Warren Buffett warns against overpaying CEOs, lays out his process for learning from acquisitions, and shares how he keeps auditors honest in a new book. Here are the 10 best quotes.

warren buffett
Warren Buffett.

  • Warren Buffett shared his views on corporate governance in a recent book.
  • The billionaire investor trumpeted the importance of executives being honest and accountable.
  • He also shared how he learns from acquisitions, and how he keeps auditors in line.

Warren Buffett warned against overpaying even the most brilliant CEO, shared his process for learning from bad acquisitions, and weighed in on why executives cheat and lie in an interview for “Talent, Strategy, Risk,” a recent book by corporate-governance experts Ram Charan, Bill McNabb, and Dennis Carey.

The famed investor and Berkshire Hathaway chairman also outlined why he’s not the easiest person to have on a board, detailed how he keeps audit firms honest, and urged CEOs to be open with their shareholders.

Here are Buffett’s 10 best quotes from the book, lightly edited and condensed for clarity:

1. “Picking the right CEO is 10 times more important than the compensation. But somebody has to be there to represent the shareholders in terms of overreaching by even competent executives.”

2. “I was at a company that made about eight acquisitions, none of which worked out, and they could hardly wait to do the ninth. So I suggested that we have a postmortem just like a hospital on every acquisition two or three years later and objectively decide – not with recriminations or anything – just what actually did happen.”

3. “It isn’t fundamental dishonesty that causes people to go in a different direction. It’s human nature. There are plenty of people who are really decent people, intelligent people. I’d be happy if they married my daughter, or if they moved in next door to me. But they just don’t come to grips with reality. And boards usually don’t push them to.”

4. “I realized that the only way to really get one of the super big-name auditors to behave was to have them more afraid of me than they were afraid of the management.” – recalling how he reined in a company “playing games” with its quarterly financials.

5. “The company lawyers tell you to list every possible thing you can dream of in the 10-K just as a protection. They kill you with quantity. The risk committees almost don’t have a chance.” – bemoaning how companies draft a laundry list of risks to obscure the key ones.

6. “Women have gotten a raw deal for so long that I’d absolutely prefer to give the job to a female. But I’ve never recommended a woman who I didn’t think had the qualities that I’ve set forth in the 10-year report.”

7. “I’ve probably been a little more of a skunk at the garden party than most directors when I’m on a board.”

8. “A CEO that wants a puppet board can still get one, I’ll put it that way.” – noting that executives can prevent their directors from questioning them by wasting their time.

9. “The person who’s going to be responsible for the assets and how they’re managed over time is the CEO, and you really want to hear from that person.”

10. “The CEO absolutely owes that to the owners. I have a strong feeling that everybody’s entitled to the same information.” – emphasizing that he aims to tell his shareholders everything he would tell his two sisters if the three of them were running the company.

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Wife of Rep. Mike Kelly may have used ‘confidential information’ she got via her husband to reap thousands in a stock, report says

US President Donald Trump greets Rep. Mike Kelly and his wife Victoria upon arrival at Erie International Airport in Erie, Pennsylvania on October 10, 2018.
US President Donald Trump greets Rep. Mike Kelly and his wife Victoria upon arrival at Erie International Airport in Erie, Pennsylvania on October 10, 2018.

  • A congressional ethics watchdog says Rep. Mike Kelly’s wife may have made an illegal stock purchase.
  • A report found “substantial reason to believe” she used insider information for the purchase.
  • Kelly previously violated the STOCK Act by not reporting a stock purchase on time, Insider reported.

There is “substantial reason to believe” the wife of Pennsylvania Rep. Mike Kelly profited by thousands of dollars on a stock purchase she made using “confidential information” she learned through her husband, according to an Office of Congressional Ethics report released Thursday.

In April 2020, Victoria Kelly purchased between $15,001 and $50,000 worth of stock in Cleveland-Cliffs Inc., an Ohio-based steelmaking company. Prior to that, the company said it would shut down their plant in Kelly’s district unless former President Donald Trump’s administration helped it compete with foreign producers, the report said.

Kelly lobbied for the company to the Trump administration, which complied with his request on April 28, 2020, according to the report. Victoria Kelly made the stock purchase the following day, days before any public announcement.

“The purchase occurred just after her husband, in the course of his official job duties, learned confidential information about the company,” the report said.

Kelly’s office did not respond to Insider’s request for comment, but a spokesperson told the Associated Press in a statement that Kelly has always been “open and transparent” about his finances, and has filed regular disclosures.

As the Associated Press reported, neither Kelly nor his wife have been criminally charged.

The ethics office recommended that subpoenas be issued for both of the Kellys, noting that both of them declined to cooperate with the ethics office’s review. The report also recommended that Kelly’s chief of staff and former Commerce Secretary Wilbur Ross be subpoenaed as part of the investigation.

The Stop Trading on Congressional Knowledge Act (STOCK) Act was passed in 2012 to address insider trading and conflicts of interest in Congress. The law requires lawmakers quickly report any trades made by themselves, their spouse, or a dependent child.

The Kellys violated the Stock Act earlier this year, Insider previously reported.

In June, Kelly failed to report that his wife purchased between $1,001 and $15,000 worth of shares in Beauty Health Company until more than seven weeks after a STOCK Act-mandated deadline required he report the purchase.

Kelly is among 43 members of Congress identified by Insider and other news organizations as having violated the STOCK Act.

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Phunware extends 2-day gain to 2,189% as Trump campaign app developer rides Digital World hype

A stock trader claps at the end of trade at the New York Stock Exchange
A stock trader claps at the end of trade at the New York Stock Exchange.

  • Phunware stock extended its two-day gain to as much as 2,189% on Friday amid the Digital World SPAC hype.
  • The software firm developed an app to help power the 2020 Trump/Pence re-election campaign.
  • Traders are speculating that Phunware might play a role in the development of Donald Trump’s Truth Social.

Phunware, a small-cap software developer based in Austin, Texas, extended its two-day gain to as much as 2,189% on Friday as it rode the ongoing hype surrounding former President Trump’s foray into the SPAC world.

Digital World Acquisition is a SPAC that announced late Wednesday plans to merge with former President Donald Trump’s recently formed Trump Media and Technology Group. DWAC stock soared more than 300% on Thursday as investors piled into the hype of a new social media app from Trump, and was up more than 100% in Friday trades.

Phunware stock is rising in sympathy of that move, as investors point out that the software developer was tapped by the 2020 Trump/Pence re-election campaign to build its app.

“Some are saying $phun and $dwac are connected,” Chief Strategist of T3TradingGroup Scott Redler said.

There is no confirmation that Phunware will work with Trump Media and Technology Group to help develop the Truth Social media app. There was no immediate response to a request for comment.

Earlier this week, Phunware said it closed an $11 million acquisition of Lyte Technology, which markets high-performance computers for gaming, streaming, and cryptocurrency mining.

Phunware, which was worth just $79 million on Wednesday, is now valued at more than $1.3 billion amid Friday’s surge. The stock was halted for volatility on Friday and eventually pared its gains to 625%.

When asked to comment on the stock price move, Phunware told Insider via e-mail, “There are no official updates at this time. When there are further updates to share, we will be sure to do so via the appropriate Reg FD channels.”

Phunware stock price
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Digital World Acquisition stock surges 190% as Trump SPAC rally continues for a second day

donald trump iowa rally
Donald Trump.

  • Digital World Acquisition stock surged as much as 190% on Friday.
  • The SPAC’s shares rose 357% on Thursday after it struck a deal to acquire Trump’s media startup.
  • Trump’s company plans to disrupt Big Tech and become a hub for conservative voices.

Digital World Acquisition shares jumped as much as 190% on Friday, as investors piled into the special-purpose acquisition company set to take former US President Donald Trump’s media startup public.

DWAC stock already skyrocketed 357% on Thursday after the SPAC announced it was acquiring Trump Media & Technology Group. The shares closed at $45.50, valuing the vehicle at about $1.5 billion – not far off the prospective $1.7 billion valuation for TMTG highlighted in the press release about the deal.

Notably, the stock’s price rose as high as $132 on Friday, giving it a market capitalization of $4.3 billion at the peak.

Trump has pitched his startup as a “rival to the liberal media consortium” and an effort to fight back against Big Tech, which he accuses of “silencing opposing voices.”

TMTG intends to launch a social-media platform named Truth Social in the next few months, and later roll out an on-demand video-streaming service featuring “non-woke” news, entertainment, and other programming.

The vision for the company is to disrupt some of the most valuable and influential companies in the world, including Apple, Amazon, Walt Disney, Netflix, Alphabet, Microsoft, and Facebook. Part of its mission is “galvanizing a conservative media universe,” according to a “company overview” on its website that doesn’t include any details of its operations or executives.

Trump was banned or suspended from nearly every major social-media site, including Facebook, Twitter, and Alphabet’s YouTube, after the January 6 attack on the US Capitol. His new venture may be an effort to reenter the spotlight and secure a louder megaphone ahead of another run at the White House.

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Digital World Acquisition stock surges 94% as Trump SPAC rally continues for a second day

donald trump iowa rally
Donald Trump.

  • Digital World Acquisition stock surged as much as 94% in premarket trading Friday.
  • The SPAC’s shares rose 357% on Thursday after it struck a deal to acquire Trump’s media startup.
  • Trump’s company plans to disrupt Big Tech and become a hub for conservative voices.

Digital World Acquisition shares jumped as much as 94% in premarket trading Friday, as investors piled into the special-purpose acquisition company set to take former US President Donald Trump’s media startup public.

DWAC stock already skyrocketed 357% on Thursday after the SPAC announced it was acquiring Trump Media & Technology Group. The shares closed at $45.50, valuing the vehicle at about $1.5 billion – not far off the prospective $1.7 billion valuation for TMTG highlighted in the press release about the deal.

Trump has pitched his startup as a “rival to the liberal media consortium” and an effort to fight back against Big Tech, which he accuses of “silencing opposing voices.”

TMTG intends to launch a social-media platform named Truth Social in the next few months, and later roll out an on-demand video-streaming service featuring “non-woke” news, entertainment, and other programming.

The vision for the company is to disrupt some of the most valuable and influential companies in the world, including Apple, Amazon, Walt Disney, Netflix, Alphabet, Microsoft, and Facebook. Part of its mission is “galvanizing a conservative media universe,” according to a “company overview” on its website that doesn’t include any details of its operations or executives.

Trump was banned or suspended from nearly every major social-media site, including Facebook, Twitter, and Alphabet’s YouTube, after the January 6 attack on the US Capitol. His new venture may be an effort to reenter the spotlight and secure a louder megaphone ahead of another run at the White House.

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43 members of Congress have violated a law designed to stop insider trading and prevent conflicts-of-interest

congressional stock report lobbying federal government 4x3
  • Insider and other media have identified numerous US lawmakers not complying with the federal STOCK Act.
  • Their excuses range from oversights, to clerical errors, to inattentive accountants.
  • Ethics watchdogs – and even some in Congress – want to ban lawmakers from trading individual stocks.
  • See more stories on Insider’s business page.

Insider and several other news organizations have this year identified 43 members of Congress who’ve failed to properly report their financial trades as mandated by the Stop Trading on Congressional Knowledge Act of 2012, also known as the STOCK Act.

Congress passed the law in 2012 to combat insider trading and conflicts of interest among their own members and force lawmakers to be more transparent about their personal financial dealings. A key provision of the law mandates that lawmakers publicly – and quickly – disclose any stock trade made by themselves, a spouse, or a dependent child.

But many members of Congress have not fully complied with the law. They offer excuses including ignorance of the law, clerical errors, and mistakes by an accountant.

While lawmakers who violate the STOCK Act face a fine, the penalty is usually small – $200 is the standard amount – or waived by House or Senate ethics officials. Ethics watchdogs and even some members of Congress have called for stricter penalties or even a ban on federal lawmakers from trading individual stocks, although neither has come to pass.

Here are the lawmakers who have this year violated the STOCK Act – to one extent or another – during 2021:

Sen. Dianne Feinstein, a Democrat from California

Dianne Feinstein
Sen. Dianne Feinstein, a Democrat of California.

Feinstein was months late disclosing a five-figure investment her husband made into a private, youth-focused polling company.

Sen. Tommy Tuberville, a Republican from Alabama

Sen. Tommy Tuberville, an Alabama Republican, is pointing while wearing a gray suit and purple tie.
Sen. Tommy Tuberville, a Republican from Alabama.

Tuberville was weeks or months late in disclosing nearly 130 separate stock trades from January to May.

Sen. Roger Marshall, a Republican from Kansas

Roger Marshall
Sen. Roger Marshall, a Republican from Kansas.

Marshall was up to 17 months late disclosing stock trades for one of his dependent children.

Sen. Rand Paul, a Republican from Kentucky

Sen. Rand Paul is administered an oath as his wife Kelley looks on during a swearing-in ceremony in the US Capitol on Jan 3, 2017.
Sen. Rand Paul, a Republican from Kentucky.

Paul was 16 months late in disclosing that his wife bought stock in a biopharmaceutical company that manufactures an antiviral COVID-19 treatment, the Washington Post reported.

Sen. Mark Kelly, a Democrat from Arizona

Mark Kelly Gabby Giffords .JPG
Sen. Mark Kelly, a Democrat from Arizona.

Kelly, a retired astronaut, failed to disclose on time his investment in a company that’s developing a supersonic passenger aircraft, Fox Business reported

Sen. Cynthia Lummis, a Republican from Wyoming

US Senator from Wyoming, Cynthia Lummis.
US Senator from Wyoming, Cynthia Lummis.

Lummis was several days late reporting a purchase in August of up to $100,000 in bitcoin, CNBC reported.

Rep. Tom Malinowski, a Democrat from New Jersey

tom.malinowski
Rep. Tom Malinowski, a Democrat from New Jersey.

Malinowski failed to disclose dozens of stock trades made during 2020 and early 2021, doing so only after questions from Insider.

The independent Office of Congressional Ethics, in part citing Insider’s reporting, found “substantial reason to believe” that Malinowski violated federal rules or laws designed to promote transparency and defend against conflicts. It voted 5-1 to refer its findings to the Democrat-led House Committee on Ethics, which confirmed on October 21 that it will continue reviewing the matter.

Rep. Pat Fallon, a Republican from Texas

Rep. Pat Fallon, a Republican from Texas, is waving his right hand and wearing a light blue suit during a group photo with freshmen members of the House Republican Conference on the House steps of the US Capitol on January 4, 2021.
Rep. Pat Fallon, a Republican from Texas.

Fallon was months late disclosing dozens of stock trades during early- and mid-2021 that together are worth as much as $17.53 million.

Rep. Diana Harshbarger, a Republican from Tennessee

Rep. Diana Harshbarger, a congresswoman from Tennessee. She is in a blue jacket at the US Capitol.
Rep. Diana Harshbarger, a Republican from Tennessee.

Harshbarger failed to properly disclose more than 700 stock trades that together are worth as much as $10.9 million.

Rep. Katherine Clark, a Democrat from Massachusetts

Katherine Clark.
Rep. Katherine Clark, a Democrat from Massachusetts.

Clark, one of the highest-ranking Democrats in the House, was several weeks late in disclosing 19 of her husband’s stock transactions. Together, the trades are worth as much as $285,000.

Rep. Blake Moore, a Republican from Texas

Rep. Blake Moore, a Republican from Utah, stands in front of the US Capitol in Washington, DC.
Rep. Blake Moore, a Republican from Utah.

Moore in early- to mid-2021 did not properly disclose dozens of stock and stock-option trades together worth as much as $1.1 million. He was late again disclosing trades made in August.

Rep. Mo Brooks, a Republican from Alabama

mo.brooks
Rep. Mo Brooks, a Republican from Alabama.

Brooks, who is running for US Senate, failed to properly disclose a sale of Pfizer stock worth up to $50,000.

Rep. Dan Crenshaw, a Republican from Texas

dan crenshaw
Rep. Dan Crenshaw, a Republican from Texas.

Crenshaw was months late disclosing several stock trades he made in the early days of the COVID-19 pandemic, the Daily Beast reported.

Rep. Susie Lee, a Democrat of Nevada

Susie Lee
Rep. Susie Lee, a Democrat from Nevada.

Lee failed to properly disclose more than 200 stock trades between early-2020 and mid-2021. Together, the trades are worth as much as $3.3 million.

Rep. Kevin Hern, a Republican from Oklahoma

Rep. Kevin Hern, a Republican of Oklahoma, speaks during a Republican Study Committee press conference on Wednesday, May 19, 2021.
Rep. Kevin Hern, a Republican from Oklahoma.

Hern did not disclose nearly two-dozen stock trades in a timely manner, in violation of the STOCK Act. Taken together, the trades are worth as much as $2.7 million.

Rep. Debbie Wasserman Schultz, a Democrat from Florida

Debbie Wasserman-Schultz
Rep. Debbie Wasserman Schultz, a Democrat from Florida.

Wasserman Schultz was months late reporting four stock trades made either for herself or her child.

Rep. Sean Patrick Maloney, a Democrat from New York

Sean Maloney
Rep. Sean Patrick Maloney, a Democrat from New York.

Maloney was months late in disclosing he sold eight stocks he inherited in mid-2020 when his mother died.

Rep. Brian Mast, a Republican from Florida

Rep. Brian Mast, Republican of Florida
Rep. Brian Mast, a Republican from Florida.

Mast was late disclosing that he had purchased up to $100,000 in stock in an aerospace company. The president of the company had just testified before a congressional subcommittee on which Mast sits.

Rep. Lori Trahan, a Democrat from Massachusetts

Rep. Lori Trahan, a Democrat from Massachusetts, talking
Rep. Lori Trahan, a Democrat from Massachusetts.

Trahan was months late disclosing the sale of stock shares in a software company.

Rep. John Rutherford, a Republican from Florida

Rep. John Rutherford, a Republican from Florida, stands outside the US Capitol.
Rep. John Rutherford, a Republican from Florida.

Rutherford failed to properly disclose five individual stock transactions he made in late 2020.

Rep. Kathy Castor, a Democrat of Florida

Rep. Kathy Castor, a Democrat from Florida, speaks at a news conference.
Rep. Kathy Castor, a Democrat from Florida.

Castor was late disclosing the purchase of tens of thousands of dollars worth of stock shares throughout 2021.

Rep. August Pfluger, a Republican from Texas

Rep. August Pfluger, a Republican from Texas, talking on the phone
Rep. August Pfluger, a Republican from Texas.

Pfluger was several months late disclosing numerous stock purchases or sales made in January or March either by himself or by his wife.

Rep. Brian Higgins, a Democrat from New York

rep. Brian Higgins
Rep. Brian Higgins.

Higgins was about 11 months late disclosing three stock trades he made in late 2020.

Rep. Cheri Bustos, a Democrat from Illinois

Cheri Bustos
Rep. Cheri Bustos, a Democrat from Illinois.

Bustos was months late in disclosing that she had sold up to $150,000 worth of stocks in March.

Rep. Steve Chabot, a Republican from Ohio

Steve Chabot
Steve Chabot, a Republican from Ohio.

Chabot was months late disclosing a stock share exchange he held in early 2021.

Rep. Victoria Spartz, a Republican from Indiana

Rep. Victoria Spartz, a Republican from Indiana, stands at a press conference.
Rep. Victoria Spartz, a Republican from Indiana.

Spartz was two weeks late disclosing a purchase of up to $50,000 worth of stock in a commercial real-estate firm.

Rep. Rick Allen, a Republican from Georgia

Rep. Rick Allen, a Republican from Georgia, stands outside the US Capitol holding a mask.
Rep. Rick Allen, a Republican from Georgia.

Allen, a four-term Republican who represents a large southeastern region of Georgia, appears to have improperly disclosed the purchases and sales of several stocks during 2019 and 2020.

Rep. Mike Kelly, a Republican from Pennsylvania

Mike Kelly
Rep. Mike Kelly, a Republican from Pennsylvania.

Kelly was more than seven weeks late reporting a stock purchase made by his wife.

Rep. Chris Jacobs, a Republican from New York

Rep. Chris Jacobs, a Republican from New York, walks outside the US Capitol
Rep. Chris Jacobs, a Republican from New York.

Jacobs was months late filing various transactions made throughout early- to mid-2021, Forbes reported.

Rep. Bobby Scott, a Democrat from Virginia

Rep. Bobby Scott
Rep. Bobby Scott, a Democrat from Virginia.

Scott was months late in disclosing a pair of stock sales from December 2020, Forbes reported. NPR also reported several other late transactions, as first identified by the nonpartisan Campaign Legal Center.

Rep. Austin Scott, a Republican from Georgia

Rep. Austin Scott, a Republican from Georgia, walks off the stage at a rally featuring former US President Donald Trump on September 25, 2021 in Perry, Georgia. Republican Senate candidate Herschel Walker, Georgia Secretary of State candidate Rep. Jody Hice (R-GA), and Georgia Lieutenant Gubernatorial candidate State Sen. Burt Jones (R-GA) also appeared as guests at the rally.
Rep. Austin Scott, a Republican from Georgia.

Scott, a Republican from Georgia, was a week late reporting a handful of transactions conducted by his spouse.

Rep. Pete Sessions, a Republican from Texas

Pete Sessions
Rep. Pete Sessions, a Republican from Texas.

Sessions was a month late in reporting a purchase of stock in Amazon.com.

Rep. Ed Perlmutter, a Democrat from Colorado

Rep. Ed Perlmutter, a Democrat of Colorado, filed stock transactions late.
Rep. Ed Perlmutter, a Democrat from Colorado.

Perlmutter ran a few days late in filing disclosures for as much as $30,000 in stock trades his wife made in June.

Rep. Tom Suozzi, a Democrat from New York

tom suozzi salt tax
Rep. Tom Suozzi, a Democrat from New York.

Suozzi failed to file required reports on about 300 financial transactions, NPR reported, citing research from the Campaign Legal Center.

Rep. Cindy Axne, a Democrat from Iowa

Cindy Axne Iowa
Rep. Cindy Axne, a Democrat from Iowa.

During 2019 and 2020, Axne didn’t file required periodic transaction reports for more than three-dozen trades, reported NPR, citing research by the Campaign Legal Center.

Rep. Warren Davidson, a Republican from Ohio

warren davidson
Rep. Warren Davidson, a Republican from Ohio.

Davidson didn’t properly disclose the sale of stock worth up to $100,000, reported NPR, citing Campaign Legal Center research.

Rep. Lance Gooden, a Republican from Texas

lance gooden
Rep. Lance Gooden, a Republican from Texas.

Gooden failed to file mandatory periodic transaction reports for a dozen stock transactions, per the STOCK Act, reported NPR, citing Campaign Legal Center research. Gooden’s office disputed to the Dallas Morning News that the lawmaker did anything wrong.

Rep. Chuck Fleischmann, a Republican from Tennessee

Rep. Chuck Fleischmann, a Republican from Tennessee, is interviewed by CQ Roll Call in his Cannon Building office, about losing his parents to cancer, February 25, 2016.
Rep. Chuck Fleischmann, a Republican from Tennessee.

Fleischmann, a Republican from Tennessee, was late in disclosing a pair of stock transactions together worth up to $30,000.

Del. Michael San Nicolas, a Democrat from Guam

Del. Michael San Nicolas of Guam, at the US Capitol
Del. Michael San Nicolas, a Democrat from Guam.

San Nicolas did not properly disclose two trades — one in 2019 and another in 2020, reported NPR, citing Campaign Legal Center research.

Rep. Jim Banks, a Republican from Indiana

Jim Banks
Rep. Jim Banks, a Republican from Indiana.

Banks was a week late reporting a handful of stock transactions.

Rep. Rob Wittman, a Republican from Virginia

wittman
Rep. Rob Wittman, a Republican from Virginia.

Wittman was a few days late in disclosing four of his stock transactions that included pharmaceutical company Johnson & Johnson.

Rep. Roger Williams, a Republican from Texas

roger williams
Rep. Roger Williams, a Republican from Texas.

Williams did not properly report three stock transactions his wife made in 2019, reported NPR, citing Campaign Legal Center research.

Rep. Dan Meuser, a Republican from Pennsylvania

Rep. Dan Meuser, a Republican from Pennsylvania, in a suit and tie.
Rep. Dan Meuser, a Republican from Pennsylvania.

Meuser was about one year late disclosing hundreds of thousands of dollars worth of stock purchases his wife and children made during March 2020, LegiStorm reported.

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Billionaire trader Paul Tudor Jones sounds the inflation alarm, touts bitcoin over gold, and warns stocks could fall in a new interview. Here are the 8 best quotes.

Paul Tudor Jones
Paul Tudor Jones.

  • Paul Tudor Jones rang the inflation alarm in an interview this week.
  • The billionaire trader touted crypto as a better hedge against rising prices than gold.
  • Jones cautioned that stocks could fall if the Fed tightens its monetary policy.

Paul Tudor Jones urged the Federal Reserve to tackle rising prices, trumpeted cryptocurrency as a better inflation hedge than gold, and suggested the Chinese government’s recent crackdowns are hurting its economy in a CNBC interview this week.

The billionaire trader and founder of Tudor Investment Corporation also warned inflation is the greatest danger to investors right now, and cautioned stocks could fall if the Fed cools the economy.

Here are the 8 best quotes from the interview, lightly edited and condensed for clarity:

1. “The number one issue facing the man on the street, as well as investors, is inflation. It’s probably the single biggest threat to financial markets and society in general.”

2. “There is $3.5 trillion just sitting in liquid deposits that could go into stocks, or crypto, or real estate, or be consumed. That’s a huge amount of dry powder, which is why inflation’s not going to be transitory.”

3. “We have a Federal Reserve board that are inflation creators, not inflation fighters. That is a huge, huge deal.”

4. “We have maybe the most inappropriate monetary policy that we’ve seen in my lifetime. We are adding stimulus, we are still quantitative easing when we should be doing the exact opposite. We’re treating inflation with this cavalier attitude when we shouldn’t be. We’re ignoring it because we haven’t seen it in four decades.”

5. “The inflation genie is out of the bottle. If we don’t immediately shift to attack it, we run the risk of getting back into the ’70s, where it was the single most important issue for multiple presidents, multiple Fed chairmen. It was pernicious and persistent.”

6. “If we actually begin to address the most important and most pressing problem we have, the dual mandate, we’re going to get a P/E compression. The stock market’s not gonna go up as fast, and may go down.” – advising investors to be careful if the Fed moves to reduce inflation, as it would lower equity valuations.

7. “We’re moving into an increasingly digitized world. Clearly there’s a place for crypto, and it’s winning the race against gold. Crypto would be my preferred inflation hedge over gold at the moment.” – Jones noted that a single-digit percentage of his portfolio is in crypto, and his fund has a small trading position.

8. “The USA is the most dominant economic power in the world because we unleash our individual entrepreneurialism and creativity. You’re seeing China doing the exact opposite. That place is, economically, on a slow boat to the South Pole.”

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Warren Buffett’s Berkshire Hathaway has notched a $9 billion gain on American Express this year – and made $26 billion on the stock overall

warren buffett
Warren Buffett.

  • Warren Buffett’s Berkshire Hathaway has made about $9 billion on American Express this year.
  • The investor’s company has racked up a total unrealized gain of $26 billion on the stock.
  • Berkshire owns 19% of American Express and hasn’t touched its stake since 1998.

Warren Buffett’s Berkshire Hathaway has made almost $9 billion on American Express this year, lifting its total unrealized gain on the stock to about $26 billion.

The famed investor’s conglomerate owned 152 million shares of the credit-card company at the last count, a position worth $27 billion as of Tuesday’s close. Buffett and his team only spent $1.3 billion on the holding, so they’ve made about 20 times their money on paper, excluding dividends.

American Express stock closed at $177 on Tuesday, just shy of its record intraday high of $180 in July. It has surged by 50% this year as the US economy has rebounded from the pandemic, and the risk of a wave of loan defaults has faded. The stock’s ascent has increased the value of Berkshire’s stake by $8.6 billion this year.

Berkshire has been an American Express shareholder for more than 25 years, and hasn’t touched its current position since 1998. Yet its stake has ballooned from 11% to over 19% in that period, thanks to the lender’s share buybacks.

Buffett is a longtime fan of American Express, and has repeatedly underlined the value of its brand and customer relationships. He plowed 40% of his investment partnership’s capital into the business in the mid-1960s, after its stock price halved following the Salad Oil scandal. He also described it as a “one-of-a-kind” company in his 1980 letter to shareholders.

American Express is the third-largest holding in Berkshire’s US stock portfolio, after Apple and Bank of America. Those two stocks have climbed 15% and 55% each this year, boosting Berkshire’s unrealized gains on them to $100 billion and $33 billion respectively, based on the cost bases detailed in its latest annual report.

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The SEC says positive sentiment from Reddit day traders, not short covering, was the biggest driver of GameStop’s wild stock surge. Here are the 5 main takeaways from the report.

People wait to cross the street in front of GameStop at 6th Avenue on March 23, 2021 in New York. GameStop stocks falls more than 10% after the video game store showing strong earnings but lower than expected.
“It was the positive sentiment, not the buying-to-cover, that sustained the weeks-long price appreciation of GameStop stock,” the SEC said.

  • Reddit-fueled retail traders, not short-sellers, drove the meme stock frenzy in January, the SEC said in a report released Monday.
  • The 44-page report looked into what led to the January frenzy and the roles Robinhood and payment for order flow played in the saga.
  • But the SEC didn’t signal any coming rule changes, and instead laid out issues to consider rather than making recommendations.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The Securities and Exchange Commission published a long-awaited report on Reddit darling GameStop’s retail-trading frenzy on Monday, saying the phenomenon was caused by a rapid rise in investor accounts betting on the stock.

“Whether driven by a desire to squeeze short sellers and thus to profit from the resultant rise in price, or by belief in the fundamentals of GameStop, it was the positive sentiment, not the buying-to-cover, that sustained the weeks-long price appreciation of GameStop stock,” the regulator said.

In its 44-page report, the SEC debunked the theory that a “short squeeze” may have sent shares of GameStop and other meme stocks soaring. While many short sellers were forced to cover their short positions, the agency said, there is no evidence that this narrative was a major factor.

GameStop purchases by those covering their short positions were a “small fraction of overall buy volume,” and the share price continued to stay high after the direct effects of such covering would have waned, the SEC said.

Here are 5 takeaways from the report:

1. GameStop’s rally was driven by 880,000 new investors trading the stock in January

“By January 27, the number of unique accounts trading GME on a given day increased from less than 10,000 at the beginning of the month to nearly 900,000.”

2. Hedge funds remained largely unscathed

A handful of hedge funds including Gabe Plotkin’s Melvin Capital lost billions of dollars over their bearish bets against GameStop. But the SEC said these firms were not badly affected.

“Staff believes that hedge funds broadly were not significantly affected by investments in GME and other meme stocks. Staff did not observe that any advisers to private funds and registered funds experienced liquidity issues or difficulties with counterparties,” the regulator said.

3. Questions on “game-like” trading apps, payment for order flow incentives

The SEC said regulators should consider whether game-like features are encouraging investors to trade more.

“Consideration should be given to whether game-like features and celebratory animations that are likely intended to create positive feedback from trading lead investors to trade more than they would otherwise.”

“In addition, payment for order flow and the incentives it creates may cause broker-dealers to find novel ways to increase customer trading, including through the use of digital engagement practices,” the regulator said.

The report did note that much of the retail order flow in GameStop was purchased by wholesalers and executed off-exchange.

4. No assurance to retail investors that they won’t face trading restrictions in future

Robinhood and some other brokerages restricted trading in meme stocks during the epic rally, causing fury among users over missing out on gains. The investing app said the National Securities Clearing Corporation asked for a $3 billion deposit to cover trading risks on highly-volatile stocks.

“In their customer account agreements, some broker-dealers reserve the right to decline customer orders or cancel trades without prior notice. Such actions could be taken, for example, for legal, compliance, or risk management reasons,” the report said.

5. Few clues on change to market-structure rules

The agency didn’t provide specific policy recommendations. It did say that the events call for a review of the factors that made brokerages restrict trading, digital engagement practices, dark pools and market makers, and short-selling. Chair Gary Gensler has previously pointed to payment for order flow and “gamification” of trading as coming under the SEC’s scrutiny.

“January’s events gave us an opportunity to consider how we can further our efforts to make the equity markets as fair, orderly, and efficient as possible. Making markets work for everyday investors gets to the heart of the SEC’s mission,” Gensler said.

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What is ROI? This simple metric can offer greater insight into the profitability of the assets in your portfolio

Acronym ROI (Return on investment) on a futuristic Button with circuit board texture background
Return on investment, or ROI, is a widely used financial ratio that measures the profit or loss from an investment relative to the amount of money initially put into it.

  • Return on investment (ROI) is a metric used to assess the performance of a particular investment.
  • ROI is expressed as a percentage and can be calculated using a simple ROI or annualized ROI equation.
  • Looking at ROI doesn’t take into account risk tolerance or time and may not show all costs.
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Return on investment (ROI) is a financial ratio that’s used to measure the profitability of an investment relative to its costs and is expressed as a percentage. When you consider investing in anything, you often hear about getting a “return on investment” but may wonder what that really means and how it works. Here’s what to consider with ROI.

Why ROI matters

When you invest, whether in the stock market or in your business, your goal is to earn money and get a return on your investment. You put up cash anticipating that what you put in offers an even greater ROI.

“ROI is expressed as a percentage and is calculated by subtracting the cost of an investment from its current value and then dividing by the cost,” explains Nicole Tanenbaum, partner and chief investment strategist at Chequers Financial Management in San Francisco. “It is a simple and straightforward formula that can be easily used to calculate the rough profitability of nearly any investment, from stock investments to business projects to real estate transactions.”

As an investor, it’s important to assess ROI as a financial metric to see how your particular investments are doing. In basic terms, are you getting more out than you put in? Or are your investments costing you, in the form of negative returns?

ROI goes hand in hand with risk and reward, meaning that with greater risks comes the potential for even higher rewards.

According to Investor.gov, a website run by the Securities and Exchange Commission (SEC), for many decades stocks have had the highest average rate of return but also tend to come with the highest risk.

ROI matters because it’s an easy-to-use metric to evaluate an investment’s performance. Expressed as a percentage, the higher the number, the greater the return.

If an investment doesn’t have a solid ROI, it may be a good time to rebalance your portfolio and sell off some assets that aren’t doing well. However, it’s important to consider any transaction costs and affects on your overall returns in the long run.

How to calculate ROI

In order to calculate ROI, you can use the following formula:

Formula for return on investment

Let’s break down the pieces of the ROI formula.

  • Net investment gain refers to the net return you get with an investment, after considering costs already put in.
  • The cost of investment is the total amount of money you’ve put in a particular investment.

To calculate ROI, you take the net investment gain and divide it by the cost of investment and multiply it by 100 (this converts it to a percentage).

For example, let’s say you put an initial investment of $10,000 into a company’s stock. Then you decide to sell your shares three years later for $12,000.

Here’s the simple ROI formula in this case:

ROI = ($12,000 – $10,000) / $10,000

In other words, you take the final sale of $12,000 and subtract the initial investment of $10,000 which gets you a net investment gain of $2,000.

You then take that number and divide by the cost of investment.

ROI = $2,000/$10,000 = 0.2

The last part of the equation is to multiply the decimal by 100 to get the percentage.

0.2 X 100 = 20%.

This simple ROI formula is pretty standard when evaluating returns. But the drawback is that it doesn’t take into account the amount of time you held the investments or any opportunity cost.

Annualized ROI can offer more nuance in regards to how long you’ve held an investment and offer a more accurate ROI. Here’s the annualized ROI formula for our example:

Formula for annualized return on investment

A= (12,000/$10,000) (⅓) -1

A= (1.2) (⅓) -1

A= 1.063-1

A= 0.063

A= 6.3%

As you can see, the simple ROI vs annualized ROI numbers are quite different. Looking at the annualized ROI can offer greater insight into an investment’s performance if you’ve held it for a good chunk of time.

It’s also important to note the difference between a realized gain and unrealized gain.

  • A realized gain is the total you gain or profit from an investment that you actually sell. In that case, you’d want to use net income as part of the net investment gain and include any transaction costs, fees, etc.
  • An unrealized gain is a gain “on paper.” In other words, it reflects an increase in value but since it’s not actually sold, it’s unrealized. In this scenario, you’d take what your current investment is worth to calculate the net investment gain.

Pros and cons of ROI

While evaluating ROI is a good way to measure performance, there are some limitations, especially when it comes to the simple ROI formula. Here are pros and cons of ROI:

Pros Cons
  • It’s an easy-to-use calculation to evaluate performance of an investment
  • ROI can help you decide to stick with an investment or sell
  • A standardized way to compare investments
  • Simple ROI doesn’t include the time you held the investments
  • ROI doesn’t consider risk tolerance or your age, two crucial aspects when coming up with an investing strategy
  • May not consider the true cost, depending on the formula (such as looking at transaction costs, fees, taxes, etc.)

You want to evaluate the pros and cons and know where the ROI metric can fall short.

“ROI can be a useful tool in comparing performance across multiple investments. However, it is important to understand that ROI does not take into account the overall time frame of an investment, or how long it took to generate the overall profit from initial purchase to eventual sale,” explains Tanenbaum.

Time is a key consideration when evaluating the true ROI of a particular investment.

“Time is a factor which should always be considered when evaluating and comparing relative performance across investments,” says Tanenbaum. “Even if an investment earns a higher profit based on its ROI, the longer the time to realization, the less efficient the investment. Therefore, ROI should be used in tandem with other performance metrics such as the rate of return, which takes time and efficiency into consideration.”

Average ROI in the stock market

The reason investing is better than keeping money in a savings account is that the possibility for a higher return is much greater. Savings interest rates have been abysmally low, but the stock market historically has offered good returns over time.

According to the SEC, the stock market has provided annual returns of about 10%, or 6% to 7% when adjusting for the impact of inflation.

Some returns are much greater depending on the type of investment and the timeframe.

“On average, the S&P 500 Stock Index has generated an ROI of about 10% per year over time, but when looking at ROI across industries, they can vary greatly, with higher growth segments generating average an ROI that’s well above 10%, and more defensive industries generating single digits or in some cases, negative ROI,” notes Tanenbaum.

Aside from evaluating ROI, remember to account for “realized” vs. “unrealized” gains as well. This is also important for losses, too. So if the stock market is tanking, you don’t necessarily need to take any action because the loss is “unrealized” until you sell. If you sell at a loss, that’s final. But if you stay in the game, you could recover in the long-term.

The financial takeaway

Return on investment is a commonly used metric to evaluate investments and business decisions. Ideally, your ROI will be positive and growing over time, however it’s possible to get negative returns as well.

ROI can help you decide where to invest and whether you should sell or hold onto assets you already own.While the ROI percentage is useful, it’s important to understand its limitations when evaluating overall risk and time horizon.

Additionally, it’s important to understand the nuances between simple ROI vs. annualized ROI. You also want to be clear on total costs such as transaction fees, taxes, and more, so you’re getting a clearer picture on your actual return on investment.

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