Is my glass half-full or half-empty? [more]
Bonds are dangerous, cash loses to inflation, alternatives are a gamble. What's the average investor to do if he doesn't want to be 100% equities? BRK-B IS an equity, but it doesn't correlate to the stock market as a whole. Check out page 1 from this year's report (link above): by WB's method of valuation, B/H has outperformed the S&P in years in which the S&P was down, by 275% (non-compounded), or about 25% a year.
25% per year!
Only twice has B/H lost value in 50 years and the most recent, 2008, it still outperformed the S&P by 27%.
In the last 10 non-negative years (S&P up), it has underperformed by about 2% per year average.
Either way it appears to me to be a far superior alternative to holding a large cash balance as a hedge against market corrections. (In fact, it's my biggest single holding). [more]
... that I've ever learned was from Joel Greenblatt in his Magic Formula book. I'm just going from memory here, but in the book he claims that anyone can beat the market over time by following his magic formula. Usually when a formula that works becomes well known (e.g., Dogs of the Dow), it ceases working because too many people are using it. Greenblatt said he wasn't worried about that happening with the Magic Formula because, while it beat the market over time, there would always be periods, often as long as one or even two years (occasionally even more!), where the MF would lag the market. When that happens, people give up on it. [more]
Caveat: this only works if you don't have a conscience. I only offer it as a cautionary tale for naieve newbies. [more]
Will the market crash, soar or limp along in 2014? [more]