Two options expired in February.

February option expiration was last week and we had two options expire worthless in our Enhanced Dividend Strategy.

The trade set-ups are below but first a brief primer on our Enhanced Dividend strategy and our use of covered calls.

The Enhanced Dividend Strategy is primarily focused on finding high-quality companies that generate a high return on capital but are also under-valued and pay a meaningful dividend, 3-5%. We’re also looking for companies with good payout ratios and that have the ability to grow their dividend.

The enhanced part is strategically using covered calls to generate extra return. This is not a buy-write strategy. We will sell a covered call when we see an opportunity. It could be during a period of high volatility when option premiums are high and/or when a position has become over-extended in the short-run. We will usually only have a few options in the portfolio at a time and it is very possible that certain positions will not have call options ever written against them.

Mondelez International

Click Image to enlarge. Chart courtesy of StockCharts.com

The red circle indicates when we sold the call, Jan. 31, and the change in short-term momentum that lead us to sell the call against Mondelez International (MDLZ).

We had another short-term price peak around $28 per share but the RSI was lower than the previous spike to $28. Plus, its MACD signal lines had a bearish crossover and the Full Stochastic previously showed MDLZ as overbought and was declining.

We saw a chance to sell a covered call at a short-term peak of momentum where we could reasonably expect the call option would expire worthless and it did.

Lockheed Martin

Click image to enlarge. Chart courtesy of StockCharts.com

The green circle indicates where we first sold a call against our Lockheed Martin (LMT) position. This was less about a seeing peak in momentum and more about using covered calls as part of our sell discipline.

We started a position in Lockheed Martin around $79 per share and we have a fair value around $97 per share. When we sold the first covered call we saw some short-term resistance around $94-95 per share. We sold a near-the-money call to collect some premium and if the call option went in-the-money we would be OK with our Lockheed Martin position being called away from us.

But…

The market and Lockheed Martin continued to rally and the option was now in-the-money. To maintain our equity exposure we rolled the call option out from the original January expiration to a February expiration. The red circle indicates when we did this trade.

We netted more option premium and gained some more time for either the stock to trade below the strike price again or to be certain that we were OK with our position in Lockheed Martin (LMT) being called away from us.

As you can see in the price chart above, as soon as we rolled out the option Lockheed’s share price sold off. The good news is we collected a lot more premium and the call option expired worthless. The bad news is the premium we collected did not provide enough protection from the sell-off.

In hindsight, if we would’ve stuck with our original use of the covered call as part of our sell discipline we would’ve avoided the sell-off in Lockheed Martin. This trade definitely qualifies as an unforced error.

For more on American Money Management and our Enhanced Dividend Strategy please visit our official website www.americanmoneymanagement.com or call us at 1-888-999-1395.

Below is the latest quarterly letter to clients of American Money Management, LLC. If you are not a client and would like to receive our quarterly updates please join our email list.

As we enter 2013, we thought it would be a good idea to review our core investing principles. These are truly big picture items that every investor should remember when investing in the capital markets, regardless of time horizon or risk tolerance. Most investors have a longer‐term ʺend gameʺ for their investment, whether it is to fund a more comfortable retirement, a charitable cause, a college education, a big ticket purchase, leaving money to heirs, etc. Yet, too often, we find the investment decision making process muddied by short‐term news and issues completely out of our control. We believe the following core investing principles ring true in any market or economic climate and should help all investors successfully navigate the financial markets and improve the odds of achieving their long‐term goals.

1. The first and most important decision is asset allocation: how much should be invested in stocks, bonds, realestate, commodities and other assets? This is the critical investing question and is often overlooked or given short attention. The development of our clients’ investment strategies begins with this question and should be inclusive of their total financial picture (not just the assets we have under advisement). Investors with longer time horizons (10+ years) should consider a greater weighting towards stocks vs. bonds and vice versa. Additionally, the introduction of non traditional assets like commodities, precious metals and absolute return strategies should provide more diversification and smoother (i.e. less volatile) returns over time.

2. Volatility is not risk. Volatility (measured by the S&P Volatility Index or VIX) is commonly used as a barometer of risk since spikes in volatility usually occur around perceived periods of risk and uncertainty in the market (9/11, Debt Ceiling Debate of 2011, etc). We believe investors should define true risk as the likelihood of a permanent loss of capital. There are many ways to permanently lose capital: buy shares in a stock that goes bankrupt, play roulette in Vegas, significantly overpay for any asset, etc; however, we do not view market volatility as one of them. In fact, as item A below shows, periods of extreme market volatility (VIX > 40) tend to coincide with excellent buying opportunities.

Click image to enlarge.

3. The price you pay determines your return. The lower the price paid on an investment, the higher the return. As simple as this sounds, it becomes more difficult to do in practice, as investments are generally ʺlow pricedʺ when there is significant uncertainty and fear in the market. Ultimately, we believe the best way for an investor to reduce real risk is to invest at fair or value prices (i.e. donʹt overpay for anything). Our view is that if an investor purchases a quality investment (i.e. low probability of bankruptcy, default, etc) at the right price then they are not only managing risk (by not overpaying) but also improving their odds of higher returns.

4. Time is your ally, but returns are not linear. The most basic definition of investing is to forgo consumption today for the opportunity to consume/have more in the future. Consider that since 1950 the average annual return for stocks was 10.8%, while a more conservative allocation of 50% stocks and 50% bonds would have annualized a very respectable 8.9%*. Nevertheless, over the same time frame, both stocks and bonds endured several multi‐year periods of negative annualized rates of return, most recently the ʺlost decadeʺ from 1999‐2009 when the S&P 500 annualized at negative .95% per year. So while investors (even those with a more conservative portfolio allocation) should be able to achieve respectable rates of return over time, these returns are not linear.

5. You canʹt predict the future. Another seemingly simple rule, yet all too often investors focus too much on trying to predict short‐term economic and market outcomes (most recently which way the fiscal cliff will go) and do not focus enough on long‐term fundamentals and valuations. Uncertainty is a fact of life in the financial markets. Waiting for more ʺclarityʺ almost always means paying a higher price (possibly violating principal #3).

The key takeaway from our core principals is that investing is a long‐term game: do your best to develop an asset allocation strategy appropriate to your risk tolerance and time horizon and adjust as circumstances change, focus on paying a fair or value price for investments, manage real risk but don’t fret volatility, and stop waiting for the end of uncertainty. As your investment advisor and money manager, we will continue to follow these principals to help you meet your goals and objectives in 2013 and beyond.

Where We Are Investing Capital Now*

The current investment landscape is one marked by historically low interest rates, massive support from global central banks via various forms of money printing, and a general mistrust among the investing public. After two major market declines in the same decade (‐49% from 2000‐02 and ‐57% from 2007‐09) many investors have chosen the path to ʺsafetyʺ provided by investment grade bonds. With the yield on 10 year U.S. treasuries (a proxy for the highest quality bonds) at a mere 1.7%, we would argue that overweighting these securities violates several of the investing principals above. Most notably principal #3 as the price paid for treasuries today is likely locking in a negative real (after inflation) rate of return. Our focus across all client portfolios, even those with a mandate calling for mostly fixed income (i.e. bonds), is to position for an inevitable rise in interest rates and inflation. Below, we provide a brief analysis on where we are investing capital now across the three primary asset classes.

Diversifying Assets: We have changed very little in our diversifying asset strategy over the last twelve months. Our primary focus with these assets has been to provide an inflation hedge to client portfolios. Research suggests that periods of low but rising inflation (something we feel is indicative of the current environment) should benefit a broad basket of commodities. To this end, we have invested in broad based commodity exchange traded funds (DJP/DBC) that we feel offer a good inflation hedge in the event of rising inflation down the road. Additionally, we have continued to allocate capital to both Gold and Silver bullion via a closed end fund that invests directly in these precious metals.

Bonds: The biggest challenge facing conservative savers and investors today is getting a fair return on their money while ensuring minimal risk to underlying principal. Given our view of 10 year treasury returns discussed above, we do not view this as a fair return. Still, conservative investors, especially those with a shorter time horizon, cannot necessarily afford the volatility that comes with investing in higher return issues. Volatility may not be true risk, but if you have a short time horizon you may not be able to wait for volatility to work in your favor. For this reason, we have focused the core of a conservative bond portfolio in higher quality, shorter maturity (i.e. lower interest rate risk) bonds, blended with smaller positions in more aggressive floating rate notes, unconstrained bond strategies and emerging market / international bonds in order to boost overall portfolio yield. While the yields on shorter‐term bonds are relatively low, the nature of the short maturity, typically < 5 years, should allow us to reinvest the proceeds at higher yields in the future.

For less conservative growth and balanced accounts, we continue to invest in floating rate notes, unconstrained strategies and international bonds but have maintained minimal exposure to low yielding investment grade bonds. Floating rate notes are tied to an adjustable rate like LIBOR; as rates increase so shall the yield on these notes. Unconstrained bond strategies focus on generating returns in any environment so they can adjust their sensitivity to rising interest rates and inflation, invest outside the US dollar with a portion of their portfolio, and short (i.e. bet against) various sectors of the bond market.

Stocks: We remain optimistic about stock returns over the long‐run. Over the short‐run the uncertainty cloud related to the ʺfiscal cliffʺ appears to have cleared, and global stock markets have responded with a nice bounce to start the year. Still, it is only a matter of time for a new uncertainty cloud to roll in (forthcoming debate over the debt ceiling?) that could create a more favorable entry point for clients with investable cash. In the meantime, long‐term valuations remain reasonable relative to history (see table below) and most other financial assets; so, we intend to hold current exposure to stocks across portfolio strategies.

Click image to enlarge.

We continue to tilt domestic stock exposure towards large cap dividend paying holdings and smaller growth oriented funds, where applicable. Internationally, we have focused the majority of our stock exposure in Emerging and Frontier markets which we believe have a better risk‐reward profile over the long‐run. Additionally, while these markets together represent approximately 50% of Global GDP, they carry only a 13% weight in the MSCI All Country World stock market index. We believe most investors have underweighted these markets relative to their weight of Global GDP and that demand for these markets will likely increase over time. Finally, we have continued to hold a relatively small position in Europe via exposure to the iShares Germany ETF (EWG). While we view Germany as the strongest country in the EU, we may add broader exposure to Europe in the months to come if a buying opportunity presents itself.

* Individual accounts will vary based on the client’s stated objectives, risk tolerance, and time frame. We manage several different portfolio strategies, so not every client has exposure to the securities listed above. In addition to growth and/or income oriented asset allocation strategies, we also manage more concentrated equity portfolios that generally carry a higher degree of risk and volatility. Please contact us if you want to discuss your portfolio strategy or any of your investments in greater detail.

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American Money Management Client Letter Q1 2013 by

An excerpt from The Fallen Angels Report.

Meteor in Night Sky

The old Chinese adage states that “in crisis there exits opportunity.” Now, a growing number of entrepreneurs including Google founders Larry Page and Eric Schmidt are developing methods for diverting asteroids for mining purposes, and the happy side-effect is that altering a meteor’s trajectory makes it less likely to hit the earth.

A typical meteor, about the size of a school bus, has more platinum on it than has been mined in the history of humanity. It also contains enough water, hydrogen, and oxygen to fuel 135 Space Shuttle missions. Clearly there is economic opportunity in this new frontier. The company they’ve help fund, Planetary Resources, Inc., is planning their first mining launch in 20 months!

Meanwhile, back on earth, here are The 12 Best Opportunities for Bargain Hunters, taken from our book “Wisdom on Value Investing” published by John Wiley & Sons.

1. Fallen Angels

When high-growth companies become overpriced, like a roller coaster at the top of the track, they peak and begin the ride downhill, picking up speed and momentum as they go. Momentum junkies get out and selling accelerates. When the selloff is over, these companies often are priced at dramatic discounts to what they’re actually worth.

2. Out-of-Favor Blue Chip Stocks

These are the world’s best-known franchises and brand names. Literally, every single blue chip stock has encountered temporary problems and fallen out of favor from time to time. Watch for these big names when they encounter temporary setbacks.

3. Spinoffs

When a company decides to divest itself of a division in the hopes of shoring up its stock for existing shareholders, it spins off the entity, which then trades independently on the stock exchange. Because there are no analysts following the newly spun-off company, it trades under the radar of Wall Street and the general public, and even tends to drift downwards for a time. Management of the new public entity is highly incentivized with options or bonus packages to bring the share price up and demonstrate the new company’s financial viability. Spinoffs present a great opportunity.

4. Overlooked Smaller Companies

Thousands of publicly traded small caps are cheap because nobody is paying much attention to them. For ideas on which companies would make good investments, pay attention to the products and services that you personally enjoy, and that seem to be catching on with consumers everywhere. Also, check out the local listings of public companies in your area for small companies making rapid strides in your home town.

5. Capital Allocators

Capital allocators are public companies run by great money managers and gifted deal makers. The most famous is Warren Buffet’s Berkshire Hathaway (BRKA). These proven allocators of capital put their company’s money to work in the most profitable ventures they can sniff out. Making great deals is in their DNA. They are the world’s consummate bargain hunters, putting even the most dedicated holiday shoppers on Black Friday to shame. Examples of other successful capital allocators are Loews Corp. (L), run by the Tisch family; Leucadia National (LUK), operated by Ian Cumming and Joseph Steinberg; Allegheny (Y); White Mountain Insurance Group (WTM); Pico Holdings Inc. (PICO), and Eddie Lampert’s Sears Holding (SHLD).

The best capital allocators have a knack for successfully putting their money to work, and by investing in them, you get to go along for the ride. They put their own money and their shareholder’s capital where it is treated best. Like great chefs who not only eat their own cooking, but they invite you, the investor, to come over for dinner.

6. Cyclical Companies at the Bottom of a Cycle.

All companies are subject to the vagaries of business and economic cycles. In a recession, retailers generally get hurt because people spend less. Every recession in history has been followed by recovery, and every boom followed by recession, so investors who are aware of these cycles can profit handsomely. All it takes is patience, and a willingness to invest some time into researching which companies have the best prospects for recovery once the cycle changes. The recession cycle is typically four to seven years, so use that information as a baseline when evaluating potential investments. For short-term investments, think about companies with seasonal business, such as tax preparation firms.

7. Growth at a Reasonable Price (GARP)

Companies that have been priced correctly will suddenly, for whatever reason, suffer price declines. The herd flees from the company, sometimes simply due to an overreaction to a piece of news. I often see great opportunities in predictable growth companies that occasionally go on sale. They may not appear to be that cheap, just under-valued. But if book value is compounding at a 15 percent annual rate, and there are prospects of continued growth as far as the eye can see, it’s like the Eveready bunny. They keep going. The story isn’t exciting or sexy, but it can be profitable. A great GARP stock grows steadily, is predictable, and demonstrates stability. When GARP goes on sale, there are bargains for the discriminating investor.

8. Distressed Companies

Distressed companies are often strong businesses with good fundamentals, which find themselves in an industry-wide funk. One example is steel companies in the 1990′s, when the U.S. steel industry was written off as antiquated. And then, suddenly, steel manufacturers become one of Wall Street’s hottest sectors, in 2002-03. The reason for the comeback was because the Third World was serious about building skyscrapers, roads, bridges, and infrastructure improvements that would require a lot of steel for many years. Another example was the airline industry after the Sept. 11th terrorist attacks. During the first decade of the 2000′s, auto makers and the entire banking industry cratered. Many of these companies are broken, but most will survive and thrive again.

9. Post-bankruptcies

After companies emerge from bankruptcy, they make deals with creditors for new, more favorable terms on debt, convert debt to equity, or pay off creditors at 50 cents on the dollar, or less. They get a fresh start. Many of America’s biggest names have gone into bankruptcy, and come out stronger than ever before. The key here is to find them after they’ve emerged, free of the old ties that bind.

10. The Parts are worth more than the Whole

Some conglomerates own dozens of companies. It’s hard for Wall Street and investors to get a real fix on what all the different business entities are worth, so the companies sell at a discount to the sum of the parts. In 2000, Disney, best known for theme parks, movies and its famous animated characters such as Mickey Mouse, was a massive conglomerate of other valuable businesses. They also owned Touchstone Pictures, the ABC television and radio network, The Mighty Ducks NHL hockey team, and the sports network ESPN. Disney had a total market capitalization of $38 billion and was estimated that the whole conglomerate sells at a 50 percent discount to the sum of its parts, the actual value of its real estate and business holdings, which are worth $70-$100 billion.

When Michael Eisner was Disney’s CEO and the stock suffered, he talked publicly about how shareholders could benefit from divestiture of these businesses, but the Board of Directors didn’t agree. They wanted to hold on to those assets. When that disparity occurs, the company can remain undervalued. Eventually, the market should recognize this and the company’s true value will eventually be reflected in its share price.

11. Activism in the Marketplace

When hedge fund managers and venture capitalists such as Carl Icahn buy large chunks of public companies, they do it with the aim of changing the way the company does business to make it more profitable for them…which also means for shareholders. They try to force the company to buy back shares to lift the price of the stock. They are activists. They try to force management to do whatever may be required to enhance the value of the stock they purchased, and you get to ride along. When high profile activists purchase shares, it becomes public knowledge, because of stock disclosure rules. Follow the financial news and look for such opportunities.

12. Oddball Companies

Oddballs have a new, unconventional way of doing business. Because they are unconventional, they’re often overlooked. At one time, selling computers directly to the public by mail was considered unconventional; companies such as Dell and Gateway were oddballs. The category includes airlines that are run differently than the large, mainstream carriers. Southwest broke the airline mold when it began offering super-cheap fares to popular destinations, and the only freebie for customers was the peanuts. These “little guys” may operate on the margins, renting terminal space from established airlines. Or, it may be selling fish tacos, when beef and chicken dominate the market. Selling a simple cup of coffee in a different, more appealing manner made a huge difference for Starbucks investors when the company was relatively new and novel. These things catch on, and small companies that are not well understood because they are different from the mainstream can present great investing opportunities.

This Week’s Fallen Angel Selection

To see the most recent Fallen Angel focus stock sign-up for the FREE Fallen Angels Report by clicking here.

Cullen Roche of Pragmatic Capitalism is out with an update to Warren Buffett’s favorite valuation metric and it’s recent rise above the 100% level.

For the first time since the recovery began, Warren Buffett’s favorite valuation metric has breached the 100% level. That, of course, is the Wilshire 5,000 total market cap index relative to GNP. See the chart below for historical reference.

I only point this out because it’s a rather unusual occurrence and the recent move has been fairly sizable. It happened during the stock market bubble of the late 90′s, but then occurred again just briefly during the 2006-2007 period when the valuation broke the 100% range in Q3 2006 and stayed above that range for about a year. We all know what followed the 2007 peak in stock prices.

Image courtesy of Pragmatic Capitalism

Just like when I look at the value of Tobin’s Q, another broad market valuation tool, I don’t like to use Equity Value as a Percentage of GNP as a tool to predict market tops nor as a tool to determine if the market is over or under-valued.

I use broad market valuation tools as a way to make reasonable estimations about future real returns. Would buying the stock market now, solely based on valuation, produce average, below-average, or above-average real returns? To answer these questions I overlay Robert Shiller’s S&P 500 real return data with Warren Buffett’s favorite valuation metric.

10 Year Annualized Total Real Returns

Click image to enlarge.

5 Year Annualized Total Real Returns

Click image to enlarge.

If history provides any clues then we can make a reasonable estimate that the next 5-10 years have a high probability of low single digit total real returns based on current valuation levels.

Again, this is only based on this valuation metric, a multitude of other factors are involved in moving the equity markets, especially over the short-run.

From the “a picture is worth a thousand words” department. I want to highlight the chart below from Dylan Grice, formerly of Societe Generale and now of Edelweiss Holdings, on total equity returns and the large role dividends have played in driving those returns since 1970.

The image was found through @BarbarianCap’s twitter feed.

Dividends and Equity Returns

Bruce Berkowitz appeared on Bloomberg to discuss his recent decision to close the Fairholme Fund (FAIRX) to new investors and the fund’s large holdings in financial companies, AIG and Bank of America (BAC).

The closure of the Fairholme Fund stems in part from the focused nature of the fund. If new money were to pour into the Fairholme Fund current shareholders would be diluted and Bruce might not be able to buy more of his top holdings.

How will Bruce get around these issues? Is this what the Fairholme Partnership is all about? “Stay tuned”…

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h/t The Reformed Broker

AIG and Bank of America (BAC) remain the largest holdings in the Fairholme Fund because they are the cheapest stocks Bruce can find within his circle of competence. Bruce also posits, who takes over the mortage market and mortgage insurance market as the GSEs, Fannie Mae and Freddie Mac, wind down?

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Apple Undervalued?

Aswath Damodaran values Apple at $609 per share and at Apple’s current price of $457 this implies about 32% potential upside. However, as Mr. Damodaran points out the biggest problem a “value” or “contrarian” investor faces is not finding a company’s fair value but that gut check moment of putting your money behind your work as the market pushes against you.

If, like me, you are in this last group, you are being tested mightily now, torn between a belief that the stock is under valued and a market that does not seem to care. It is a good test of whether you are a value investor and what you do will depend upon two assessments:

• The Gut Check: Are you really a value investor or do you just like talking like one? It is easy being a contrarian value investor, in the abstract, but much more difficult to be one in practice, since you are taking a position at odds with the rest of the market. Not all investors have the stomach for that, and if you don’t, it is a good time to find out.
• The Confidence Check: How confident are you in your assessment of value? That confidence will stem from your comfort with the valuation metric/model that you used and the inputs that you used in that model, as well as from your prior experience in investing based on your valuations. Again, you cannot talk yourself into being confident, and if you are not, it is best not to take a stand.

If you are willing to put your money behind your work while the market goes against you then follow the link below for some advice from Aswath Damodaran to help get you through the short-term volatility.

Are you a value investor? Take the Apple test (Musings on Markets)

An excerpt from the latest Fallen Angels Report.

Jean-Baptiste Alphonse Karr

A 21st Century version of this in the financial world is widely known as “The Great Rotation,” which we take another look at in this week’s Fallen Angels Report. With some 30 years in this business, more often than not, I’m beginning to feel like it’s “deja vu all over again,” to quote Yogi Berra’s immortal words.

The Great Rotation

“As people learn the old tricks, new tricks have to be invented” – Garet Garrett

Three years ago, we told you about a major “sea change” underway, driven by 78 million aging baby boomers looking to replace paychecks with a steady and reliable income stream in retirement. Our research observed individual and institutional investors slowly and steadily moving out of growth-only securities, and into dividend paying stocks. This theme continues to gather momentum. Now we want you to know about “The Great Rotation.”

Every 20 years or so, the world’s major pension and insurance funds slowly and continually increase their allocations in whatever asset classes have worked for them in the past. For over 20 years now, bonds have provided steady returns. And along the way, the major glacial pensions have continued to acquire them, even though bonds have become the most expensive legitimate securities in a generation. According to Reuters London correspondent Mike Dolan, UK pension funds’ holdings of bonds have exceeded that of equities for the first time in almost 40 years. “The precise numbers may differ, but this broad trend has played out similarly across the globe.”

Nothing New ~ We’ve Been Here Before

In his article “The Great Rotation: A flight to equities in 2013,” Mike Dolan points out that massive flows out of bonds and into stocks have occurred many times in prior 20 year rotational cycles. For example, in the early 1990′s, British pension funds had almost doubled their allocation to stocks, over the prior 20 years, to a “staggering 80 percent of portfolios.” As a consequence, stock prices continued to trend higher until they reached excessive valuations. In hind sight, stocks were ridiculously priced by the time pensions stopped buying them in 1999. So, here we go again. One of the biggest investment shifts in years is underway. Don’t miss this one. “The Great Rotation ~ a tilting of pension and insurance funds’ strategic, long-term asset preference back toward equity from extreme positioning in bonds ~ has been one of the themes of the new year so far.”

Fallen Angels Focus Stock

To see the most recent Fallen Angel focus stock sign-up for the FREE Fallen Angels Report by clicking here.

David Tepper, always an entertaining guest for TV, appeared on Bloomberg yesterday to discuss his outlook for the equity markets. He is very bullish in case you missed his previous CNBC appearance. The crux of his argument is the equity market is trading at 13x this year’s earnings and around 11x next year earnings. Couple this with the Federal Reserve’s monetary intervention and the equity market could have a very strong year.

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Warren Buffett & his yukelele.

1. “Rule No. 1: Never lose money. Rule No.2: Never forget rule No. 1.”

3. “An investor should ordinarily hold a small piece of an outstanding business with the same tenacity that an owner would exhibit if he owned all of that business.”

8. “Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market”

38. “Price is what you pay. Value is what you get.”

43. “Turn-arounds” seldom turn.”

47. “An investor needs to do very few things right as long as he or she avoids big mistakes.”

To read the rest of Buffett’s timeless quotes follow the link below to the ROIC Blog.

A few timeless Buffett quotes (ROIC Blog)

For more memorable Buffett quotes check out the book The Tao of Warren Buffett: Warren Buffett’s Words of Wisdom by Mary Buffett and David Clark.