Warren Buffett: investors should stick to low-priced tracker funds

Warren Buffett gave his annual shout-out to America on Saturday, extolling capitalism, immigration, the legal system and smart investing as he detailed the $17.6 billion his company earned past year.

Furthermore, shares are already up about 13% for February, so Berkshire’s Apple position continues to perform well, as shares now trade at all-time highs.

This was addressed in Mr Buffett’s letter, where he writes: “For decades, Jack has urged investors to invest in ultra-low-cost index funds”.

Buffett’s letter came as Berkshire Hathaway reported an increase in its quarterly profit though a drop in its operating income, Reuters noted. With one year to go, the index has returned 85% and the basket of hedge funds about 22%.

Berkshire, which has stakes in Kraft Heinz, Coca-Cola and a number of other companies, and recently invested in Apple, has benefited from the Wall Street rally after Trump’s election.

In a possible sign that succession planning is on Mr Buffett’s mind, he noted that senior investment managers Todd Combs and Ted Weschler each managed more than $US10 billion of Berkshire’s investments. Buffett is a longtime Democrat who supported Hillary Clinton, but he has said he thinks the economy will be OK under President Donald Trump.

Previous year was no different; shares in Berkshire Hathaway – which owns household-name United States businesses including insurer Geico and railroad company BNSF, as well as big chunks of Apple, Coca-Cola, Kraft Heinz, Delta Airlines among others – finished 2016 up 23.4 percent, nearly double the 12 percent gain (including dividends) of the broad S&P 500 index.

Berkshire Hathaway never commits to holding a security, says Mr. Buffett.

Buffett spoke highly of the iPhone, in particular, saying, “the continuity of the product is huge and the degree to which their lives center around it is huge. $171 + $129 = $300”, Tilson wrote in an email distributed to other investors.

“If a statue is ever erected to honour the person who has done the most for American investors, the hands down choice should be Jack Bogle”, the Berkshire Hathaway founder told investors in Nebraska on Saturday.

The billionaire investor praised the USA market system for its ability to allow Americans to continue building “mind-boggling amounts” of wealth. Berkshire had reported $84.8 billion there as of September 30.

He revealed he’s ploughed $20 billion into the market over the last four months.

Companies that regularly leave out what they call “restructuring costs” and “stock-based compensation” from their expenses, boosting profits by deviating from standard accounting practices made him nervous, he said.