From the Presidential Medal
of Freedom presentation

Warren E. Buffett : as a world-known investor and philanthropist, Warren E. Buffett business acumen is matched only by his dedication to improve the lives of others. He is the co/founder of the Giving Pledge, an
organization that encourages wealthy Americans to donate at least 50percent of their wealth to philanthropic causes.

Warren Buffett’s example of Generosity and Compassion has shown us the power of one individual’s determination in inspiring countless women and men to help make our world a brighter place.

Last posts

Ferrari Index

USA

Andiamo fuori tema se parliamo di Cars come investimento? Cosa direbbe Buffett?

Direbbe che non producendo denaro la tua Ferrari o McLaren non è un investimento in senso tecnico stretto ma una speculazione. Cioè un oggetto, come una tela d’autore, in cui tu paghi un prezzo per un valore difficilmente calcolabile e speri che un altro un domani si emozioni piu’ di te pagando un prezzo ancora piu’ alto e cosi’ via. Però negli anni 70 a Buffett capito’ un’occasione di un investimento correlato ad una collezione di vetture che ammise lui stesso erano vendute per 1 o 2 milioni e 10 anni dopo valevano piu’ di 10 milioni. Quindi parliamone, direbbe Jay Leno. e da appassionato di Ferrari non posso che “tradire” per un secondo Buffett e dire che evidentemente per storia personale il suo cuore non batte per la Ferrari come il mio batte rosso dalla culla.

Intendiamoci Buffett dice che la “quintessenza” dell’essere americano è nella cura e passione per l’auto e nel macinare miglia coast to coast! Ed è vero! La mia Cadillac come quella di Buffett ha un motore piu’ grosso della mia Ferrari e la usi tutti i giorni e ci viaggi quanto ti pare (a 1,99 dollari a gallone!). Sono 0,50 centesimi di Euro a litro, o forse meno. 1 gallone è 3.875 litri.

Ma allora perchè una Ferrari non solo non è una vettura normale ma ti fa battere il cuore (anche volendo con soli 1991cc) dalla nascita e poi per sempre e perchè se vuoi venderla ti offrono di solito piu’ di cio’ che l’hai pagata anni indietro? E perchè esistono aste milionarie soprattutto in USA e perchè esiste un “Ferrari Index”? Che come il DOW JONES, fluttuazioni ne ha, ma alla fine tende sempre a crescere, crescere ?

Perchè solo Ferrari ha 3 caratteristiche per le quali dovreste comprare un oggetto del genere (in realtà anche pochissimi altri brand ma per me in misura minore..)

1. Un BRAND unico nel Suo Prestigio ed inimitabile irraggiungibile

2. Una soddisfazione ed esperienza di guida inimitabili

3. Pochi esemplari prodotti in genere per ogni modello (con grosse differenze ovviamente da un modello all’altro  che influiscono sul  prezzo)

Con queste tre caratteristiche comprare una Ferrari vintage è sempre un buon acquisto. Vi garantite un’esperienza ed un’emozione inimitabili, vi garantite un valore che proporzionalmente al numero di esemplari del vostro modello crescerà nel futuro a lungo termine. Sempre. Portatevi solo un buon meccanico esperto Ferrari per non comprarvi “accrocchi” o schifezze tenute male.

Un ultimo dato relativo al punto due. Qui in USA le usano poco. Le conservano in modo straordinario. Ho avuto modo pochi giorni fa grazie a John Levy (Ferrari official di Fort-Lauderdale) di vedere la F40 comprata nuova li’ dal compianto Paul Allen co-founder di Microsoft. Il secondo proprietario l’ha appena venduta grazie a John (con cui parli per ore di Ferrari). E’ nuova. Sembra mai usata e in effetti ha circa 10.000 km. Ed è pure tanto. A Miami il mio amico Jordi Ricart ha appena venduto una F50 con 212 miglia!! Adesso ne ha un’altra bellissima per “soli” 2.600.000 USD con 12.000 km. La vedi. Nuova.

Io non sono molto d’accordo. Per me vanno usate. Enzo Ferrari se non sbaglio se ne lamentava un po’ di questo minore uso dei nostri primi compratori e clienti (da sempre) gli Stati Uniti. Quasi 3000 vetture su 9.000 e changes del 2018 sono vendute in America! Quanto tutta l’area EMEA ..(E nel 2017 in Italia vendute solo 350 mi pare. Un decimo quasi!). E qui aspettano in media 2 anni!

Vanno usate, almeno ogni tanto. Non ho dubbi. Qualsiasi modello. Non c’è prezzo per le emozioni di un V8 cilindri Ferrari alle spalle nel misto delle curve della costiera di Maratea in una bella giornata di Maggio. Il Ferrari Index per una volta non la prenderà cosi’ male.

Follow the Value of the Company nor Mr. Market

Education

Stocks are down and that’s good news. What do I buy if I am a long term Value Investor ? And when?

Since we agree upon the fact that is impossible to time the market, the most important of the two questions is the first. If you have the capability of finding a real super wonderful business, or just a wonderful one, you are more than half a way to success. If the price makes sense you are easily buying something that will allow you to be happy in the next 5 or 10 or more years. Why? Because you learnt from before how to reach the figure in your own mind of the “intrinsic value” of that particular company. It’s a company you already know and you are following and you like so much to own. You’ re discounting at the appropriate interest rate the flows of positive cash flows that this particular business you know it generates (eventually from here to judgment day). You say to yourself : “I will buy this SuperFunMegaBusiness at this price because…” And make sure you have a pretty much articulate reasoning behind this answer. An answer you will base upon facts and facts that are valuable.

If the price of the stock goes down below your “intrinsic value” you don’t care about the market as a whole and the fluctuations of the entire SP 500 or you read the newspapers headlines or whatever. You don’t care if immediately the price keeps going down. You have a chance to buy more. You don’t let Mr. Market to instruct you. You let Mr. Market to serve you. You use him until he will be sober again and will use your same judgment in the future about that particular business you are able to understand before he does.

So, if you know what stock (business) to buy, you don’t care about the entire DOW and predict what will be tomorrow or in ten days or ten months either. You follow and look at the business you want to buy and the price is selling today compared to your intrinsic value. To your own ability to evaluate.

And that figure and reasoning is yours and only yours. That’s why you don’t let Mr. Market tell you what to do. Never. That’s why is never gambling. The opposite : it’s a fantastic game to play.

Have fun!

Speaking of Ben Franklin today

Benjamin Franklin

I read somewhere that the word “self-evident” in the “Declaration of Independence” was a Ben Franklin’s substitution for a more articulated and complex number of words by Thomas Jefferson regarding Life, Liberty and the Pursuit of Happiness. If you take a look at the manuscript of the Declaration you’ll find this correction hand-written above. Albeit many could say it was a minor contribution or so, I always considered the expression “self-evident” so brief and that powerful, that told me a lot about Benjamin Franklin himself.

I always said in this website that words from Warren Buffett are so powerful and full of wisdom that can teach by themselves a lot. So simple and clear, they are like his wisdom and humanity. Most of this “Spirit” is an American spirit, or the best part of the American Spirit. It gushed out from Franklin and it is present in people like Buffett and Munger today. Some words of Wisdom and the use of “Bon Mots” travelled through the centuries comfortably. They’re unbiased and they still work today. Buffett and Franklin have in common the same wonder: the facts about them are true.

The more you know about them and their lives the more you find surprising the adventure you get in. Both men of sagacity, both cunning negotiators, both always trying to avoid disputes and battles, but ready and strong if the fight would call. Franklin changed the history of this Country and Buffett changed the way we can approach and look at the entire world of Business, Money, Investment and Philantropy. Both of them teach us today timeless lessons about Honesty, Integrity, Rationality. Timeless examples of hard-working and commitment and the power of investing in Education, learning continuosly. And continuosly investing in yourself to acquire many sides of Wisdom in as many fields you feel you want to know.

And to complete (if ever possible) the picture, we must note how beloved and esteemed was Franklin’s character and reputation in America as well as in Europe. “A friend to human kind” to quote John Adams. His humour is characteristically American and I see how good can be to take example from the Buffett modern good humour, humbleness and good sense. Useful and needed more than ever in a ever-changing and “always on the move” world as the one we are living today.

“Il mondo non appartiene ai pessimisti..”

Be like Buffett

Non c’è nulla di sbagliato nel pensare in grande e nel credere in se’ stessi. Ho imparato cosi’ tanto da Buffett e ho lasciato che molti suoi consigli siano parte di me, che non ricordo nemmeno piu’ dove e quando ho sentito da lui per la prima volta frasi che sono diventate parte della mia vita quotidiana. Vi auguro per Natale che diventino parte anche della vostra vita. Ogni giorno. Nessuno escluso. Devono essere come una memoria muscolare, un riflesso. Essere onesti ed etici per esempio. Non puo’ essere un’abitudine se lo siete ad intermittenza. Non puo’ essere una cosa saltuaria. Dovete proprio ESSERE onesti ed etici per essere felici, non sembrarlo e basta.

Dovete poi pensare che sia possibile raggiungere cio’ che volete nella vita. E dovete per questo avere un piano. Il piu’ dettagliato e preciso possibile. Siate sicuri di sapere cio’ che fate ma siate anche sicuri di sapere che potete farlo. Un idiota con un buon piano puo’ sicuramente sconfiggere un genio senza un piano. Se fallite nel prepararvi, preparatevi a fallire. Non è questione di IQ, ma piuttosto di essere freddi e lucidi calcolatori. E’ piu’ disciplina e sudore che genio. E’ rinforzarsi invece di lasciarsi abbattere. E’ non arrendersi e restare concentrati sull’obiettivo. In questo siate implacabili. Siate ispirati da gente che ha fatto bene, molto meglio di voi. Imparate incessantemente dai migliori. Cercate di essere come loro, di acquisire le qualità che hanno e che vi piacciono di piu’. Siate come coloro che volete essere. Provateci. Potete farlo. E anche se siete nati nel posto sbagliato per voi, non arrendetevi: traslocate. Andate dove è l’avventura. Non lamentatevi, non serve a niente. Non fate le vittime. Lottate!

Buon Natale e Buone Feste a tutti,

Marco Turco 

“The time to hesitate is through..”

Be like Buffett

The world doesn’t belong to the pessimistic. There’s nothing wrong in thinking big and there’s nothing wrong in being confident. I learned so much from Buffett and I let be part of me some of this simple knowledge, that I can’t even recall exactly from where and when I heard him saying the things that become part of my everyday life. I wish you for Christmas that they can be also part of your life. Everyday. They must be like muscle memory. Like being honest and ethical. You can’t decide it is something you turn on and off. You have to BE that way to be happy.

You have to think that it is possible to achieve what you want in life. And you have to have a plan for that. As detailed and precise as possible. Make sure you know what to do but make sure also you know you can do it. An idiot with a plan can defeat for sure a genius without a plan. Because if you fail to plan, plan to fail. It’s not a matter of IQ, its a matter of being cold and rational calculators. It’s more discipline and sweat than genius. It’s about thoughen up and dont let the others bring you down. Don’t give up and stay focused on your goal. Be inspired by people who did good, much better than you. Learn relentlessly from the best. Try to be like them, to have the qualities they have and that you like the most. Blike the one you want to be. Try. You can. And even if you’re born in the wrong place for you, it doesn’t matter: move. Go where the adventure is. Don’t you ever whine or be a victim. Fight!

Merry Christmas and Happy Holidays to you all, Marco Turco 

Fees that never sleep

Uncategorized

In more than one occasion Buffett mentioned how there’s often no-proportion and no reason to pay 1 or 2 percent of fees or commissions over very poor results from most money-managers and funds today. On this month issue of FT Wealth magazine you’ll find an interesting article by Matthew Vincent that finally replicates most of the fair comments by WB. In some “letters to shareholders” and in some “Shareholders meetings” of Berkshire you’ll find how Buffett is not against commissions in theirselves. We all love to pay outrageous fees to brokers if we make in exchange a wonderful deal. But it must be a buy of a wonderful business at a wonderful price, or “something of a sort”. Conversely what we see around in the investment world is a mediocre gain on the capital invested, plus an additional erosion provoked by fees that never sleep. They are justified by the so-called (often by themselves”) professionals for a superior management of your sums compared to what they call the “amateurs” (the ones like me that don’t have a Bachelor Degree or a MBA from some famous and expensive business schools but thrived in Grahams and Doddsville). What a shame that at the end of the day my portfolio has a +11 or more percent of gains net of no-commissions to share among we partners in a reasonable percentage (that every investor would happily share) if compared to the output of some of the big funds that “professionally” gain a 1 or 2 percent net of bundled-fees, the ones that never sleep. Without mentioning those portfolio managers who sell and buy for you very often just to add costs over fees and giving the impression to the know-nothing client that something must be done every once in a while to avoid losses and eliminate risks ..(sic..!).. (no comment..)

But what’s interesting (and staggering) is that also over the long term, a 1 or 2 percent per year commission will ruin a decent result on your investment: a 100.000 dollars growing at an average of 4.5 percent a year for 30 years will be 210.000 with fees of 2 percent.

1 per cent? You add roughly 70.000 dollars net in your pocket and your principal will be 324.000 if you had the chance to pay 0,5 percent a year of commission instead of 2 per cent. With the 0,5 per cent scenario you’ve been left with roughly the 90percent of your gross 374.000 outcome. It’s a difference of 50 per cent on your result relative to the 2 percent scenario. Amazing uh? No surprise that for the “non-professional” more than one super-investor gives the advice of buying low cost index funds. Better than paying a “formula-pundit-guy” to get 2 percent after costs. You don’t pay Jim Hall a guitar lesson just to know what a major scale is, right? And If a pay you an extra-fee I want some extra-mayo on my burger!

You guys have a wonderful jazzy week! And don’t hesitate to call me for the extra-mayo on your money…Sincerely, MT

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Last posts

Ferrari Index

USA

Andiamo fuori tema se parliamo di Cars come investimento? Cosa direbbe Buffett?

Direbbe che non producendo denaro la tua Ferrari o McLaren non è un investimento in senso tecnico stretto ma una speculazione. Cioè un oggetto, come una tela d’autore, in cui tu paghi un prezzo per un valore difficilmente calcolabile e speri che un altro un domani si emozioni piu’ di te pagando un prezzo ancora piu’ alto e cosi’ via. Però negli anni 70 a Buffett capito’ un’occasione di un investimento correlato ad una collezione di vetture che ammise lui stesso erano vendute per 1 o 2 milioni e 10 anni dopo valevano piu’ di 10 milioni. Quindi parliamone, direbbe Jay Leno. e da appassionato di Ferrari non posso che “tradire” per un secondo Buffett e dire che evidentemente per storia personale il suo cuore non batte per la Ferrari come il mio batte rosso dalla culla.

Intendiamoci Buffett dice che la “quintessenza” dell’essere americano è nella cura e passione per l’auto e nel macinare miglia coast to coast! Ed è vero! La mia Cadillac come quella di Buffett ha un motore piu’ grosso della mia Ferrari e la usi tutti i giorni e ci viaggi quanto ti pare (a 1,99 dollari a gallone!). Sono 0,50 centesimi di Euro a litro, o forse meno. 1 gallone è 3.875 litri.

Ma allora perchè una Ferrari non solo non è una vettura normale ma ti fa battere il cuore (anche volendo con soli 1991cc) dalla nascita e poi per sempre e perchè se vuoi venderla ti offrono di solito piu’ di cio’ che l’hai pagata anni indietro? E perchè esistono aste milionarie soprattutto in USA e perchè esiste un “Ferrari Index”? Che come il DOW JONES, fluttuazioni ne ha, ma alla fine tende sempre a crescere, crescere ?

Perchè solo Ferrari ha 3 caratteristiche per le quali dovreste comprare un oggetto del genere (in realtà anche pochissimi altri brand ma per me in misura minore..)

1. Un BRAND unico nel Suo Prestigio ed inimitabile irraggiungibile

2. Una soddisfazione ed esperienza di guida inimitabili

3. Pochi esemplari prodotti in genere per ogni modello (con grosse differenze ovviamente da un modello all’altro  che influiscono sul  prezzo)

Con queste tre caratteristiche comprare una Ferrari vintage è sempre un buon acquisto. Vi garantite un’esperienza ed un’emozione inimitabili, vi garantite un valore che proporzionalmente al numero di esemplari del vostro modello crescerà nel futuro a lungo termine. Sempre. Portatevi solo un buon meccanico esperto Ferrari per non comprarvi “accrocchi” o schifezze tenute male.

Un ultimo dato relativo al punto due. Qui in USA le usano poco. Le conservano in modo straordinario. Ho avuto modo pochi giorni fa grazie a John Levy (Ferrari official di Fort-Lauderdale) di vedere la F40 comprata nuova li’ dal compianto Paul Allen co-founder di Microsoft. Il secondo proprietario l’ha appena venduta grazie a John (con cui parli per ore di Ferrari). E’ nuova. Sembra mai usata e in effetti ha circa 10.000 km. Ed è pure tanto. A Miami il mio amico Jordi Ricart ha appena venduto una F50 con 212 miglia!! Adesso ne ha un’altra bellissima per “soli” 2.600.000 USD con 12.000 km. La vedi. Nuova.

Io non sono molto d’accordo. Per me vanno usate. Enzo Ferrari se non sbaglio se ne lamentava un po’ di questo minore uso dei nostri primi compratori e clienti (da sempre) gli Stati Uniti. Quasi 3000 vetture su 9.000 e changes del 2018 sono vendute in America! Quanto tutta l’area EMEA ..(E nel 2017 in Italia vendute solo 350 mi pare. Un decimo quasi!). E qui aspettano in media 2 anni!

Vanno usate, almeno ogni tanto. Non ho dubbi. Qualsiasi modello. Non c’è prezzo per le emozioni di un V8 cilindri Ferrari alle spalle nel misto delle curve della costiera di Maratea in una bella giornata di Maggio. Il Ferrari Index per una volta non la prenderà cosi’ male.

Follow the Value of the Company nor Mr. Market

Education

Stocks are down and that’s good news. What do I buy if I am a long term Value Investor ? And when?

Since we agree upon the fact that is impossible to time the market, the most important of the two questions is the first. If you have the capability of finding a real super wonderful business, or just a wonderful one, you are more than half a way to success. If the price makes sense you are easily buying something that will allow you to be happy in the next 5 or 10 or more years. Why? Because you learnt from before how to reach the figure in your own mind of the “intrinsic value” of that particular company. It’s a company you already know and you are following and you like so much to own. You’ re discounting at the appropriate interest rate the flows of positive cash flows that this particular business you know it generates (eventually from here to judgment day). You say to yourself : “I will buy this SuperFunMegaBusiness at this price because…” And make sure you have a pretty much articulate reasoning behind this answer. An answer you will base upon facts and facts that are valuable.

If the price of the stock goes down below your “intrinsic value” you don’t care about the market as a whole and the fluctuations of the entire SP 500 or you read the newspapers headlines or whatever. You don’t care if immediately the price keeps going down. You have a chance to buy more. You don’t let Mr. Market to instruct you. You let Mr. Market to serve you. You use him until he will be sober again and will use your same judgment in the future about that particular business you are able to understand before he does.

So, if you know what stock (business) to buy, you don’t care about the entire DOW and predict what will be tomorrow or in ten days or ten months either. You follow and look at the business you want to buy and the price is selling today compared to your intrinsic value. To your own ability to evaluate.

And that figure and reasoning is yours and only yours. That’s why you don’t let Mr. Market tell you what to do. Never. That’s why is never gambling. The opposite : it’s a fantastic game to play.

Have fun!

Speaking of Ben Franklin today

Benjamin Franklin

I read somewhere that the word “self-evident” in the “Declaration of Independence” was a Ben Franklin’s substitution for a more articulated and complex number of words by Thomas Jefferson regarding Life, Liberty and the Pursuit of Happiness. If you take a look at the manuscript of the Declaration you’ll find this correction hand-written above. Albeit many could say it was a minor contribution or so, I always considered the expression “self-evident” so brief and that powerful, that told me a lot about Benjamin Franklin himself.

I always said in this website that words from Warren Buffett are so powerful and full of wisdom that can teach by themselves a lot. So simple and clear, they are like his wisdom and humanity. Most of this “Spirit” is an American spirit, or the best part of the American Spirit. It gushed out from Franklin and it is present in people like Buffett and Munger today. Some words of Wisdom and the use of “Bon Mots” travelled through the centuries comfortably. They’re unbiased and they still work today. Buffett and Franklin have in common the same wonder: the facts about them are true.

The more you know about them and their lives the more you find surprising the adventure you get in. Both men of sagacity, both cunning negotiators, both always trying to avoid disputes and battles, but ready and strong if the fight would call. Franklin changed the history of this Country and Buffett changed the way we can approach and look at the entire world of Business, Money, Investment and Philantropy. Both of them teach us today timeless lessons about Honesty, Integrity, Rationality. Timeless examples of hard-working and commitment and the power of investing in Education, learning continuosly. And continuosly investing in yourself to acquire many sides of Wisdom in as many fields you feel you want to know.

And to complete (if ever possible) the picture, we must note how beloved and esteemed was Franklin’s character and reputation in America as well as in Europe. “A friend to human kind” to quote John Adams. His humour is characteristically American and I see how good can be to take example from the Buffett modern good humour, humbleness and good sense. Useful and needed more than ever in a ever-changing and “always on the move” world as the one we are living today.

“Il mondo non appartiene ai pessimisti..”

Be like Buffett

Non c’è nulla di sbagliato nel pensare in grande e nel credere in se’ stessi. Ho imparato cosi’ tanto da Buffett e ho lasciato che molti suoi consigli siano parte di me, che non ricordo nemmeno piu’ dove e quando ho sentito da lui per la prima volta frasi che sono diventate parte della mia vita quotidiana. Vi auguro per Natale che diventino parte anche della vostra vita. Ogni giorno. Nessuno escluso. Devono essere come una memoria muscolare, un riflesso. Essere onesti ed etici per esempio. Non puo’ essere un’abitudine se lo siete ad intermittenza. Non puo’ essere una cosa saltuaria. Dovete proprio ESSERE onesti ed etici per essere felici, non sembrarlo e basta.

Dovete poi pensare che sia possibile raggiungere cio’ che volete nella vita. E dovete per questo avere un piano. Il piu’ dettagliato e preciso possibile. Siate sicuri di sapere cio’ che fate ma siate anche sicuri di sapere che potete farlo. Un idiota con un buon piano puo’ sicuramente sconfiggere un genio senza un piano. Se fallite nel prepararvi, preparatevi a fallire. Non è questione di IQ, ma piuttosto di essere freddi e lucidi calcolatori. E’ piu’ disciplina e sudore che genio. E’ rinforzarsi invece di lasciarsi abbattere. E’ non arrendersi e restare concentrati sull’obiettivo. In questo siate implacabili. Siate ispirati da gente che ha fatto bene, molto meglio di voi. Imparate incessantemente dai migliori. Cercate di essere come loro, di acquisire le qualità che hanno e che vi piacciono di piu’. Siate come coloro che volete essere. Provateci. Potete farlo. E anche se siete nati nel posto sbagliato per voi, non arrendetevi: traslocate. Andate dove è l’avventura. Non lamentatevi, non serve a niente. Non fate le vittime. Lottate!

Buon Natale e Buone Feste a tutti,

Marco Turco 

“The time to hesitate is through..”

Be like Buffett

The world doesn’t belong to the pessimistic. There’s nothing wrong in thinking big and there’s nothing wrong in being confident. I learned so much from Buffett and I let be part of me some of this simple knowledge, that I can’t even recall exactly from where and when I heard him saying the things that become part of my everyday life. I wish you for Christmas that they can be also part of your life. Everyday. They must be like muscle memory. Like being honest and ethical. You can’t decide it is something you turn on and off. You have to BE that way to be happy.

You have to think that it is possible to achieve what you want in life. And you have to have a plan for that. As detailed and precise as possible. Make sure you know what to do but make sure also you know you can do it. An idiot with a plan can defeat for sure a genius without a plan. Because if you fail to plan, plan to fail. It’s not a matter of IQ, its a matter of being cold and rational calculators. It’s more discipline and sweat than genius. It’s about thoughen up and dont let the others bring you down. Don’t give up and stay focused on your goal. Be inspired by people who did good, much better than you. Learn relentlessly from the best. Try to be like them, to have the qualities they have and that you like the most. Blike the one you want to be. Try. You can. And even if you’re born in the wrong place for you, it doesn’t matter: move. Go where the adventure is. Don’t you ever whine or be a victim. Fight!

Merry Christmas and Happy Holidays to you all, Marco Turco 

Fees that never sleep

Uncategorized

In more than one occasion Buffett mentioned how there’s often no-proportion and no reason to pay 1 or 2 percent of fees or commissions over very poor results from most money-managers and funds today. On this month issue of FT Wealth magazine you’ll find an interesting article by Matthew Vincent that finally replicates most of the fair comments by WB. In some “letters to shareholders” and in some “Shareholders meetings” of Berkshire you’ll find how Buffett is not against commissions in theirselves. We all love to pay outrageous fees to brokers if we make in exchange a wonderful deal. But it must be a buy of a wonderful business at a wonderful price, or “something of a sort”. Conversely what we see around in the investment world is a mediocre gain on the capital invested, plus an additional erosion provoked by fees that never sleep. They are justified by the so-called (often by themselves”) professionals for a superior management of your sums compared to what they call the “amateurs” (the ones like me that don’t have a Bachelor Degree or a MBA from some famous and expensive business schools but thrived in Grahams and Doddsville). What a shame that at the end of the day my portfolio has a +11 or more percent of gains net of no-commissions to share among we partners in a reasonable percentage (that every investor would happily share) if compared to the output of some of the big funds that “professionally” gain a 1 or 2 percent net of bundled-fees, the ones that never sleep. Without mentioning those portfolio managers who sell and buy for you very often just to add costs over fees and giving the impression to the know-nothing client that something must be done every once in a while to avoid losses and eliminate risks ..(sic..!).. (no comment..)

But what’s interesting (and staggering) is that also over the long term, a 1 or 2 percent per year commission will ruin a decent result on your investment: a 100.000 dollars growing at an average of 4.5 percent a year for 30 years will be 210.000 with fees of 2 percent.

1 per cent? You add roughly 70.000 dollars net in your pocket and your principal will be 324.000 if you had the chance to pay 0,5 percent a year of commission instead of 2 per cent. With the 0,5 per cent scenario you’ve been left with roughly the 90percent of your gross 374.000 outcome. It’s a difference of 50 per cent on your result relative to the 2 percent scenario. Amazing uh? No surprise that for the “non-professional” more than one super-investor gives the advice of buying low cost index funds. Better than paying a “formula-pundit-guy” to get 2 percent after costs. You don’t pay Jim Hall a guitar lesson just to know what a major scale is, right? And If a pay you an extra-fee I want some extra-mayo on my burger!

You guys have a wonderful jazzy week! And don’t hesitate to call me for the extra-mayo on your money…Sincerely, MT