The Sage's latest words and a look at share buyback featured on the boards this week.
Buffett's thoughts on gold
In his famous annual letter to shareholders, Warren Buffett this week pointed out that, at current prices, the value of all the gold ever mined (which would amount to a 68-foot cube) would be enough to buy up all the cropland in the USA, 16 Exxon Mobils, and still have $1 trillion left over. Is he right that buying gold is a mug's game? At Bert's Investor Sanctuary, avidya doesn't agree...
"I like Buffet's image of comparing a notional world gold pile to real productive assets, which as always with Buffet is a folksy and striking image. I also have a lot of sympathy with those who are put off by the 'loonie tunes' conspiracy rantings of many gold bugs! But nevertheless I'd argue that there's something 'special' about gold."
But the board landlord, BertEEE, is on Buffett's side...
"An investment to me is exactly that. You are investing in long-term productive capital. So for an equity you are buying a long-term income stream with profits accruing over time and either being paid out as dividends or retained for internal investment to growth the business. For a bond you are financing a business to invest in growing its long-term income stream and being provided with interest to compensate you for that financing. But gold isn't an investment..."
Got any thoughts about the shiny stuff? Please feel free to join in on the thread.
Getting other people's takes on company results is one of the best uses of the boards and, over on Paulypilot's Pub - Share Ideas, beans4tea has been taking a look over this week's 2011 figures from investment manager Man Group (LSE: EMG)...
"I remain a very happy holder. I topped up a few times over the last six months and MAN remains my single biggest equity investment. A bit of successful options trading has alleviated the pain of sitting on a paper loss but I remain of the opinion that Man is a £10 stock in waiting. It's very highly geared to a return in risk on the markets. In five years time I think it'll be a long way from here and I'm happy to collect the divis while I wait."
What is it about the company that makes it look such an attractive prospect? You'll have to read it for the details.
Companies often use spare cash to buy back some of their own shares in an effort to raise the price, with the idea being that future earnings and dividends are spread across fewer shares, increasing the per-share rewards. So why do so many people dislike the idea? Over on High Yield - HYP Practical, OldFoolFred was pondering that very question...
"I've seen a number of criticisms of share buy-backs eg 'I prefer this capital return plan a lot more than share buy-backs' on a recent post, and don't understand why ltb&h would not approve of these [...]
As long as the company is making an increasing profit per share then I'm happy whether its held within the company (added to capital value), used for a buy-back (almost like a reinvested divi) or paid as dividend (income)."
So what are the advantages and disadvantages of the different methods of boosting shareholder value? There are plenty of opinions voiced in the subsequent discussion.
Searching for posts
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If you look down near the bottom of a discussion board post or any boards-related page, for example the main boards page, you'll see three search boxes, labelled "Ticker", "Board" and "Author", which you can use for those three specific searches.
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Last week's roundup: Choosing When To Sell