor—and very few should try to do that—then they should just stay with index funds. Any low-cost index fund. And they should buy it over time. They’re not going to be able to pick the right price and the right time. What they want to do is avoid the wrong price and wrong stock. You just make sure you own a piece of American business, and you don’t buy all at one time.

Q: By your rule, now seems like a good time to be greedy. People are pretty fearful.

A: You’re right. They are going in that direction. That’s why stocks are cheaper. Stocks are a better buy today than they were a year ago. Or three years ago."

Everything Buffett says here is so simple and all encompassing—now just implement the advice: Read as much as you can; dollar cost average in a low-cost index fund; keep buying, keep buying, keep buying…

A Great Resource: RealSimple.com

If you have never heard of Real Simple, I suggest you click the link—especially if you travel. My Mom reads the magazine called Real Simple—a magazine that highlights the good, the bad, and the ugly of basically everything. A special issue called Real Simple Travel lists the best places to travel depending on the time of year; it tells you what types of clothes to wear, the best places to eat, where to stay, and endless tips and tricks to make the most of your vacations.

The part of the magazine that caught my attention is a section called: The Travelers Handbook. It features advice from A-Z such as: awesome travel websites, the best way to write a postcard, how to sleep better on an airplane, as well as other mind grenades that should keep you busy.

For instance, do you know when you should hand out tips?

“Anna Post, Emily Post’s great-great-granddaughter and the spokesperson for the Emily Post Institute, shares, well, tips on what to hand out when.

Doorman: $2 for help with bags, $1 for a hailed cab.

Taxi driver: 10 to 15 percent. Add an extra dollar or two if he/she helps with the bags.

Airport porter: Most porters charge $2 for the first bag. If they don’t, you should pay at least that. Add a dollar or two for good service.

Other airport staff (ticket agents, flight attendants): Don’t tip them. It can be tempting to slip an agent a $20 bill in the hopes that you’ll get better treatment out of the deal, but that comes off as smarmy.

Bellhop: $2 for the first bag, $1 a bag after that.

Housekeeping: $2 to $5 a day. Leave this tip daily, as you often have a different person cleaning your room each day. (Leave a note so the housekeeper knows the money is for her.)

Concierge: $5 to $10 every time she helps you with something above and beyond the job description, like scoring hard-to-get tickets to a show. For guidelines on tipping in other countries, click here”

Should You Settle?

The March edition of The Atlantic has an article that legitimately made me upset because I think it highlights some of the problems with society’s view of marriage. The article, written by Lori Gottlieb titled Marry Him—The case for settling for Mr. Good Enough undoubtedly offers an “out of the box” perspective of marriage, but principally wrong (in my opinion), and out of touch with reality nonetheless.

She does; however, offer a fair perspective of some of the challenges facing women these days—especially the unmarried 30 something crowd:

“To the outside world, of course, we still call ourselves feminists and insist—vehemently, even—that we’re independent and self-sufficient and don’t believe in any of that damsel-in-distress stuff, but in reality, we aren’t fish who can do without a bicycle, we’re women who want a traditional family. And despite growing up in an era when the centuries-old mantra to get married young was finally (and, it seemed, refreshingly) replaced by encouragement to postpone that milestone in pursuit of high ideals (education! career! but also true love!), every woman I know—no matter how successful and ambitious, how financially and emotionally secure—feels panic, occasionally coupled with desperation, if she hits 30 and finds herself unmarried...all I can say is, if you say you’re not worried, either you’re in denial or you’re lying.”

I don’t disagree with her thoughts here; however, I have a huge issue with her solution. She says: “My advice is this: Settle! That’s right. Don’t worry about passion or intense connection.” Is this the criteria people use for marriage? To find someone good enough that you may kinda like and decide to marry them? Do you think there is a connection between this type of attitude towards marriage and the fact that 50% of them end in divorce?

Of course the advice to settle arrives from a woman who conceived a child with donor sperm because she hadn’t found Mr. Right. WHAT?! Is this even allowed? The boy now has the pleasure of growing up fatherless because the idea of motherhood couldn’t wait for true love…

I guess at a time when ideals and principles seem to be at an all time low, it’s articles like this that truly make my blood boil…

More of my thoughts on marriage:
The Secret Ingredient for a Successful Marriage
Marriage and Personal Finance: Yes, They Are Related!
Why You Should Get Married

Our Fascination with "Free"

I came across an interesting article today written by Paul J. Lim for Yahoo Finance. The article, called “Why you’re a big sucker,” captures a growing problem in society: Spending more when we planned to spend less.

The question, then, is why do we spend more than we want to? Dan Ariely, a noted behavioral economist says he’s found the answer: Our fascination with “free” offers. Marketing 101 at its finest—appealing to or tricking the senses in order for people to spend more money. Dan Ariely helps to explain part of the problem in the following excerpt:

“Question: How else do we act against our best interests?

A. By comparing prices on similar items.

Question: Wait, I thought that was smart to do?

A. It is, but only if you compare everything with everything. If you just compare items near one another, you open yourself up to being influenced. When you open a menu at a restaurant, you may not realize that the prices you see affect what you're willing to pay. If the most expensive entrée is $45, you might decide $30 is an acceptable price. Should the restaurant add a $60 dish, you may be willing to pay $45. The same issue comes up when shopping for real estate. Letting a broker show you a house above the top of your range can be costly.

Question: So how do we overcome irrationality?

A. There's no cure-all. But when I see the word free, I now ask myself, "What's the seller trying to do here?" Also, it sounds strange, but try not to look at price, not at first. Decide what you want and what you're willing to pay without being influenced by outside factors.”

I’ve noticed major department stores doing this more and more. Raising the sticker price well above what someone may be willing to pay, but advertising the entire store at 50%-75% off. This marketing act tricks the senses into believing we are getting a great deal—but are we?

Although it may be a stretch to suggest completely ignoring the sticker price, knowing what you’re willing to pay and setting your limits will surely save you money in the long run...