MONEY Warren Buffett

The Surprising Lessons Warren Buffett Learned from a Candy Company

Berkshire Hathaway's Warren Buffett at the See's Candies booth Saturday, May 3, 2014, at the Berkshire Hathaway Annual Shareholder's Meeting, in Omaha, Neb.
Berkshire Hathaway's Warren Buffett at the See's Candies booth Saturday, May 3, 2014, at the Berkshire Hathaway Annual Shareholder's Meeting, in Omaha, Neb. Dave Weaver—Invision for See's

Instead of seeking great bargains, Buffett learned to find great businesses.

Warren Buffett’s success in business is well chronicled and nearly unparalleled. But you may not know he attributes a healthy dose of his success to a candy shop in California you may never have heard of.

The history

In 1972 See’s Candies was purchased for $25 million by Buffett and longtime Berkshire Hathaway lieutenant Charlie Munger through Blue Chip Stamps, a business controlled by Buffett and Munger.

Although Blue Chip Stamps has faded into obscurity as Americans stopped buying stamps, Buffett has gone on to say that See’s Candies is actually his “dream business.”

So what has made See’s so successful? First, although it hasn’t been a world-beater in growing its sales, it has been incredibly profitable and a cash-generating machine. From 1972-2011 it contributed a staggering $1.65 billion to the bottom line of Berkshire.

Knowing it brings in roughly $85 million annually in pre-tax profits, there will soon come a day when the total contribution of See’s to Berkshire will top $2 billion. And what has Berkshire done with all that cash?

In 2007 Buffett answered that very question by revealing, “After paying corporate taxes on the profits, we have used the rest to buy other attractive businesses.”

Undoubtedly Buffett is thankful for the financial contribution See’s has made to Berkshire.

But it turns out through See’s Candies, he learned something even greater.

The gratitude

Buffett was very much an avid devotee of the value-investment philosophy predicated in the teaching of his former professor, boss, and mentor, Benjamin Graham. Graham spoke to the inefficiencies rooted in financial markets, and how there were always bargains to be had that Wall Street overlooked.

But thanks to his friendship with Munger, Buffett’s mind-set on investing began to shift. Instead of seeking great bargains, Munger continued to tell Buffett about to the need to find great businesses. A 1988 article in Fortune Magazine notes:

So in conversations with Buffett over the years [Munger] preached the virtues of good businesses, and in time Buffett totally accepted the logic of the case. By 1972, Blue Chip Stamps, a Berkshire affiliate that has since been merged into the parent, was paying three times book value to buy See’s Candies, and the good-business era was launched. ”I have been shaped tremendously by Charlie,” says Buffett. ”Boy, if I had listened only to Ben, would I ever be a lot poorer.”

Graham’s teaching doesn’t run contrary to this — he said, “Investment is most intelligent when it is most businesslike” — but it also wasn’t the principle focus. And through Munger and the resulting acquisition of See’s Candies, this insight was all the more affirmed.

When asked about See’s Candies at the Berkshire Hathaway Annual Meeting this year, both Warren and Munger chimed in on how grateful they were for buying it more than 40 years ago:

Buffett: “See’s has provided us with lots of cash for acquisitions and opened my eyes to the power of brands. We made a lot in Coca-Cola partly because of See’s. There’s something about owning one [brand] to educate yourself about things you might do in the future. I wouldn’t be at all surprised that if we hadn’t owned See’s, we wouldn’t have bought Coca-Cola.”

Munger: “There’s no question about the fact that See’s main contribution to Berkshire was ignorance removal. One of the benefits of removing our ignorance is that we grew into what we are today. At the beginning, we knew nothing. We were stupid. If there’s any secret to Berkshire, it’s that we’re pretty good at ignorance removal.”

The 400 million shares of Coca-Cola Berkshire now owns cost $1.3 billion to acquire between 1988-1994, but at the end of September they were worth a remarkable $17.1 billion. And that is to say nothing of the billions worth of dividends Berkshire received over the last two and a half decades.

Buffett openly admits none of that would’ve likely been available to Berkshire (and its shareholders) were it not for See’s Candies. As a result, it is clear the benefit of See’s extends well beyond the $2 billion contribution it has made to the bottom line.

What this reveals

Examples like this show us how we must always seek to learn from things both great and small, and give great credence to the Proverb “Let the wise hear and increase in learning.”

Few would guess a small candy shop would’ve taught Buffett so much.

Above all, this story reminds us to always be thankful of those things great and small, because we never know where they shall lead us.

MONEY consumer psychology

7 Internet Memes That Are Better Than Advertising

If any press is good press, then these brands really lucked out by association with memes that turned their products—or sales staff—into clickbait.

If there’s any lesson to be learned from the IKEA monkey, it’s that the Internet can make stars out of cute creatures in stores. And this past weekend proved it all over again, when “Alex from Target” took over the hearts and Twitter feeds of teenage girls worldwide:

After this photo inspired countless memes, a rumor circulated that the whole thing was just a marketing stunt—though that theory was quickly debunked, with Target spokespeople stating they were “as surprised as anyone” by Alex’s fame. But that didn’t keep them, of course, from getting in on the action: Pleased with all the attention, the store tweeted an approving “We heart Alex, too!”

Alex, who is enjoying his new-found fame (and perhaps waiting for his own web game to drop), is hardly the only example of the Internet giving a free gift to brand managers and advertisers.

Here are 6 other brands that went viral.

1. Chevrolet

Last week, a Chevrolet regional zone manager named Rikk Wilde nervously botched a televised speech while presenting World Series MVP Madison Bumgarner with a new Chevy truck. The company took ownership of the resulting viral video by turning Wilde’s most embarrassing line — “It combines class-winning and leading, um, you know, technology and stuff” — into a hashtag.

2. Poland Spring

Florida Senator Marco Rubio unintentionally filmed a compelling bottled water ad when he got a dry mouth during the Republican response to the 2013 State of the Union address—and awkwardly grabbed and gulped from a Poland Spring bottle placed off-camera.

3. McDonald’s

When Iowa science teacher John Cisna ate nothing but McDonald’s food for 3 months (and—crucially—exercised every day), he lost 37 pounds. His experiment, originally designed to teach his students the importance of making smart choices when presented with any menu, led to a supersized Twitter following, book deal, and paid gig speaking to McDonald’s franchisee and employee groups. Cisna even kept the experiment going past the 3-month mark:

4. PBS

You might remember when then-presidential candidate Mitt Romney raised hackles during a 2012 debate by saying to debate moderator Jim Lehrer: “I’m going to stop the subsidy to PBS. I’m going to stop other things. I like PBS. I love Big Bird. I actually like you too. But I’m not going to — I’m not going to keep on spending money on things to borrow money from China to pay for it.” As a result, at least some public broadcast stations saw a spike in donations, thanks to a “save Big Bird” campaign.

5. Diet Coke and Mentos

A favorite of science teachers and YouTube daredevils alike, this famous viral challenge gives anyone who enjoys harmless explosions an incentive to buy Coke and Mentos. Though the reaction technically doesn’t require Diet Coke—just carbonated water—the aspartame in diet soda apparently makes the reaction most powerful.

6. Chipotle

This video, featuring an adorable child professing love for the purveyor of pico de gallo, speaks for itself. So far, more than 2 million people have viewed it.

Now learn more about Alex from Target and check out some examples of videos that brand managers wish you had never seen:

 

MONEY stocks

How to See the Stock Market Like Warren Buffett Does

Warren Buffett, chief executive officer of Berkshire Hathaway Inc.
Jeff Kowalsky—Bloomberg via Getty Images

Ultimately, intelligent investors mustn't view stocks as numbers on screens or charts moving up and down, but as businesses.

When I say “stock,” what comes to mind?

If it’s one that you own, do you think of a chart that is hopefully moving upwards? If it’s one you’re thinking about owning, do you think about how a few important numbers and metrics stack up against those of its peers?

One of the greatest investors of all time — the one and only Warren Buffett — looks at stocks in a way that is easy to understand yet incredibly hard to manage. But his strategy is one we should all remember when we think about the stocks we own and the ones we’re thinking about investing in.

The simple wisdom

When Buffett discusses the progress of Berkshire Hathaway’s four biggest individual stock holdings — Wells Fargo, Coca-Cola, American Express, and IBM — in his latest annual letter to shareholders, at no point does he mention their price.

Instead, he speaks of two critical things: Berkshire’s ownership stake in the companies themselves and how much of their bottom-line earnings are actually available to Berkshire because of that stake.

Berkshire Hathaway’s ownership of each of the big four has grown over the last few years thanks to its purchase of larger positions in Wells Fargo and IBM plus the share repurchase efforts of the management teams at Coca-Cola and American Express.

youll-never-see-your-stocks-the-same-way-again-1_large

Although those slight increases in ownership may not raise any eyebrows, dominate headlines, or even inspire a Tweet, consider Buffett’s own words:

If you think tenths of a percent aren’t important, ponder this math: For the four companies in aggregate, each increase of one-tenth of a percent in our share of their equity raises Berkshire’s share of their annual earnings by $50 million.

And that brings us to our second point: It isn’t just the ownership stake that matters, but the actual results of the company that is owned. Buffett went on to say:

The four companies possess excellent businesses and are run by managers who are both talented and shareholder-oriented. At Berkshire, we much prefer owning a non-controlling but substantial portion of a wonderful company to owning 100% of a so-so business; it’s better to have a partial interest in the Hope diamond than to own all of a rhinestone.

As a result of both increased ownership and the continued success of Buffett’s “Big Four,” the portion of earnings available to Berkshire — although only the dividends paid out show up on its financial statements — has grown dramatically since 2011:

youll-never-see-your-stocks-the-same-way-again-2_large

But this growth is nothing new. In his 2011 letter to shareholders, Buffett said:

We expect the combined earnings of the four — and their dividends as well — to increase in 2012 and, for that matter, almost every year for a long time to come. A decade from now, our current holdings of the four companies might well account for earnings of $7 billion, of which $2 billion in dividends would come to us.

And while the earnings growth of the Big Four may not continue at its recent pace of more than 15% annually, $7 billion may even be a dramatic understatement.

The key takeaway

As Buffett’s famed mentor Benjamin Graham said in his seminal book The Intelligent Investor: “Investment is most intelligent when it is most businesslike.”

Ultimately, intelligent investors mustn’t view stocks as numbers on screens or charts moving up and down, but as businesses. We must largely ignore movements in stock prices and evaluate the fundamental business dynamics, knowing that over time stock prices will reflect changes in underlying fundamentals and the results of the business.

For example, since Chipotle CHIPOTLE MEXICAN GRILL INC. CMG 2.4672% went public on Jan. 26, 2006, its stock has moved up or down by 5% roughly once every four weeks, or 132 times. But those investors who have patiently waited, ignoring the price gyrations and trusting in the company’s hugely successful business, would have seen a $1,000 investment grow to nearly $14,000 at the time of writing.

Examples like this show why Buffett once remarked, “The stock market is designed to transfer money from the active to the patient.”

Does this mean you should simply pour money into great businesses? No, because, as Buffett has also said, “A business with terrific economics can be a bad investment if the price paid is excessive.”

But we must see that whenever we make an investment, we must always consider it part-ownership in a company, not simply a stock. Buffett does, and so should you and I.

TIME 2014 Election

Corporations, Advocacy Groups Spend Big on Ballot Measures

A still from an advertisement payed for by Citizens Against the Maui County Farming Ban, a group backed by agricultural giants Monsanto and DowAgroSciences YouTube

Spending on TV ads soars to $119 million ahead of Election Day

Correction appended: October 26, 2014

Bonnie Marsh is worried that many of her neighbors’ health problems stem from big companies farming genetically modified crops around her in Maui County, Hawaii. So she helped collect enough signatures to put an initiative on the November ballot that would ban growing such crops until an environmental study is done.

“We’ve come forward because we feel there’s a real threat to the health of the Earth,” said Marsh, a nurse who focuses on natural remedies. “We are done being an experimental lab.”

Marsh said her group, Sustainable Hawaiian Agriculture for the Keiki and the ‘Aina, has raised about $76,000 so far for what is the first-ever citizen-initiated ballot measure in Maui County. They’ve used about $17,000 of it to buy TV ads to help get the word out. But Marsh’s group is being outraised and outspent by business-supported opposition.

Citizens Against the Maui County Farming Ban, a group backed by agricultural giants Monsanto and DowAgroSciences, has already spent more than $2 million — or $23.13 per registered voter in the county — on television ads arguing that the ban would kill jobs, cost the local economy millions of dollars and block crops that have been proven safe.

And more ads could be on the way — the group has not yet filed a report with the state to say how much it has raised, nor would it volunteer the information to the Center for Public Integrity.

More has been spent on television time on that measure than any other local initiative in the nation. It’s also more expensive than more than 100 statewide measures, according to a Center for Public Integrity analysis of preliminary data from media tracking service Kantar Media/CMAG.

Across the country, large companies and national advocacy groups are putting big dollars behind committees with benign-sounding names that support or oppose ballot initiatives on issues as varied as minimum wage increases in Alaska and recreational marijuana in Florida.

The committees are using that money to put their message out in expensive ads featuring family farmers, concerned doctors and smiling teachers. Voters may not readily be able to identify the patrons behind the millions of dollars in ads, but a who’s who of corporate America — soda king Coca-Cola, agriculture magnate Monsanto and malpractice insurer The Doctors Company — are among them.

Through Oct. 20, TV ad spending on ballot issues totaled roughly $119 million, including $11.3 million on local initiatives such as the one in Maui County.

Four of the five most expensive ballot initiatives feature at least one corporate patron duking it out over the airwaves, getting involved in the initiative process that was designed as a way to give voters a direct voice on public policies.

· The two most expensive propositions were in California. Proposition 46 has drawn more than $23 million in ad spending, while Proposition 45 has attracted $20.5 million. Almost all of it has come from two groups: No on 45 — Californians Against Higher Healthcare Costs and No on 46 — Patients, Providers and Healthcare Insurers to Contain Health Costs. The “no” groups are backed by doctors and insurance companies, including The Doctors Company and Blue Shield of California, fighting to stop measures that would force doctors to undergo drug testing and insurers to get new approval for rate hikes, according to a Center for Public Integrity analysis of state campaign finance records.

· Coming in third place was a Colorado amendment to expand gambling, which has drawn about $12 million in ad spending. Of that, $6.4 million came from Coloradans for Better Schools, a group backed by a Rhode Island casino company, Twin River Casino. Competing casinos in Colorado are helping fund $5.7 million in ads opposing the measure through a group called Don’t Turn Racetracks Into Casinos.

· Ranking fourth were two California measures that have been touted as an inseparable duo: Proposition 1, which would authorize a bond issue for water infrastructure projects, and Proposition 2, which would change the state’s “rainy day fund.” Most of the $7.6 million spent on ads supporting the two measures came from California Gov. Jerry Brown. The Democrat has not run any ads for his re-election bid, instead buying $5.6 million in ads through his campaign committee to back the propositions.

· Rounding out the top five, with $5 million in ads, was an Oregon measure that would require genetically modified foods to be labeled. The No on 92 Coalition, fueled by groups such as Monsanto and the J.M. Smucker Company, is battling natural food companies funding the Vote Yes on Measure 92 committee.

Fewer but costlier initiatives

This year voters have fewer ballot measures to decide than they did four years ago, when a comparable number of offices were up for election. In 2010, voters considered 184 statewide initiatives compared with 158 this year.

Even California voters, well acquainted with lengthy ballots, have only six measures to read through this November.

But this year already has 2010 beat in terms of TV ad spending. In 2010, ballot measure backers and opponents spent about $87 million on ads for the entire election cycle, compared with this year’s $119 million through Oct. 20.

Citizens in 26 states can gather signatures and put a proposal on the ballot that would create a new law or veto an existing one. Every state but Delaware offers voters the chance to weigh in on constitutional amendments approved by the legislature. Once the initiative is approved to go before voters, the ad deluge begins.

Ballot measure opponents and supporters use a number of tools to influence voters — door-knocking, direct mail, digital advertising and more — but television spots have the highest profile influence on such direct democracy.

“TV ads are a very effective way of getting out a message,” said Daniel Smith, a University of Florida professor who has studied ballot measures for more than 20 years. Advertising can be used “devastatingly well,” he added.

But those ads — and the money behind them — aren’t necessarily a bad thing if it gets people talking, he said, even if a few of them are confusing or misleading. “Increased money usually means there is more information, more awareness of ballot measures,” he added.

Corporate titans rule the airwaves

In California, competing messages about the drug-testing-for-doctors proposition are abundant on the airwaves. Recent transplant James VanBuskirk, a 34-year-old marketer for a property insurance company, says he sees one every time he watches prime-time TV.

Prop 46 tops the ballot measure spending pile in this election, with $23 million spent on thousands of ads across California.

Consumer Watchdog, a national advocacy group, teamed up with trial lawyers to back the measure. Trial lawyers stand to benefit from Prop 46 because, in addition to testing doctors for drug use, it also increases the maximum judges can award for pain and suffering in medical malpractice lawsuits. Groups backed by them spent $3.9 million so far on ads supporting the measure.

Consumer advocates and the California Nurses Association have also thrown their money behind Proposition 45, which would require insurers to receive approval for rate hikes from the California insurance commissioner, an elected regulator. Ballot committees supporting the measure have aired more than $679,000 on ads so far.

But their messages have been crowded out by those of insurers and doctors, who are spending big to oppose both measures on the airwaves — with more than $38 million spent on ads so far, about $19 million on each measure — nearly a third of the total amount spent on ballot measure ads nationwide. And there are likely many more ads to come: Groups opposing the two measures together have raised more than $100 million, according to California campaign finance records.

“It’s definitely in the upper stratosphere of California fundraising,” said Kim Alexander, president of the California Voter Foundation, a nonpartisan nonprofit that produces online voter guides.

That doesn’t mean the insurance companies are necessarily going to win. In 2010, a group backed by Pacific Gas & Electric Co. spent almost $14 million on ads supporting a ballot measure that would require local voter approval for any new government-backed utilities. The electric company lost, even though its opponents did not buy any airtime.

Casinos versus casinos

In Colorado, casinos are waging the nation’s third-most-expensive ballot fight over the airwaves this year.

It’s casino versus casinos, according to an analysis of state campaign finance data. One Rhode Island gambling company, Twin River Casino, wants to offer slot machines, blackjack and other games at a racetrack in Aurora, Colorado. In ads, the committee backed by the company promises $100 million of new gambling revenue will be sent to an education fund every year. The ads have run more than 5,500 times, at a cost of about $6.4 million.

But already established gambling operations in Colorado that don’t want more competition have backed a group that has kept pace, spending $5.7 million on ads opposing the measure. “Amendment 68 is not about education. It’s a Rhode Island gambling scheme,” one opposition ad says.

Most Coloradans likely have no idea that casinos are backing the ads on both sides, said Kyle Saunders, associate professor of political science at Colorado State University. Colorado has clear-cut competitive U.S. Senate and gubernatorial races, he said, while ballot-measure backers are “muddying the issues.”

“It’s a difficult environment for voters to know everything about a particular ballot measure anyway, in a normal election,” Saunders said. “You have to actually do some digging or find that article on the Internet or newspaper that has that in-depth information, and that’s actually a pretty demanding task for low- and medium-information voters.”

Gambling is also on the ballot in Massachusetts, with a casino-backed group spending about $3.3 million on ads.

In total, gambling-based ballot measures are responsible for $17.5 million in ad spending nationwide.

Food industry food fight

Even soda is getting in on the political ad contests. The American Beverage Association, whose members include Coca-Cola and Pepsi, has pumped millions into a group opposing a Massachusetts ballot measure that would raise fees for beverage distributors and expand the state’s bottle deposit to cover more types of bottles. The beverage lobby-backed group has spent about $2.5 million on TV ads, while pro-initiative forces have not bought any airtime.

The California branch of the beverage-makers group has also backed a group trying to defeat a local initiative in San Francisco that would tax sugary drinks; so far the group has spent $1.8 million on ads, making the measure the second-most expensive local measure in terms of television spots, behind Maui’s initiative.

Coca-Cola and Pepsi are also teaming up with other big food businesses like Monsanto and the Hershey Company in their effort to keep Oregon and Colorado from requiring labels on food that contains genetically modified organisms. Groups backed by the team of food companies have spent about $3 million on ads in each state, arguing that the measures would raise food prices and hurt farmers.

“Farming is hard enough. The last thing we need is Measure 92, a bunch of complex, costly regulations that don’t exist in any other state,” says a plaid-shirt-wearing farmer in an ad opposing the Oregon measure.

Proponents of labeling in Oregon, backed by natural food companies, have spent $2 million on television ads in the state. “I want you to be able to trust the food you feed your family,” says another plaid-shirt-wearing farmer, who favors the measure. Proponents in Colorado have not aired ads.

Winning hearts

Corporations aren’t the only big players in state ballot measures this year. National advocacy groups are also tugging at heartstrings on the airwaves.

Planned Parenthood and the ACLU have teamed up to oppose anti-abortion measures in Tennessee and Colorado. In Tennessee, a group backed by the pair has spent about $1.3 million on TV ads against a measure that would give the legislature more leeway to regulate abortion. Proponents of the measure, backed by Tennessee Right to Life, have spent about $606,000 on ads.

In Colorado, a Planned Parenthood-backed group has spent $477,000 on the airwaves to oppose an amendment to the state constitution that would redefine “person” to include the unborn. The ads say the move would effectively ban all abortion in the state. Proponents have aired no ads.

Other initiatives attracting interest from advocacy groups include:

· In Washington, television viewers have already been treated to more than 4,000 ads about a pair of conflicting ballot measures concerning background checks for gun purchases, with most of them coming from a group supporting expanded background checks. That organization — backed by Michael Bloomberg’s Everytown for Gun Safety fund, early Amazon investor Nick Hanauer and a handful of Microsoft executives, according to state records — spent an estimated $3 million on ads. The other side, backed by gun enthusiasts and sporting clubs, is trailing behind, with only about $58,000 spent.

· In North Dakota, the Nature Conservancy and the Audubon Society, among others, have lent their support to a measure that would dedicate some of the state’s oil tax revenues to land preservation. North Dakotans for Clean Water, Wildlife and Parks has ponied up nearly $485,400 for ads—more than double the cost for all the ads run by candidates for state offices this year. The group’s opponents have spent about $134,000 on ads so far.

· In Maine, voters are considering a ballot measure that would ban traps, bait and dog chases in bear hunting. The Humane Society has backed a group that has spent about $860,000 on ads favoring the ban so far. The other side, Maine’s Fish & Wildlife Conservation Council, has spent about $713,000 on ads.

Attracting voters with pot and money

Marijuana is on the ballot in the District of Columbia and three states, spurring $4.5 million in ads. In Oregon, voters have watched some 1,825 ads worth more than $1 million run by supporters of legalizing recreational marijuana. That effort’s backers include the family of Peter Lewis, a longtime marijuana legalization advocate from Ohio and chairman of Progressive Insurance, who died in 2013. Another backer is the Drug Policy Alliance, an anti-drug-war nonprofit backed by liberal financier George Soros. (Soros’ Open Society Foundations are a financial supporter of the Center.)

The ads argue that legalizing the drug will allow police to focus on solving murders and finding missing children. Opponents have aired no ads so far, but a similar measure failed in Oregon in 2012. In Alaska, supporters of marijuana have aired just $8,210 worth of ads.

In Florida, opponents of a ballot measure to legalize medical marijuana have spent roughly $3.2 million on ads. But the players in that fight might care less about marijuana than the governor’s race. Analysts say the marijuana legalization effort in Florida is really a tactic to get more young and left-leaning residents to turn out and vote for the Democratic gubernatorial candidate, former Gov. Charlie Crist.

Billionaire casino operator Sheldon Adelson has given $4 million to the anti-pot campaign, while the pro-pot side is backed more than $3.8 million from the personal injury lawyer John Morgan and his firm, which hired Crist after he left office. So far, however, the marijuana advocates have only spent about $195,000 on TV ads, according to Kantar Media/CMAG data.

Ballot measures are a reliable way to motivate a party’s base. For instance, liberal groups helped get measures to raise the minimum wage on five states’ ballots this fall. Yet only Nebraska’s appears to have drawn TV ads: a paltry $79,000 worth.

“That totally makes sense,” said Neil Sroka, a strategist for progressive groups and the communications director at the Howard Dean-founded Democracy for America. “I wouldn’t count the lack of spending on ads to be indicative that they’re not incredibly useful in driving out votes.”

Sroka told the Associated Press that polls show overwhelming support for raising the minimum wage, including among independents and Republicans. Liberal activists looking to motivate voters can use the minimum-wage measures as a way to get perhaps reluctant voters talking and then tell them that the Democratic nominees for office also support higher wages.

“These ballot measures are great ways to talk to voters who might not want to talk to Democrats,” Sroka said.

Money talks but does it win?

For some corporations and national advocacy groups, investments in ballot measure ads have already paid off. This summer, oil companies won an August vote after dishing out nearly $900,000 to buy about 8,000 TV spots in Alaska to keep special tax breaks. “We need to stay in the game,” said a hockey coach in an ad that likened the sport to the oil industry.

In Michigan, manufacturers almost hit the $2.8 million mark on ad spending for an August ballot measure designed to eliminate a double tax on industrial property, while also rerouting an existing tax to fund local budgets. Though observers worried the measure was too confusing for pessimistic Michigan voters, who turned down every single initiative on the ballot in 2012, the manufacturers walked away with a victory.

But for others, ad spending was for naught. In Missouri, construction companies spent about $1.2 million on TV ads but still lost an August vote that would have authorized a sales tax to fund road construction.

The bulk of the measures, though, will come before voters on Nov. 4, so a flood of advertising is on the horizon. Then the implications of voters’ decisions will begin, affecting individuals’ lives and companies’ bottom lines.

In Hawaii, approval of the Maui County GMO ban would be a blow to Monsanto, which can produce up to four crops of corn seeds a year in Hawaii’s lush environment.

The state’s seed industry, including Monsanto’s corn, has grown rapidly in recent years, and last growing season was worth $217 million, outpacing sugar cane and pineapples. The corporate-backed Citizens Against the Maui County Farming Ban argues that small farms and big alike would be hurt by the ballot’s ban.

“More than 600 people would lose their jobs,” the group’s spokesman, Tom Blackburn-Rodriguez, said in an email. “The purpose of the TV ads is to educate voters about the flawed, costly and harmful initiative.”

Natural remedies nurse Marsh doesn’t know whether her side can beat the Monsanto-backed ads; she said fliers against the GMO ban show up in her mailbox every day. But the ban advocates have a great volunteer network, she said, and at the very least they’ll get to make themselves heard. “We’re just trying to make them be held responsible for what they’re doing,” she said.

Associated Press reporter Philip Elliott contributed.

Correction: The original version of this story misstated the amount Sustainable Hawaiian Agriculture for the Keiki and the ‘Aina has raised to back the ballot measure banning GMO farming. It was about $76,000.

MONEY Fast Food

Millennials to Blame for McDonald’s September Slump

The fast-food chain is getting hit not only by problems in China but also by rising costs and changing tastes. Coca-Cola is suffering too.

MONEY Markets

Warren Buffett Tells You How to Handle a Market Crash

Berkshire Hathaway Chairman and CEO Warren Buffett
What would Buffett do? Nati Harnik—AP

Are you starting to panic? Heed the advice of the Oracle of Omaha.

Warren Buffett has never been shy about packing lessons for successful investing into his annual letter to shareholders. That letter is a treasure-trove of insight, presented in a folksy manner that is not only easy to read but incredibly entertaining.

With the market tumbling we’re all likely in need of a few doses of Warren’s unpretentious advice, so I dug through his past shareholder letters to find some gems that may help us navigate the current market drop and build a bigger nest egg for retirement.

1. “It’s better to have a partial interest in the Hope diamond than to own all of a rhinestone,” wrote Buffett in 2013.

Buffett is always hunting for great companies that he can buy for Berkshire Hathaway shareholders, but if he can’t buy the whole company, he’s OK with owning a smaller piece of it instead. Applying this advice to our own investments means spending less time considering how many shares of a company we can buy and more time figuring out where we believe the company will be in ten years. Doing that will help us avoid the pitfall of foregoing investments in great companies like Amazon AMAZON.COM INC. AMZN 1.2947% ) or Priceline THE PRICELINE GROUP INC. PCLN 2.8207% when they’re on sale to buy lower quality companies with smaller share prices.

2. “A ‘normal year,’ of course, is not something that either Charlie Munger, Vice Chairman of Berkshire and my partner, or I can define with anything like precision,” wrote Buffet in 2010.

Sure, the average annual return for the S&P 500 has been 8.14% over the past decade, but assuming that will be our return this year, next year, or any year is folly. Returns are volatile and will continue to be volatile, so we should focus less on the returns for any one period of time and instead focus on buying great companies and socking them away. Consider this point: While the S&P 500 has experienced plenty of fits-and-starts over the past 10 years, those who have owned it all along are up 103%.

3. “Long ago, Charlie laid out his strongest ambition: ‘All I want to know is where I’m going to die, so I’ll never go there,'” wrote Buffett in 2009.

Buffett avoids businesses whose future he can’t evaluate. Instead, he focuses on finding businesses that offer a predictable profit for decades to come. Taking the long-haul approach to finding great companies goes far beyond identifying the next big thing — after all, during the Internet boom there were plenty of Internet companies that soared on expectations rather than profit, and many of those companies have since gone bankrupt. Instead, we should be investing in companies we can understand that are likely to remain winners.

4. “We will never become dependent on the kindness of strangers. Too-big-to-fail is not a fallback,” wrote Buffett in 2009.

Warren’s cash stockpile is a thing of legend, and while that cash hoard holds back his returns in periods of growth, it also protects him when markets turn sour. Importantly, it also gives him the financial flexibility to take action and buy when prices are right. That plan-ahead mentality is something every investor can embrace by making sure there’s always some dry-powder around to deploy during the market’s inevitable declines.

5. “We would rather suffer the visible costs of a few bad decisions than incur the many invisible costs that come from decisions made too slowly — or not at all — because of a stifling bureaucracy,” wrote Buffett in 2009.

Buffett doesn’t hesitant when he’s presented with an idea that hits the mark. He recognizes that he won’t be right every time, but he also believes that taking action is critical to realizing the potential of an opportunity. As investors, we can emulate Buffett’s approach by making sure that once we’ve done our due diligence and picked our favorite investments we take action and buy, regardless of the market’s short-term machinations.

6. “Unlike many business buyers, Berkshire has no ‘exit strategy.’ We buy to keep. We do, though, have an entrance strategy, looking for businesses in this country or abroad…available at a price that will produce a reasonable return. If you have a business that fits, give me a call. Like a hopeful teenage girl, I’ll be waiting by the phone,” wrote Buffett in 2005.

Buffett keeps strictly to his investment discipline, but he also keeps an open mind to great ideas that fit into his strategy. Those ideas can come from various places. His acquisition of Clayton Homes, for example, was sparked by an autobiography of Clayton’s founder Jim Clayton which had been given to him as a gift by some University of Tennessee students. Keeping open to opportunities, regardless of their origin, may help us find worthwhile investments for the long term, too.

7. “Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful,” wrote Buffett in 2004.

Buffett knows that emotion is a dangerous weapon that, if used incorrectly, can result in significant loss — and, if used correctly, can result in significant gain. Emotional reactions to surging or descending markets can make people buy when they should sell and sell when they should buy. Buffett often compares taking advantage of market slides to shopping for groceries. Last week on CNBC he summed it up by saying, “If you’re buying groceries, you like it when prices go down next week. And you like it if they go down further the next week.” Just as we like getting a good deal on the items at the grocery store we would be buying anyway, we should also be fans of getting a good deal on our favorite companies.

Following in Buffett’s footsteps

Buffett has no idea whether he’ll outperform the S&P 500 over the next year, but he does know that Berkshire Hathaway’s book value has grown a compounded annual 19.7% over the past 49 years. Similarly, we don’t know if our investments will outperform the market daily, weekly, or yearly, either. What we can feel pretty good about is the knowledge that investing in great companies like Coca Cola and Wells Fargo WELLS FARGO & CO. WFC 1.9329% — two companies that are long-standing Buffett holdings — may help put us on a path to a less-worrisome retirement.

TIME Obesity

Why Cutting Soda Calories Isn’t Such a Sweet Idea

soda
Getty Images

Civil rights and soda might not seem like a classic combination. But yesterday, as major soda brands announced their goal to reduce beverage calories in the American diet, it seemed to make sense to Wendy Clark, president of sparkling brands and strategic marketing for Coca-Cola North America.

“‘The time is always right to do the right thing’ – MLK” she tweeted. “So proud of our industry.”

That time will come in 2025, the year by which every American will drink 20% fewer soda calories than they do today. In the press release about the announcement, which was made at the Clinton Global Initiative meeting in New York, Coca-Cola, PepsiCo and Dr. Pepper Snapple vowed to make these reductions in part by making containers smaller, as well as focusing marketing efforts and innovation into lower-calorie drinks, no-calorie drinks and water. In the release, President Bill Clinton called the pledge a “critical step in our ongoing fight against obesity.”

But are such premature congratulations merited? Is developing more low- and no-calorie bottled beverages really the way to fight obesity?

Soda consumption has dropped, with sales lower than they have been since 1995. And while we might like to think sippers are swapping soda for water or unsweetened herbal tisane, research shows they’re not. A Pediatrics study published earlier this year that showed while kids aren’t drinking as much soda as they once were, they’re guzzling more energy drinks and coffee beverages—both caffeinated sweetened products with a nutritional profile similar to most sodas. Sales for ready-to-drink tea—most of which is sweetened—are also up by double digits in the Coca-Cola portfolio, reports Forbes.

That’s concerning if we want to seriously address obesity. The jury is out on no-calorie and low-calorie sweeteners, but mounting recent evidence showings sugar substitutes may contribute the very obesity they’re meant to combat. That’s because they appear to fuel sugar cravings and alter the composition of gut microbes, leading to a rise in blood glucose levels. Several studies have found a link between sugar alternatives and weight gain, and research just published in the journal Appetite found that drinking artificially sweetened beverages make you think about food more, choose high-calorie foods more often, and feel less satisfied after eating things sweetened with actual sugar.

“On face value you’re getting a nice sweet taste without calories, but my research shows it might lead to cognitive shifts that might promote overconsumption later,” Sarah Hill, the study author and a psychologist at Texas Christian University, tells TIME.

This all suggests that even if soda slashes calories by 2025 as promised, the replacement ingredients could come with unforeseen consequences.

The idea of tasting something sweet without getting any energy from it is an evolutionarily very novel thing for our bodies to handle, Hill says. “When you have that unnatural pairing of sweetness and no energy increase, it leads the body to perceive an energy crisis,” Hill says. “It triggers thoughts and behaviors consistent with a scarcity mode.”

“I think that the real way to get change is drinking water,” Hill says. Plain, unadulterated, straight-from-the-tap H2O included.

TIME marketing

Coca-Cola Is Bringing Back SURGE

Coke dials up the 1990s nostalgia

Coca-Cola’s 1990s SURGE citrus drink is back by popular demand.

The Mountain-Dew inspired soda, which debuted in 1996 but was discontinued in the early 2000s, has been the subject of a nostalgia-fueled online campaign to lobby the company to bring back the drink.

A Facebook group devoted to SURGE has over 129,000 likes, and Coca-Cola said in a statement that they’ve decided to re-issue the drink thanks to “a passionate and persistent community of brand loyalists who have been lobbying The Coca-Cola Company to bring back their favorite drink over the last few years.”

SURGE will be sold on Amazon.com, which represents the first time a Coca-Cola product has been sold exclusively through an online retailer. SURGE’s relaunch will also be an experiment in social media marketing for the brand, since they said they will not invest in any traditional marketing for this product.

MONEY Investing

Use This Trick to Beat Your Friends at Fantasy Football

Minnesota Vikings running back Adrian Peterson
Jeff Hanisch/USA Today Sports—Reuters

The start of the football season is close and fantasy football drafts have begun. Here's why thinking like a long-term investor can ruin your season.

Last November, one National Football League running back had a particularly good day.

Strong, agile, and quick, this player absolutely tore apart the Atlanta Falcons defense on Nov. 17 to the tune of 163 rushing yards and three touchdowns. Fantasy football owners fortunate to have him on their rosters were awarded almost 35 points from his performance alone—more than a third of the total usually needed to win a whole game.

So who was this guy? Future Hall of Famer Adrian Peterson? The Philadelphia Eagles buoyant halfback LeSean McCoy? Jim Brown? No, no, and of course not. He was an undrafted second-year player out of Western Kentucky named Bobby Rainey. Who, you ask? Exactly. On that same day Peterson himself, perhaps the greatest running back since Jim Brown, ran for 100 fewer yards than Rainey and never touched the end zone en route to a pedestrian 8.5 fantasy points.

It’s hard not to look for a lesson in this episode. And for someone like me, immersed in the investing world, the inclination is to draw a parallel to value investing, the discipline made famous by Warren Buffett. Value investing involves looking for companies that the market does not fully appreciate in hopes that, over time, they will outperform expectations and send the stocks soaring.

But as the fantasy football season gets under way, with millions of fans around the country drafting players over the next few weeks, I’m here to tell you that a Buffett-like approach to fantasy football probably won’t lead to glory.

Why not? Well, to start, value-focused buy-and-hold investing is all about ignoring short-term market fluctuations and sticking with your investment philosophy over the long-haul. Coca-Cola THE COCA COLA CO. KO 2.872% has a bad quarter? Johnson & Johnson JOHNSON & JOHNSON JNJ 1.2748% delivered poor earnings-per-share growth? No matter. Value investors often see these rough patches as buying opportunities. And one of the foundational principles of value investing is that no investor can consistently predict exactly when to buy this stock or trade that one. When investors do engage in this perilous behavior, they generally end up losing money.

That ethos, however, falls flat when it comes to fantasy football. For one thing, there is no long-term in fantasy football. The season only lasts 17 weeks, which means you have only 17 chances to maximize your total scoring output. While one or two days of poor returns won’t hurt your portfolio, one or two weeks of fantasy football failure could ruin your season. Most leagues have around 10 teams, and, in order to make the playoffs, you’ll usually need seven wins. So if one of your players isn’t performing well, or hasn’t reached his full potential, you don’t have the time to wait.

In other words, don’t be scared to grab onto a hot player until he cools off. For instance, take another look at Peterson and Rainey. Going into the 2013 season, ESPN ranked Peterson the top fantasy football player to draft. Bobby Rainey is not Adrian Peterson. For his career, Rainey only has 566 rushing yards. Peterson has 10,115.

Nevertheless, Rainey was the superior running back over the last seven weeks of the 2013 NFL season. Using the NFL.com scoring system, Rainey earned 79.3 points from week 11 to 17, while Peterson (due in part to injury) only scored 54.8. Even if you take out Rainey’s career day against the Falcons, the two running backs scored pretty much the same number of points.

This isn’t an isolated example, either. Two weeks earlier, Nick Foles, who began the season as the Philadelphia Eagles second-string quarterback, threw for seven touchdowns and garnered 45.2 points for his fantasy owners. Foles would go on to accumulate a total of almost 260 points for the season (more than superstars Tom Brady, Ben Rothlisberger, and Matt Ryan) despite starting in only 11 of 16 games.

In fact, last season, 15 different players scored the most points in a given week (Peyton Manning and Drew Brees each did it twice). Of those 15 players, not one was listed in the top five on ESPN’s pre-season best fantasy football players list. Brady never scored the most points in any one week, for example, but Bears back-up quarterback Josh McCown did, in week 14.

In short, buying the football equivalent of Coca-Cola shares (one of Buffett’s most beloved and long-held stocks) and hanging on through thick and thin can be a losing game.

I learned this lesson the hard way, having drafted Buffalo Bill running back C.J. Spiller with my first pick last season. Ranked the 7th best player by ESPN going into last season, Spiller scored 3.5, 11.7, 3, and 7.7 over the first four weeks. Unwilling to give up on such a high pick, however, I kept him in my starting lineup for most of the season. I ended up in the bottom of my league and learned a valuable lesson in sunk cost theory.

Of course finding seven weeks of Rainey, or spotting the next Foles off the waiver wire, is difficult. Some up-and-comers are just flashes in the pan and will deliver worse returns than your first-round pick. But when this season’s Foles takes off, don’t be surprised. If you play fantasy football you must learn to embrace the shooting star—and if that star burns out, find another.

MONEY

10 Things Americans Have Suddenly Stopped Buying

Popping bubble gum
Ross Culshaw—Getty Images

America is just not the clean-shaven, gun-buying, soda-drinking, Chef Boyardee-eating place it used to be

For a variety of reasons—including but not limited to increased health consciousness, the harried pace of modern-day life, and plain old shifting consumer preferences,—Americans have scaled back on purchases of many items, sometimes drastically so. Here’s a top 10 list of things we’re not buying anymore, at least not anywhere near as frequently as we used to.

Cereal
In one recent four-week period, cereal sales were down 7%, and cereal giant Kellogg’s sales decreased 10%. The reasons for cereal’s declining dominance at the breakfast table are many. As the Wall Street Journal reported, consumers are more apt nowadays to turn to yogurt or fast food in the morning, and they’re less likely to have time to eat breakfast at home at all—not even if it’s a simple bowl of cereal.

Consumers also want their breakfast to pack more punch, protein-wise. “We are competing with quick-serve restaurants more, but the bigger driver is that people want more protein,” Kellogg CEO John Bryant told the Journal. It’s no coincidence that milk sales have been falling alongside cereal, with cow’s milk struggling especially due to the rise of alternatives like soy and almond milk. (Sales of yet another breakfast-at-home staple, orange juice, have plummeted 40% since the late 1990s.)

To try to put cereal back on the spoon of more breakfast eaters, food makers have been resorting to all manner of gimmicks, including the promoting of new higher-protein cereals, as well as the idea that cereal is a great late-night snack rather than just a breakfast-time basic.

Soda
The crash of soda—diet soda in particular—has been years in the making, with consumers increasingly turning to energy drinks, flavored water, and other beverages instead of the old carbonated caffeine drink of choice. The latest Wall Street report from Coca-Cola showed that the soda giant missed estimates, partly because sales of Diet Coke in North America fell in the “mid-single digits.”

(MORE: 10 Things Millennials Won’t Spend Money On)

While a lot of soda’s slump can be attributed to shifting consumer preferences—more organic, less sugar—the broader war on soda involving taxes and big-beverage bans must factor in too. And if First Lady Michelle Obama has any say in things, the decline of soda is a trend that’ll continue: Her ongoing “Drink Up” campaign encourages kids to consume more water—and, consequently, less soda.

Gum
Likely due to heightened competition from mints and candies, chewing gum sales have dipped 11% over the past four years, the Associated Press reported. The editorial board of the News Tribune of Washington state, for one, weighed in that it is wonderful that gum sales are down in the gutter, sniffing, “Gum-chewing doesn’t do us any favors, making us look like cows chewing our cud. For humans, that’s not a good look.”

Guns
Gun sales have been booming in recent years, with sales periodically juiced when perceived anti-gun politicians enter office or a high-profile mass shooting takes place, prompting consumers to seek guns for protection—or just out of fear they won’t be able to buy them in the future because tougher gun regulations might be passed.

Lately, however, gun sales have fallen, sometimes sharply. The big reasons why this is so seem to be that there’s little in the way of likely gun control for gun enthusiasts to motivate new purchases, and also that everyone who has wanted to buy a gun in the past couple of years has already bought one (or seven). In the first quarter of 2014, the guns-and-ammo-focused Sportsman’s Warehouse retail chain saw comparable stores sales drop 18%, while gun sales at Cabela’s fell 22%.

But a little perspective is necessary. While guns sales and background checks are down compared to the past couple of years, they remain far above the levels of the early ’00s. As gun industry experts have put it, the decline probably just represents a “returning to normal” for gun sales—which aren’t as strong as they once were, but are still very strong nonetheless.

Cupcakes
Well, it looks like many of us at least have stopped buying the pricey “gourmet” variety of cupcakes. That’s the conclusion to be drawn with the collapse of Crumbs, the 65-store chain that shut down abruptly in early July. The news was widely interpreted as a sign that the gourmet cupcake trend is officially dead.

Chef Boyardee
ConAgra recently issued a warning to Wall Street that its consumer food volume experienced a 7% decline, and that it faced “continued profit challenges” due to some of its flagging, tired products—in particular, Chef Boyardee, the 86-year-old canned pasta brand.

Golf Gear
It’s not surprising that going hand in hand with fewer people playing golf, there are also fewer golf purchases being rung up at sporting goods store registers. The most notable eye-opener occurred this past spring, when Dick’s Sporting Goods announced that its golf equipment sales were down around 10%, at the same time the average driver was selling at a price of 16% less.

(MORE: Could Rory McIlroy Be Golf’s Long-Awaited Savior?)

Razors
Beard-loving hipsters were blamed for the decline in razor sales last summer, and in 2014, razor giants like Procter and Gamble (owner of Gillette) has continued to blame poor sales on the trendiness of beards. Everything from the shaggy beards worn by the World Series champion Boston Red Sox, to month-long no-shave “challenges” like Movember and Decembeard have been cited as reasons why guys have scaled back on razor purchases. In response, marketers have introduced even more varieties of new high-tech razors, while also pushing the concept of “manscaping,” with special razors designed just for the task. The hope is that even if men aren’t shaving their faces, they might still shave one or several other parts of their bodies.

Bread
According to one survey, 56% of American shoppers said they are cutting back on white bread. White bread was surpassed in sales by wheat bread sometime around 2006, but in recent years the gluten-free trend has hurt sales of all breads. Sales are even down in European countries like baguette-loving France, where consumption is down 10%. In American restaurants, meanwhile, there’s an epidemic of free bread disappearing from tables, as fewer owners want to bear the expense of putting out free rolls and other breads that no one is going to eat.

Convertibles
The fun-loving, wind-in-your-hair thrill of driving in a convertible just hasn’t been enough to keep consumers buying the classic ragtop in strong numbers. Businessweek noted that convertible sales have fallen 44% since 2004, and automakers have been significantly scaling back the number of models that are even offered in convertible form. Apparently, too many consumers see convertibles as impractical, and/or not worth the $5,000 or so premium one must pay compared to the regular model.

Data recently released from Experian Automotive indicates that the convertible is largely now a toy purchased by the rich. Nearly 1 in 5 convertible buyers have household incomes of at least $175,000 (compared to 11% of buyers of all cars), and 12% of convertible buyers own homes valued over $1 million (compared to 4% of buyers of other cars). For what it’s worth, convertible drivers are also better educated than the average car owner (50% of convertible buyers have at least a bachelor’s degree, versus 38% overall), and nearly one-quarter of all convertibles are now purchased in three sunny states with ample coastlines: California, Florida, and Texas.

Related:

10 Things Millennials Won’t Spend Money On

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