Buffett Watch

  Friday, 18 Jan 2019 | 12:12 PM ET

This was Jack Bogle's 'only regret about money'

Investing legend and Vanguard Group founder John C. "Jack" Bogle died this week at the age of 89. While his personal fortune was valued at a whopping $80 million and "he regularly gave half his salary to charities," the New York Times reports, he wished he had done one thing differently.

"My only regret about money," Bogle said in 2012, per the Times, "is that I don't have more to give away."

Much of his giving went to the educational institutions "that shaped his character, notably Blair Academy and Princeton University," according to his obituary in the Philadelphia Inquirer. He was a scholarship student at both schools, and his generosity as an alum "far outstripped his legendary frugality."

Bogle was born in 1929, and he learned a great deal from the way his family weathered financial hardship during the Great Depression.

"They were tough times and I started working when I was 10 years old, delivering papers and eventually becoming a waiter," he said in 2012. "I learned you work for what you get, and I feel sorry for people who haven't had that upbringing."

Though it was difficult that his family "lived with uncertainty," he said in a 2014 interview with The Sacramento Bee, it also taught him the value of hard work: "You learn at a very young age, you'd better roll up your sleeves."

Not everyone has the kind of background that imparts key lessons about money, however. In fact, though many people feel good about their financial health, the realities for most Americans are more complicated.

Last year, the National Financial Educators Council created a 30-question financial literacy quiz to test young adults' ability to earn, save and grow their finances. Of the nearly 25,000 participants, less than half passed. The average score was 64 percent.

Likewise, a 2017 survey by financial-services company Financial Engines found that 47 percent feel more secure about their finances today than they did five years ago. When Financial Engines gave the same survey respondents an 11-question financial literacy quiz, however, only 6 percent passed.

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  Thursday, 17 Jan 2019 | 12:02 PM ET

Jack Bogle taught a generation how to invest for the long term—this was his strategy

Jack Bogle, father of the index fund and one of the world's greatest investors, died Wednesday at age 89.

The legendary investor's strategy was simple, yet highly effective: buy and hold for the long term.

"If you hold the stock market, you will grow with America," Bogle, founder of The Vanguard Group, said in 2018 on CNBC's "Power Lunch."

In the long run, there is a high correlation between the stock market and U.S. economic growth, he said. So, even when the situation is volatile, "stay the course. Don't let these changes in the market, even the big one [like the financial crisis] … change your mind and never, never, never be in or out of the market. Always be in at a certain level."

If you try to trade in and out of the market, "your emotions will defeat you totally," Bogle added. "Short-term betting is not a good way to go."

Smart investing is "all about common sense," Bogle preached in his book "The Little Book of Common Sense Investing." "Owning a diversified portfolio of stocks and holding it for the long term is a winner's game. Trying to beat the stock market is theoretically a zero-sum game (for every winner, there must be a loser), and after the substantial costs of investing are deducted, it becomes a loser's game.

"Common sense tells us — and history confirms — that the simplest and most efficient investment strategy is to buy and hold all of the nation's publicly held businesses at very low cost."

That's why he recommended investing in low-cost index funds, which are broadly diversified, hold many stocks and operate with minimal expenses. It's "the only investment that guarantees you your fair share of stock market returns," he wrote.

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  Thursday, 17 Jan 2019 | 10:28 AM ET

Warren Buffett once gave a touching tribute to his friend Jack Bogle at Berkshire's annual meeting

Posted ByLiz Moyer

Warren Buffett paid tribute to Jack Bogle at Berkshire Hathaway's annual meeting in 2017, which Bogle attended just days before his 88th birthday.

(See the video above)

Bogle revolutionized investing for regular people, Buffett said. While Nobel-winning economist Paul Samuelson and value-investing pioneer Benjamin Graham had talked about the idea of an index fund, Bogle is the one who actually put the concept together at the fund company he founded in 1975, Vanguard Group. And he did this despite resistance from others on Wall Street, which had a vested interest in maintaining the status quo.

Index fund investing has dramatically lowered the cost of investing for mom and pop investors and made a once-complex activity easy and quick.

"It wouldn't have happened without him," Buffett said.

Bogle died Wednesday at age 89. But his legacy will live on in Vanguard, which has grown to be one of the world's largest fund companies, with $5.1 trillion of assets under management.

"Index funds, overall, have delivered for shareholders a result that has been better than Wall Street professionals as a whole," Buffett said at the 2017 meeting. The index fund has put "tens and tens of billions into their pockets. And those numbers are going to be hundreds and hundreds of billions over time."

Buffett reiterated these words in comments to CNBC following Bogle's death.

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  Wednesday, 16 Jan 2019 | 6:10 PM ET

Warren Buffett says Jack Bogle did more for the individual investor than anyone he's ever known

Posted ByJohn Melloy
Jack Bogle, founder of Vanguard Group.
Ken Cedeno | Bloomberg | Getty Images
Jack Bogle, founder of Vanguard Group.

Warren Buffett paid tribute to fellow investing legend Jack Bogle, who died Wednesday at the age of 89.

"Jack did more for American investors as a whole than any individual I've known," Buffett told CNBC's Becky Quick. "A lot of Wall Street is devoted to charging a lot for nothing. He charged nothing to accomplish a huge amount."

Bogle helped bring investing to the masses through his creation of the index fund and founding of the no-nonsense, low-fee investing firm Vanguard Group. He preached a philosophy of steady investing and avoidance of market timing.

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  Wednesday, 16 Jan 2019 | 5:24 PM ET

Jack Bogle, founder of Vanguard Group and creator of the index fund, dies at age 89

Jack Bogle, who founded Vanguard Group, an investing juggernaut now with more than $5.1 trillion in assets under management, and created the world's first index mutual fund, has died. He was 89.

Bogle died Wednesday in Bryn Mawr, Pennsylvania, according to Vanguard. A private funeral is planned for Monday, a Vanguard spokesman said.

Bogle, who preached buy and hold investing, was considered one of the world's greatest investors. His index mutual fund enabled investors to achieve high returns but at lower costs than for actively managed funds.

He founded Vanguard, the world's largest mutual fund organization, in 1975, and later served as chairman and CEO until 1996. Vanguard now manages assets from more than 20 million investors in about 170 countries.

Bogle, whose personal fortune was a valued at relatively modest $80 million, had a history of cardiac problems, suffering the first of a half-dozen heart attacks at age 31 and undergoing a transplant at 65.

He wrote 13 books on investing, most recently the 2018 "Stay the Course: The Story of Vanguard and the Index Revolution." His devotees created an entire website based on his investing advice: Bogleheads.org.

"If a statue is ever erected to honor the person who has done the most for American investors, the hands down choice should be Jack Bogle," billionaire investor Warren Buffett wrote in his annual letter in March 2017. "In his early years, Jack was frequently mocked by the investment-management industry. Today, however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their savings than they otherwise would have earned. He is a hero to them and to me."

Bogle's primary philosophy was "common sense" investing. Indeed, two of his books used the phrase in their titles.

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  Wednesday, 16 Jan 2019 | 11:09 AM ET

Hedge fund billionaire Ray Dalio: 'Capitalism basically is not working for the majority of people'

With just over $18 billion to his name, capitalism has been good to Ray Dalio: He started his hedge fund, Bridgewater Associates, out of a two-bedroom New York City apartment in 1975 and it now manages $160 billion in assets and is the largest hedge fund in the world, according to Forbes.

Quite literally, Dalio has built a fortune thanks to capitalism. But he's also keenly aware that it is a deeply flawed system.

"Capitalism basically is not working for the majority of people. That's just the reality," Dalio said at the 2018 Summit conference in Los Angeles in November. Monday, Dalio tweeted a video of his Summit talk.

Dalio made the comment about capitalism during a discussion about wealth inequality.

"Today, the top one-tenth of 1 percent of the population's net worth is equal to the bottom 90 percent combined. In other words, a big giant wealth gap. That was the same — last time that happened was the late '30s," Dalio said. (Indeed, research from Emmanuel Saez and Gabriel Zucman of the National Bureau of Economic Research of wealth inequality throughout the 20th century, covered by The Guardian, bears this out.)

Further, Dalio points to a survey by the Federal Reserve showing that 40 percent of adults can't come up with $400 in the case of an emergency. "It gives you an idea of what the polarity is," Dalio said. "That's a real world. That's an issue."

And Dalio says the income gap will only get worse.

"We're in a situation when the economy is at a peak, we still have this very big tension. That's where we are today," he said in November. "We're in a situation where, if you have a downturn, and we will have a downturn, I believe that — I worry that that polarity will become greater."

In fact, Dalio said that the President of the United States should declare the current wealth gap a national emergency.

"If I was doing it, I think that you have to call that a national emergency," said Dalio. Then, reasoned Dalio, the President could "[take] responsibility for changing those metrics. I think there's a lot that can be done in private-public partnerships and so on to be able to change it, but I fear that that probably will not be done by the next time we have a downturn, and I fear for what that conflict is going to be like that."

Dalio is not the only billionaire to speak out about the problems with modern capitalism.

Berkshire Hathaway CEO Warren Buffett, who is worth $81 billion according to Forbes, has said the problem with the economy is the extreme wealth of people like him.

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  Tuesday, 15 Jan 2019 | 3:43 PM ET

If you invested $1,000 in Netflix in 2007, here's how much you'd have now

Video-streaming giant Netflix announced Tuesday that it is raising prices between 13 and 18 percent for new and existing customers. That's the most substantial increase in its history. Following the announcement, the company's stock shot up more than 6 percent.

If you had invested in Netflix in 2007, when it first began its streaming service, that investment could have paid off big time: A $1,000 investment would be worth more than $90,000 as of Jan. 15, according to CNBC calculations.

While the company's stock has performed well over the years, any individual stock can over- or under-perform and past returns do not predict future results.

The platform faces competition from Amazon, Apple, Disney and, most recently, NBCUniversal, which either offer similar services or plan to launch streaming platforms and which could pull content, and potentially viewers, from Netflix.

"I think Netflix is in trouble when the big guys start coming after them," Laura Martin, an analyst at investment-banking and asset-management firm Needham & Company, said in a previous interview with CNBC.

Still, investors remain generally optimistic about Netflix.

CNBC: Netflix stock as of January 2019

"The company's investment in content, technology and distribution will drive subscriber growth well above consensus expectations, both in the U.S. and internationally," says Goldman Sachs internet analyst Heath Terry.

And Justin Patterson of investment banking-company Raymond James upgraded Netflix's stock to "strong buy" from "outperform."

"We believe the combination of positive revisions and emerging signs of long-term profit potential will yield share price outperformance," says Patterson, noting high viewer numbers for the popular original film "Bird Box," as well as "Netflix's advantages in film; convenience, cost, and global distribution."

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  Monday, 14 Jan 2019 | 9:15 AM ET

5 money mistakes that keep you from getting rich

Posted ByMichelle Fox

The rich — they're just like us, right?

Well, not exactly.

If you analyze the habits of wealthy people, some trends begin to emerge. First, they don't follow the pack — whether it's a fad investment or panicking during a market sell-off, according to Tom Corley, an author who has studied self-made millionaires.

Secondly, they work at becoming successful every day. And it doesn't have to take hours of their time.

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  Wednesday, 9 Jan 2019 | 10:09 AM ET

Cramer: The Buffett-Bezos-Dimon health venture needs to 'embrace the Apple ecosystem'

L-R: Apple CEO Tim Cook, JP Morgan Chase CEO Jamie Dimon, Amazon CEO Jeff Bezos and Berkshire Hathaway CEO Warren Buffett.
Getty Images
L-R: Apple CEO Tim Cook, JP Morgan Chase CEO Jamie Dimon, Amazon CEO Jeff Bezos and Berkshire Hathaway CEO Warren Buffett.

If Apple wants to reshape health care, it should get involved with the joint venture created by Jamie Dimon, Jeff Bezos, and Warren Buffett, CNBC's Jim Cramer contended Wednesday.

Dimon, chairman and CEO of J.P. Morgan, would need to be the one to bring Apple in since Buffett's Berkshire Hathaway owns a huge stake in the tech stock that could appear "self serving," said Cramer, whose charitable trust also owns shares of Apple. "It is really time for, I think, that ecosystem to embrace the Apple ecosystem."

Through their venture, Amazon's Bezos, Buffett, and Dimon are working on ways to cut health costs and improve services for their U.S. employees. The three titans hope that the sheer sizes of their companies will help bring the necessary scale and resources to tackle the health-care system's most pertinent issues.

Dr. Atul Gawande, a surgeon and professor at Harvard Medical School, is taking the lead on the new health-care company.

In an interview with Cramer that aired Tuesday night, Apple CEO Tim Cook teased that the company will announce new services this year, especially in the realm of health care. Apple has been investing in health and wellness in recent years as it capitalized on the success of its Apple Watch and hired dozens of doctors to bolster its health technology segment.

"I believe, if you zoom out into the future, and you look back, and you ask the question, 'What was Apple's greatest contribution to mankind?' It will be about health," Cook told Cramer.

Apple shares have been under pressure since the company lowered its first-quarter guidance last week, citing weakness in China's economy. However, Wall Street analysts had already been peppering Apple's stock with downgrades due to concerns that the company would suffer declines in iPhone unit sales over the next couple of years.

Cramer, whose has long warned his followers against selling Apple's stock, said last week the company could eventually bottom out at $120 per share. At the time, the stock was trading around $144. Apple shares jumped 2 percent to nearly $151 each on Tuesday.

— CNBC's Elizabeth Gurdus and Christina Farr contributed to this report.

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  Tuesday, 8 Jan 2019 | 8:13 AM ET

Court allows Chairman Eddie Lampert another chance to buy Sears, pushing off decision to shut stores

Posted ByLauren Hirsch

A bankruptcy judge decided Tuesday to give Sears Chairman Eddie Lampert another chance to buy the retailer out of bankruptcy and save roughly 50,000 jobs.

Sears Holdings had planned to reject Lampert's bid to save the 126-year-old company, which would have put it on a course to liquidation.

Lampert had put forward a $4.4 billion bid to save Sears through his hedge fund ESL Investments. One of the biggest unresolved issues had that it fell short of covering the fees and vendor payment it owes, making it "administratively insolvent."

ESL protested Sears' decision. ESL, which worked over the weekend to improve its offer, pointed to the advisory fees that Sears has racked up during bankruptcy, a person familiar told CNBC. Such fees are part of Sears' administrative expenses.

Ultimately, the bankruptcy judge gave Lampert more time — but at a cost. ESL will now be required to pay a $120 million deposit by 4:00 p.m. Wednesday. Sears will allow Lampert to participate in a previously scheduled auction Monday, when it will compare ESL's offer to others by liquidators. But it's unclear where he will get the funds to back his offer. A person familiar with the situation told CNBC Lampert has been working to get the financing.

The people requested anonymity because the information is confidential.

A liquidation remains a possibility, and even if it comes to that pieces of the storied retailer could still be salvaged, like its home services business.

Lampert's grand plan was to fortify two struggling retailers, Sears and Kmart, by combining them in 2005. But the combined companies became victim of savvier competition, changing shopping habits and, many have argued, poor management.

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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.