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He has challenged Mark Zuckerberg to a cage fight, lashed out at Mark Cuban, and mocked Bill Gates’ appearance. So of course Elon Musk had something to say about one of the most prominent billionaires in the world: Warren Buffett.
“To be totally frank, I’m not his biggest fan,” Musk told Joe Rogan on an episode of “The Joe Rogan Experience” podcast. “He does a lot of capital allocation. He reads a lot of annual reports of companies and all the accounting — and it’s pretty boring, really.”
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Musk also described Buffett’s principle about companies with sustainable competitive advantages as “lame” during a Tesla earnings call in 2018.
“First of all, I think moats are lame,” he said. “They’re nice in a sort of quaint, vestigial way. But if your only defense against invading armies is a moat, you will not last long. What matters is the pace of innovation. That is the fundamental determinant of competitiveness.”
When asked about it, Buffett responded, “Certainly you should be working on improving your own moat and defending your own moat all the time. And Elon may turn things upside down in some areas. I don’t think he’d want to take us on.”
To be fair, building rockets, implanting chips and manufacturing electric cars is much sexier than poring over earnings reports all day. However, there is some evidence to suggest that ordinary investors would do well following Buffett’s “boring” approach.
Good investing is boring
Buffett probably wouldn’t heed Musk’s comments since analyzing company fundamentals and looking at the less flashy and exciting industries is at the heart of his investing style.
He isn’t the only one to take this approach. George Soros, another famous investor, once said, “If investing is entertaining, you’re probably not making any money. Good investing is boring.” You can take a page from their book by making your own investments safe and boring. Frec Direct Indexing automates the process of investing in ETFs, so users don’t need to deal with the complexity of buying, selling and holding a portfolio of hundreds of stocks manually.
Frec does the legwork for you, using an algorithm to take advantage of market volatility. The fund swaps out a losing stock for 30 days, then buys it back and books that loss as a tax deduction. This ensures that you keep tracking the performance of the S&P 500 while taking advantage of market volatility. Best of all, Frec’s direct investing solution comes with a 0.10% annual fee, comparable to the 0.945% on the SPDR S&P 500 ETF Trust.
Frec allows you to put your investment strategy on autopilot, so you can sit back while the fund unlocks tax savings so you can keep more of your own money.
Value investing, which Buffett advocates, is focused on finding beaten-down and overlooked companies. Buffett’s Berkshire Hathaway portfolio, for instance, includes DaVita HealthCare Partners (DVA), a network of kidney dialysis centers, and Louisiana-Pacific (LPX), a manufacturer of engineered wood panels.
Buffett’s game plan is to find strong companies that generate steady cash flows and deliver predictable performances rather than chase innovation or high-stakes ventures. Reliable insights on predictably performant stocks are not always easy to come by — but the Motley Fool Stock Advisor can be a game-changer for those who are looking for expert advice on safe investments.
Over half a million investors use this service, getting the inside scoop on expert stock picks in every sector. For those looking to improve their financial know-how and pinpoint precise market opportunities, the Motley Fool Stock Advisor is worth consideration.
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Boring is key to building wealth
Your chances of earning long-term investing success with stock picking are slim. Even professional hedge fund managers have underperformed the S&P 500 and Nasdaq in the first three months of 2024, according to PivotalPath’s Equity Sector Index.
Even Berkshire Hathaway stock is barely able to outperform the S&P 500 index. Its shares are up 12.7% in 2024, while the benchmark is up 10.5%.
In other words, a retail investor who simply invested in a low-cost index fund that tracks the S&P 500 would have outperformed the hedge fund index.
This illustrates the magic of boring investing. You don’t need to reinvent the wheel or uncover the next big tech breakthrough to generate wealth. Simple, boring investing and compounding are a potent combination that all retail investors should take advantage of.
One of the best ways ordinary investors can harness the power of compound interest is by starting as early as possible. Getting a foothold with your investing strategy can be as simple as downloading Acorns, an automated savings and investment app that makes your spare change go to work for you.
When you make a purchase on your credit or debit card, Acorns automatically rounds up the price to the nearest dollar and places the excess into a smart investment portfolio. This way, even the most essential spending translates to money saved for the future.
Right now, when you sign up for Acorns, you can get a $20 bonus investment to help jumpstart your wealth building.
You can also consider the safety of investing in gold and other precious metals in physical forms — like coins — instead of stocks, mutual funds and other traditional investments.
For example, you could open a Gold IRA — a type of individual retirement account that allows you to invest in precious metals, with the opportunity to benefit from the tax advantages of an IRA, as well as diversify your portfolio and stabilize your finances in the face of persistent inflation.
Unlike the U.S. dollar, which has lost 87% of its purchasing power since 1971, gold’s purchasing power remains stable over time. With help from American Hartford Gold — an industry leader in precious metals — you can open a gold IRA and help preserve your retirement with an inflation-resistant asset.
American Hartford Gold is an industry leader in precious metals, with an A+ rating from the Better Business Bureau.
Not everyone can build wealth like Musk. Even launching a successful business on a small scale is incredibly difficult. One in four small businesses fail within the first year, according to the U.S. Bureau of Labor Statistics (BLS). Operating a business is significantly more difficult when economic conditions are not favorable. Amid high interest rates and a pullback in consumer spending, total bankruptcies — including consumer, small business and big corporates — have been climbing steadily for 20 months up to April, according to Epiq data cited by Bloomberg.
So your chances of running a successful business, let alone a trillion-dollar tech giant, are slim. Your chances of steady gains with a certificate of deposit (CD), however, are much better.
A CD is a low-risk savings account that offers a higher interest rate than traditional accounts. Your money is “locked” for a fixed term (though it’s possible to withdraw it for a fee), and many banks are now offering 5% or higher APYs on deposits as low as $1000.
You can explore a solid way to optimize your savings through CD Valet.
With CD Valet – an online CD marketplace – users can shop and compare top certificate of deposit rates from various banks and credit unions nationwide. Their extensive database shows the most competitive rates without bias, with daily rate updates and earnings calculators which give consumers an array of free tools to help them find the right CD to meet their savings goals.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
