Buffett Watch

  Sunday, 21 Oct 2018 | 9:00 AM ET

Mark Cuban started a stamp company as a kid and the profits helped him pay for college

Self-made billionaire and "Shark Tank" star Mark Cuban has been hustling since he was a kid. One early business scheme, collecting and re-selling valuable stamps, even earned him enough to help pay for college.

"I was about 16 when I started a stamp company," Cuban told American Business Owner in 2010. "I started going to stamp shows and trade shows and just working a little bit harder than other people at these shows. I would trade up from one stamp to the next. I went to a show starting with only a quarter and started with buying a single stamp."

Success helped him gain confidence: "I left that show with $50 thinking, 'Hey, if I could do this, I could do anything.'"

And, as he told the United States Postal Service, "collecting stamps is an amazing way to start to understand business. Each stamp has its own level of scarcity, of demand, of price, and as a collector you have to make decisions on when to keep a stamp, trade or sell it, and when to invest in a new stamp for your collection."

The experience, overall, was a great education for him, he said: "I bought, sold and traded so many that the experience taught me as much about business as any class I have ever taken."

Cuban started looking for ways to earn money when he was 12 years old and his dad declined to buy him a pair of sneakers. "My dad said, 'Those shoes on your feet look like they're working pretty well. If you want a new pair of sneakers, you need a job and you can go buy them,'" he recalled during a 2014 episode of Bloomberg's "Masters in Business" podcast.

So he started selling trash bags around his neighborhood in Pittsburgh: "I would literally go door to door to door: 'Hi, does your family use garbage bags?' And who could say no? So that's where I learned to sell."

He's not the only billionaire who hatched business schemes as a kid.

Warren Buffett earned $5,000, the equivalent of about $53,000 today, before he turned 20, thanks to various business ventures. One of his most lucrative ideas involved setting up pinball machines in barber shops all over Washington, D.C., where his family lived at the time. A year later, Buffett sold the business, which he'd started with just $25, for over $1,000.

There's value in learning how to hustle from a young age, says Cuban. To succeed, "you've got to grind. It takes work. There are no shortcuts," he told Smart Hustle Magazine at SXSW in 2016. "There's gonna be things that upset you. There's gonna be failure and if you're not able to hustle, if you're not able to grind, you're not gonna be able to fight through those things."

Don't miss: Warren Buffett bought a pinball machine for $25 in 1946 and started 'the best business I was ever in'

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  Friday, 19 Oct 2018 | 2:23 PM ET

Billionaire investors Warren Buffett and Leon Cooperman agree: Luck is key to success

Warren Buffett, 88, and Leon Cooperman, 75, are two of the most successful investors of all time. Buffett, the chairman and largest shareholder of Berkshire Hathaway, is worth a cool $86.6 billion, while Cooperman, the founder and CEO of Omega Advisors, has a personal fortune of about $3.2 billion.

The self-made billionaires both readily admit that they wouldn't be where they are today without good fortune.

Cooperman, who was raised by working-class Polish immigrants and was the first in his family to go to college, said on CNBC's "Fast Money Halftime Report": "Whatever success I've achieved, I think I've achieved it because I've been very lucky." He added that common sense and a strong work ethic have also contributed to his fortune.

And Buffett has often talked about how lucky he's been from the beginning because he won the "ovarian lottery," meaning that he was born with real advantages that helped him get ahead.

"The womb from which you emerge determines your fate to an enormous degree for most of the seven billion people in the world," Buffett told journalist Rebecca Jarvis in 2013. "Just in my own case: I was born in 1930, I had two sisters that have every bit the intelligence that I had, have every bit the drive, but they didn't have the same opportunities."

In short, "if I had been a female, my life would have been entirely different."

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  Thursday, 18 Oct 2018 | 8:45 AM ET

Billionaire investor Leon Cooperman: I made my fortune thanks to luck and common sense

After a successful 25-year career at Goldman Sachs, billionaire investor Leon Cooperman left to start his own hedge fund, Omega Advisors, in 1991.

Today, his firm manages approximately $3.4 billion in assets. But the Wall Street legend wasn't born rich: His parents were working-class Polish immigrants and he grew up in a one-bedroom apartment in the South Bronx.

"Whatever success I've achieved, I think I've achieved it because I've been very lucky, I have common sense and I have a strong work ethic," Cooperman said on CNBC's "Fast Money Halftime Report."

The self-made billionaire is the first to admit that he wouldn't be where he is today without a bit of luck. And he isn't the only successful business titan to do so: His good friend Warren Buffett says the key to his success has been luck, too. Buffett often says he was fortunate to win the "ovarian lottery," meaning that he was born with real advantages that helped him get ahead.

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  Wednesday, 17 Oct 2018 | 11:44 AM ET

Berkshire Hathaway shares look really cheap using Warren Buffett's own method of valuing stocks

Posted ByLiz Moyer
Warren Buffett
David A. Grogan | CNBC
Warren Buffett

Berkshire Hathaway's Class B shares should be trading higher, but the market doesn't put enough value on the contribution of the conglomerate's massive $200 billion stock portfolio, according to analysts from J.P. Morgan.

Berkshire CEO Warren Buffett, also known as one of the most successful value-style investors, has talked about the concept of "look-through earnings." Companies pay investors dividends but they also retain some of their earnings. Over time, companies invest these retained earnings at a higher rate of return and that ultimately boosts their share prices, benefiting their investors.

When evaluating investments, Buffett not only looks at the operating earnings of the companies, but also calculates what Berkshire's share of their retained earnings would be, minus taxes.

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  Tuesday, 16 Oct 2018 | 12:35 PM ET

Disney vs Netflix: Here's which stock would have made you richer if you invested $1,000 10 years ago

On October 16, 1923, Walt and Roy Disney founded The Walt Disney Company and, nearly a century later, the company is one of the largest and most successful media conglomerates in the world. One of its next moves is to expand into the video streaming industry, challenging leading competitors such as Netflix.

Investing in either company 10 years ago would have been a good bet. But which would have made you richer? The answer is Netflix.

According to CNBC calculations, a $1,000 investment in Netflix in October 2008 would be worth more than $97,560 as of after the earning bell on Monday, or more than 96 times as much, including price appreciation and dividends reinvested.

If you put $1,000 in Disney at the same time, your investment would be worth $5,123 now, or more than four times as much. That's about $92,437 less than you would made betting on Netflix.

CNBC: Netflix stock as of October 2018.

Netflix and Disney's stock have performed well over the last decade, but any individual stock can over- or underperform and past returns do not predict future results.

Some analysts have concerns about Netflix. The company is going to report earnings Tuesday and there are fears the stock could dip. Morgan Stanley, Goldman Sachs and Raymond James all recently slashed their 12-month forecasts because of concerns the company's growth will slow as interest rates continue to rise.

Meanwhile, Disney recently was outbid for British satellite TV provider Sky by CNBC parent company Comcast.

Still, investors are generally optimistic about both companies.

"While broader market performance and rising rates have been more important factors for stock price performance," Goldman's analyst Heath Terry said of Netflix in a note to clients, "we believe that upside to consensus expectations and what the strength in subscriber net additions says about Netflix's business, beyond guidance for the next quarter, is likely to be a positive catalyst for the stock."

CNBC: Disney stock as of October 2018.

And Jim Cramer, host of CNBC's "Mad Money," places Disney at No. 1 in his power ranking of the top five communications services. "Now that all the deal-making distractions are behind them," he says, "I love the way things are set up for Disney. For ages, this stock had been held back by worries about subscriber losses in one of their marque properties, ESPN.

"But lately, Disney has made a push into subscription-based online streaming services, including ESPN Plus, which … already has over one million subscribers. And let's not forget," Cramer adds, "between Star Wars and Marvel Comics, they've got some incredibly lucrative film products."

In the same power ranking, Netflix lands at No. 5.

If you're looking to invest in Netflix, Disney or just the stock market in general, experienced investors like Warren Buffett, Mark Cuban and Tony Robbins suggest you start with index funds, which hold every stock in an index, offer low turnover rates, attendant fees and tax bills. They also fluctuate with the market to eliminate the risk of picking individual stocks.

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Don't miss: 3 things you should never do when the stock market tanks

Video by Andrea Kramar

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  Tuesday, 16 Oct 2018 | 10:26 AM ET

Warren Buffett: 'If I had been a female, my life would have been entirely different'

Berkshire Hathaway chairman Warren Buffett, one of the most successful investors of all time, is worth an estimated $84.9 billion. And the 88-year-old is the first to admit that he wouldn't be where he is today without a bit of luck.

"The womb from which you emerge determines your fate to an enormous degree for most of the seven billion people in the world," Buffett told journalist Rebecca Jarvis in 2013. "Just in my own case: I was born in 1930, I had two sisters that have every bit the intelligence that I had, have every bit the drive, but they didn't have the same opportunities."

In short, "if I had been a female, my life would have been entirely different."

Buffett had made a similar point before. As he said at Berkshire Hathaway's Annual Shareholders Meeting in 1997, he knew he had won what he called the "ovarian lottery."

"You don't know whether you're going to be born black or white. You don't know whether you're going to be born male or female," he explained. "You don't know whether you're going to be born infirm or able-bodied. You don't know whether you're going to be born in the United States or Afghanistan."

The ovarian lottery is "the most important event in which you'll ever participate," Buffett continued. "It's going to determine way more than what school you go to, how hard you work, all kinds of things."

Research backs his claim that the circumstances you're born into strongly affect your success. Being born rich is far more helpful in life than being born gifted, the Washington Post reports: "Economists found genetic endowments are distributed almost equally among children in low-income and high-income families. Success is not."

For example, "the least-gifted children of high-income parents graduate from college at higher rates than the most-gifted children of low-income parents."

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  Monday, 15 Oct 2018 | 1:09 AM ET

Sears files for bankruptcy, and Eddie Lampert steps down as CEO

Sears Holdings filed for bankruptcy protection early Monday after years of staying afloat through financial maneuvering and relying on billions of CEO Eddie Lampert's own money. Lampert, who has served as CEO for the past five years, will step down from that post, effective immediately, but remain chairman.

The 125-year-old retailer, once the nation's largest, said Monday it was appointing Mohsin Meghji, managing partner of M-III Partners, as its chief restructuring officer.

As part of the bankruptcy, Sears will shutter 142 stores toward the end of the year. It expects to begin liquidation sales shortly.

The bankruptcy filing comes more than a decade after Lampert merged Sears and Kmart, hoping that forging together the two struggling discounters would create a more formidable competitor.

Over the years, Lampert shed Sears assets and spun out real estate to pay down the debt. The company still has roughly 700 stores, which have at times been barren, unstocked by vendors who have lost their trust. Many of the stores have never been visited by younger generations of shoppers.

Also see: Here is a map of the 142 Sears and Kmart stores set to close

Lampert, who has a controlling ownership stake in Sears, personally holds some 31 percent of its shares outstanding, according to FactSet. His hedge fund ESL Investments owns about 19 percent.

But even with the bankruptcy filing, Lampert continues to invest in Sears. The retailer said Monday morning ESL is negotiating a $300 million debtor-in-possession loan to support it through its bankruptcy. That loan comes on top of an additional $300 million it has secured from investment banks.

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  Thursday, 11 Oct 2018 | 4:25 PM ET

3 things you should never do when the stock market tanks

The Dow Jones Industrial Average plunged a whopping 800 points Wednesday. On Thursday, it closed over 500 points lower for a two-day loss of more than 1,300 points.

If you're invested in the stock market, or are thinking about investing, you don't need to freak out, experts say, though you can always take some basic steps to make sure you're being smart with your money.

Here are three things not to do when the market's being volatile:

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  Thursday, 11 Oct 2018 | 1:36 PM ET

Warren Buffett on why interest rates matter so much for investing

Posted ByTae Kim
Warren Buffett
David A. Grogan | CNBC
Warren Buffett

Warren Buffett believes interest rates are critical in determining stock valuations.

The Dow Jones Industrial Average plunged more than 1,300 points in two days as investors worried about the negative effects from the rising interest rate environment.

In a 2017 interview video clip found using CNBC's Warren Buffett Archive, the investor explained why rates matter so much for investors.

"The most important item over time in valuation is obviously interest rates," Buffett said last year. "If interest rates are destined to be at very low levels. … It makes any stream of earnings from investments worth more money."

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  Wednesday, 10 Oct 2018 | 2:59 PM ET

Chip stocks are getting massacred in October — including AMD — on rising rates, downturn fears

Posted ByTae Kim
A worker holding a wafer at Advanced Micro Devices
Norbert Millauer | AFP | Getty Images
A worker holding a wafer at Advanced Micro Devices

Chip stocks are plunging this month as investors react to surging interest rates and concerns over weakening business trends in the semiconductor industry.

The iShares PHLX Semiconductor ETF has declined nearly 5 percent this month through Tuesday versus a 1 percent fall for the S&P 500. The chip sector ETF closed down another 4.4 percent Wednesday.

Several chip stocks are down much more than the sector. Shares of AMD are down about 17 percent month to date, while Nvidia's stock is down nearly 10 percent.

Earlier this week, Raymond James reduced its 2019 earnings estimates for eight chip stocks, predicting companies will announce weakness in business activity. After spending a week in Asia talking to chip supply chain companies, the firm also downgraded several semiconductor stocks in late September, saying the sector has entered a "cyclical downturn."

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About Buffett Watch

  • Warren Buffett is arguably America’s most-admired and most-followed investor. Buffett is the largest shareholder and CEO of Berkshire Hathaway and one of the world’s most famous and most generous philanthropists. Legions of investors - from all walks of life - follow Buffett's homespun investment philosophy: invest in what you know, invest in value. Here on CNBC.com's Warren Buffett Watch, we’ll keep you up to date on what the “Oracle of Omaha” is doing by following Buffett's trades, words and deeds.