MONEY stocks

McDonald’s Seeks To Supersize Its Growth

B.A.E. Inc.—Alamy

McDonald's stock has moved little over the past year as the mature company struggles to find its next big thing. But if it wants to show investors growth again, it's all about the menu.

The Golden Arches haven’t shone for investors lately.

Over the past 12 months, McDonald’s stock has returned less than 3%. That compares with an average 21% return for restaurant stocks. Part of the problem is that growth is always harder for a big, mature business — and with a market value of $93 billion, McDonald’s is larger than its two biggest rivals — Starbucks and Yum Brands — combined.

But the company has found ways to boost sales before. Job No. 1: Freshen up the menu.

Want wings with that?

McDonald’s has had trouble finding new menu items that diners want.

McDonald’s is no longer the basic burger, fries, and soda joint you remember from your childhood. Facing new upscale competitors, it responded by adding salads, wraps, and specialty coffees to the menu. This worked for a while: U.S. same-store sales climbed an annual average of 5% from 2003 to 2011, according to the brokerage Raymond James.

But lately the Oak Brook, Ill., company has struggled to find “the next big thing,” says Edward Jones analyst Jack Russo. Recent new items like chicken wings haven’t been a hit. (And until McDonald’s settles on the right mix, the added complexity in the kitchen from new items “slows down the drive-thru,” says Russo.)

U.S. same-store sales, though high at an average $2.5 million, have plateaued.

A partial bet on China

The country is important to the chain but still not the main event.

The U.S. market is well saturated, leaving McDonald’s stuck fighting for share with both fancier brands like Chipotle and low-cost Taco Bell fare. So an obvious avenue for future growth is the vast new Chinese market. Last year, 20% of the chain’s store openings were in China.

But China remains a “smaller piece of a much bigger business,” says Morgan Stanley analyst John Glass. He estimates the country represents up to 4% of profits.

Competitor Yum Brands, which owns Taco Bell, KFC, and Pizza Hut, gets a third of its earnings from China. That makes McDonald’s a less risky play — Yum saw a 4% drop in revenues last year in part because of a bird flu outbreak, for example — but also means there’s less potential for fast profit gains.

No shortage of cash

A steady flow helps the company pay back its investors.

Since 1976, McDonald’s has consistently delivered cash back to shareholders in the form of dividends or share repurchases. Today the stock offers an attractive dividend yield of 3.4%. And there’s every reason to think that the business will keep delivering a strong income.

McDonald’s is built to generate consistent cash. When a franchisee launches a new store, the company often purchases the land and collects rent on top of franchise fees. So even in tough times, the “downside is relatively limited,” says Westwood Holdings portfolio manager Matthew Lockridge.

If management can find that elusive new hit product and deliver improved growth, that plus a reliable payout may satisfy value-minded investors.


Tech Looks Like It’s Entering Another Period of Insanity

Fackbook Acquires WhatsApp For $16 Billion
Justin Sullivan—Getty Images

But are some sky0high prices defensible?

Is the world of tech investing losing its head again? Or are some tech investments worthwhile even at jaw-dropping prices because of the potential for future growth? Such questions crop up now and then, but in the past few weeks they’ve come up with an alarming frequency.

Last month, after Facebook said it would buy WhatsApp for $19 billion, a furious debate broke out over whether the price was insane or defensible. Since then, similar debates have emerged in different areas: most recently, the wildly successful IPO of digital-healthcare startup Castlight; and Intercept Pharmaceuticals, a top-performing stock in the red-hot biotech sector, among others.

There are key differences between these three examples: One is in M&A, another a recent IPO and the third as stock that has traded publicly for a few years. Each operates in a different sector. But they’ve all sparked debates that have a similar dynamic – a disconnect between those who see strategic sense in betting on future growth, and those who say the valuation is unjustified by any logic.

And there seems to be no bridging the disconnect between the two.

Facebook’s acquisition of WhatsApp. Announced four weeks ago, the proposed deal would offer $4 billion in cash and the rest in Facebook shares, which most analysts expect to keep rising for the next year at least.

Why it’s so promising: Facebook needs more must-have apps to remain relevant on mobile. WhatsApp attracted 450 million users with 55 employees and no marketing. Facebook gets better exposure to emerging markets and strengthens its ownership of the photo-sharing market. WhatsApp could conceivably contribute billions to Facebook’s annual revenues. Importantly, Facebook keeps Google from owning WhatsApp.

Why it’s so overvalued: Facebook is paying $345 per employee. For a precedent you have to go back to the dot-com era. Valuing a company on a per-user basis was a desperate metric used in that same era, which didn’t end well. Monetizing WhatsApp faces challenges: Competition is rife (WeChat, KakaoTalk, Kik), and some may undercut WhatsApp’s subscription fees or offer a richer platform of services.

Castlight’s IPO. Founded in 2008, the San-Francisco-based company uses cloud technology to help companies manage healthcare costs more efficiently. Castlight filed to raise $100 million last month, but demand bumped its take up to $176 million. The stock rose 149% to $39.80 on its first day of trading last Friday before settling at $37.25 Monday.

Why it’s so promising: Health care is a notoriously opaque industry, and Castlight is early in creating transparency through cloud software. Its founders hail from RelayHealth (acquired by McKesson), VC firm Venrock and Athenahealth, adding cred on Wall Street. Castlight has a $109 million backlog of contracts not recognized yet at revenue.

Why it’s so overvalued: The company listed at 107 times revenue and now trades at 250 times revenue. (Athenahealth trades at 11 times revenue.) It’s lost a total of $131 million to date. Castlight’s involvement in the cloud and healthcare exposes it to two markets subject to speculative investment.

Intercept’s stock surge. The New York-based developer of drugs for chronic liver disease went public in late 2012 at $15 a share and was trading around $60 a share in early January. After phase II trials of a drug was stopped early because of positive results, the stock has since risen as high as $462 last week, a 577% gain year to date.

Why it’s so promising: The drug treats NASH, a liver condition that can lead to liver failure and that affects an eighth of the US adult population. It’s considered an unmet medical need with no approved therapies. One analyst called the news “potentially paradigm changing” while another said the market could be “bigger than Hepatitis C” with sales as high as $4 billion.

Why it’s so overvalued: Intercept has lost $186 million to date, yet its market cap has gone from $1 billion in January to $8 billion today, and analysts are saying it could rise to $17 billion. The NASH drug has passed a key obstacle but still faces more. The phase II results don’t necessarily guarantee regulatory approval, and long-term side effects could hurt marketing.

It’s important to note that none of these are fly-by-night companies attempting to mislead investors. Each has a well-run business and a promising story to tell. What’s notable is that the market is willing to price each one on a best-case scenario that lies several years down the road. And that’s assuming nothing will go wrong.

No investor wants to be left out of the next big thing. And yet the willingness to invest in sunny, best-case scenarios is something that was absent from the market even a couple of years ago, but is growing more commonplace in 2014. Back then, companies with nine-digit losses couldn’t squeak into the markets. And tech giants like Facebook were focusing on modest acqui-hires.

We’re in a different market now. One where valuations are starting to resemble those of 15 years ago. The difference this time is many of the highly valued companies have a persuasive story to tell. But even a good story can lead to disappointment when it’s priced to perfection.

MONEY Investing

Fixing the Holes in Your 401(k)

Employer-sponsored retirement plans are getting better, but they've still got plenty of holes. Here's how to plug them.

Prodded by Washington, the 401(k) industry has in recent years cut fees, increased participation, and made it generally easier for Americans to invest in these tax-advantaged retirement accounts.

Still, shortcomings remain. And some of the fixes that have improved the overall system may actually be impeding your progress.

“You’ve got be careful,” says Rick Meigs, who runs, an industry website that tracks trends in the retirement marketplace. “There are always unintended consequences.”

In the stories that follow you’ll learn the various ways that your plan is letting you down. More important, you’ll find out how to make the best out of a savings tool that — holes and all — is still likely to be your best bet at being able to fund a pleasant and prosperous retirement.

Leak No. 1: Auto-enrollment is a double-edged sword

The push to enroll employees in 401(k)s automatically has generally been praised — for good reason. Participation rose from 67% in 2005, before these programs began, to 78%, as young workers have been swept into the system. But for long-time savers, auto-enrollment cuts a different way.

Related: What is a 401(k) plan?

Most companies set aside a fixed pot of money for 401(k) matches and other benefits. As the pool of eligible employees grows, firms can either set aside more or cut the size of the benefits. It’s too early to tell how companies will respond in the long run, but a study affiliated with the Boston College Center for Retirement Research found that plans without this feature matched 3.5%, vs. 3.2% for auto-enroll plans.

Another unintended consequence: Many plans default workers in at a meager 3% savings rate, in part to avoid scaring off new participants. You know that’s too little. What you may not realize, though, is that a low default rate for newbies can help “frame” what even experienced hands think is an adequate level of saving. In auto-enroll 401(k)s, those making more than $100,000 sock away 9.3% of their pay, vs. 10.7% for highly paid workers who aren’t in such plans.

“People look at the 3% and think, ‘That’s what the company is recommending. So if I’m saving twice as much, that must be a good thing,’ ” says Rob Austin, director of retirement research at the benefits consultant Aon Hewitt. Yet even three times the default is probably insufficient, as many planners advise socking away 15% of your pay, including the match.


Make automation work for you. Two in five auto-enroll plans offer a different automated function — one that boosts your contribution rate over time unless you opt out, according to the Plan Sponsor Council of America. If yours doesn’t, you may still be able to opt in to such a tool. Even if you think you’re disciplined enough to make these adjustments yourself, sign up just in case.

Bank your raises as you go. At the same time some businesses are cutting their match, many are restoring bonuses and raises. Commit to saving at least a portion of those pay hikes before you get them, says Shlomo Benartzi, chief behavioral economist at AllianzGI.

“People tend to feel the pain of losses more than the pleasure of gains,” he says. In this context, money “lost” to savings “feels like a loss.” But that won’t be the case if you sock the raise away before you ever have a chance to enjoy it.

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401(k) Fees: Still Too High

401(k) Advice Could Come at a Cost

Does Your 401(k) Offer Too Few Index Funds?

401(k) Waiting Periods Take a Toll

Your Company’s Stock Is Too Risky for Your 401(k)


401(k) Fees: Still Too High

401(k) fees are beginning to come down, but maybe not enough.

Employer-sponsored retirement plans are getting better, but they’ve still got plenty of weak spots. MONEY looked at six holes you might see in your 401(k) plan, and some fixes you can make to address them. Below, how to shore up one of those leaks: the fees you pay.

Leak No. 2: Fees are falling, but perhaps not enough

Thanks in part to Labor Department regulations, which came on the heels of a string of class-action lawsuits, 401(k) costs are beginning to come down. The average investment fee charged by stock funds in these accounts, for instance, fell from 0.74% of assets annually in 2009 to 0.63% in 2012, the last full year for which data are available, according to the Investment Company Institute, the mutual fund industry’s trade group. But those figures mask a two-tiered system. Employees at large companies with billion-dollar plans frequently get access to ultra-cheap investment options that are usually available only to institutions. Work for small businesses that lack economies of scale and retirement-market expertise, and you’re probably paying significantly more. For example, the average fee that investors pay in plans with less than $50 million in assets is 0.94%, according to the financial information company BrightScope. A few plans charge fees as high as 3%.


Take full advantage of your employer match. Even if your plan is expensive, it almost always makes sense to contribute enough to get the full match, which is essentially free money.

Then look for alternatives. Albany planner Walt Klisiwecz says if your plan charges total fees above 1.25% of assets per year, you should look for a work-around. He recommends that investors in pricey plans put their next incremental dollars into traditional or Roth IRAs, where you can buy any fund you want. Those who aren’t allowed to deduct traditional IRA contributions because their adjusted gross income is above $70,000 for singles or $116,000 for married couples — or who expect to be in a higher tax bracket at retirement — should go with the Roth. Roth contributions aren’t deductible, but withdrawals at retirement are tax-free. You can save $5,500 a year in a Roth ($6,500 for those 50 and older) if you’re single and earn $114,000 or less or married and make $181,000 or less.

Stick with the lowest-fee funds in the plan. After you max out on your IRA, go back and redirect any extra money to your 401(k). But go with the lowest-fee funds in your plan (see Leak No. 4) to make the best of a bad situation. “You’ve just got to hold your nose,” Klisiwecz says.

Is your 401(k) plan letting you down? Send a letter to the editor to

MONEY Investing

401(k) Advice Could Come At a Cost

Investing for retirement can be confusing, but your employer's 'free' 401(k) advice may come at a price.

Employer-sponsored retirement plans are getting better, but they’ve still got plenty of weak spots.

MONEY looked at six holes you might see in your 401(k) plan, and some fixes you can make to address them. Below, see another way your retirement plan might be letting you down — with handholding that isn’t free.

Leak No. 3: Plans are offering more advice but…

Companies understand that most Americans are confused about investing for retirement. Roughly half of large plans now offer access to some type of investment management, up from 11% in 2007, according to Hewitt. These services don’t simply tee up suggestions on what to do with your account. They pick funds for you and adjust your portfolio automatically.

Vanguard, one of the largest 401(k) providers — largely by improving participants’ stock and bond mix. In reality, though, there are no guarantees. Managed accounts in Vanguard’s plans returned just 1.9% a year on average between 2007 and 2012, vs. 2.3% for DIY participants.

Part of the problem: Handholding isn’t free. In some company plans these add-ons will cost as much as 1% or more of your assets a year, eliminating most or all of the potential advantage. The most popular providers, Financial Engines and Morningstar’s Retirement Manager program, charge about half that or less.

Still, those costs are on top of the investment fees you’re paying for the underlying funds, which could run you another half or full percentage point — dragging down your returns.


In your thirties and forties: All the advice you may need is guidance on how much to save (answer: shoot for 15%) and a target-date fund, says Lori Lucas, defined-contribution practice leader at the investment consulting firm Callan.

Target-date funds — all-in-one portfolios that expose you to stocks and bonds and that automatically grow more conservative over time — are a form of professional management available in two-thirds of plans.

In your fifties and beyond: At this stage, you’ve accumulated a sizable sum and the idea of handing over investment decisions to a pro may not sound bad.

“This is especially true for near retirees,” says Lucas. “You are making some complex decisions that are both major and irreversible.”

Related: Should I delay my retirement?

The one in four workers 56 to 65 who held more than 90% of their 401(k)s in equities heading into the financial crisis certainly could have used such help. Don’t expect miracles, though. Hewitt found that on average investors who sought help performed about the same as investors who were on their own in 2008. They did, however, perform better in 2009 when stocks bounced back.

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MONEY Investing

Does Your 401(k) Offer Too Few Index Funds?

Research shows that passive investing -- buying index funds that hold broad swaths of the market -- is your best option.

Employer-sponsored retirement plans are getting better, but they’ve still got plenty of weak spots.

MONEY looked at six holes you might see in your 401(k) plan, and some fixes you can make to address them. Below, see another way your retirement plan might be letting you down: a limited choice of index funds.

Leak No. 4: You can have index funds, but only a few

There’s a vast body of research that shows passive investing — through index funds that simply buy and hold large parts of the market — is your best bet. That’s because most index funds charge a fraction of the fees actively managed portfolios do. And saving as little as half a point in expenses annually over 35 years could easily generate $100,000 more in lifetime savings, assuming a modest 6% annual return.

“I wouldn’t put a penny in anything else,” says Miami financial adviser Frank Armstrong.

Related: 401(k) advice could come at a cost

Then why do so few plans let you index your whole portfolio? Only half offer index funds for foreign equities or intermediate-term bonds. And fewer than two in five let you index small-company stocks.

In most cases, your employer doesn’t pay for record keeping or other administrative costs directly. Those are covered by fund fees. Since index funds charge very little, plan designers fear that including too many may make plans unaffordable. Many 401(k)s are also run by fund or insurance companies that “want to offer their own products,” says Brooks Herman, head of data and research at BrightScope.


Start with what your 401(k) does offer. Ninety-five percent of plans include an index fund that tracks the S&P 500 or a similar index. These blue-chip investments are likely to be the single biggest piece of your strategy, making up as much as half your total portfolio in your forties.

Next, look at your actively managed options. The average expense ratio for indexed foreign funds, small-stock funds, and bond funds are 0.59%, 0.48%, and 0.31%. If you have access to active funds with fees close to those levels, they may be a decent alternative.

Finally, think outside your 401(k) box. While you can contribute only about a third as much annually in an IRA as the 401(k) max, that’s not necessarily a problem. In a balanced portfolio of stocks and bonds, your fixed-income weighting may only amount to about a third. You may have also rolled over old 401(k)s into IRAs. Those balances probably aren’t huge, but you can use them for exposure to small or foreign stocks, which may account for just 10% to 20% of your total portfolio.

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Mutual Funds Gone Down the Drain

Forty-one percent of U.S. mutual funds operating 10 years ago, closed before 2014.

Your mutual fund does worse when its close to extinction. Here's what to do about it.

Of all traditional U.S. mutual funds operating a decade ago, four in 10 shut down before 2014, reports Morningstar.

Why care? Even though you can cash out (or get shares in a fund absorbing the loser), costs rise and performance falls as the end nears, says Daniel Kern, president of investing firm Advisor Partners, who has studied closures.

Here’s how not to get swept away in the failures.

Stopping your losses

Seek high marks. Eight in 10 funds given five stars by Morningstar in 2002 lived to 2012; only 39% of one-star funds did, according to a study Kern co-wrote. Stewardship grades, gauging how shareholders are treated, count too: A and B funds outlast low-ranked ones, says Morningstar’s Laura Lutton.

Don’t think small. Bigger funds aren’t always better, but those that stay small or shrink too much have high failure rates. Be wary of portfolios with assets well under $250 million, says Kern’s collaborator Tim McCarthy, author of The Safe Investor.

Exit early. If you think a fund will close, sell. Funds lose an average of 3.6% in their final 18 months, Vanguard has found. Has your fund already merged into another offering? Be picky, advises San Diego planner Leonard Wright, and sell the new one if you wouldn’t have bought it otherwise.

MONEY Investing

Ford Revs Up Sales

Ford's domestic auto sales accelerated last year. 2013 Getty Images

Ford has done well to improve its sales, but can it get into luxury market and broaden its reach overseas.

The nation’s second-biggest automaker has been cruising lately, thanks largely to a series of successful vehicle redesigns that are winning over fuel- and style-conscious young buyers.

But Ford Motor Co.’s dramatic face-lift and CEO Alan Mulally’s cost-cutting efforts are old news. Investors have grown accustomed to better-than-average performance from Ford , which ranked as the world’s sixth-largest carmaker last year.

Today Wall Street wants to see whether Mulally & Co. have enough in the tank to broaden Ford’s rebound to include luxury vehicles and key foreign markets.

Sales are surging

As U.S. auto sales have come roaring back, Ford has managed to stand out. How? The company “rolled out a strong field of products over the last few years,” says Kelley Blue Book senior analyst Karl Brauer. “The Fusion, Focus, and Fiesta — combined with a resurgence of the truck market thanks to the rebound in housing — have made Ford a fascinating company to watch.” Indeed, Fusion sales rose 22% last year to nearly 300,000, almost equaling the Toyota Corolla’s popularity.

Nearly two dozen more upgrades are due out this year. The redesigns are taking place as Mulally is cutting costs by trimming the number of platforms on which vehicles are built from 27 in 2007 to nine by 2016.

But the stock is stuck

Despite the upbeat results, Ford’s stock has lagged. Execs warned that profit margins could fall in 2014 because of a record number of new product launches, such as the Lincoln MKC, a small luxury crossover.

There’s also the fact that investors have been betting on a rebound since 2009. They now want to see more. Ford’s resurgence, for instance, has yet to reach the luxury market: Its Lincoln line sold fewer cars last year than in 2012, and about 100,000 less than Cadillac.

Related: Road to Wealth

Says senior analyst Jessica Caldwell: “Lincoln is trying to have a brand renaissance, but that takes time.”

And Ford trails abroad

Overseas, Ford’s outlook is decidedly mixed. The carmaker has expanded its share in Europe, where auto sales remain weak. And in China, where sales growth is robust, Ford “is definitely playing catch-up to GM,” says Matthew Stover, an analyst with Guggenheim Securities.

Still, the company is making strides. Its 936,000 sales in China last year represented nearly a 50% jump from 2012. And Ford is now the fifth-largest foreign car seller in China, having leaped over Toyota. Mulally is investing heavily in the region, with plans to increase its number of production plants and dealerships.

Will they bear fruit? That will largely depend on whether Ford’s youthful, fuel-conscious designs translate to foreign audiences.


The Easiest Way to Juice Your Portfolio

Take best advantage of the tax code to increase your portfolio's real rate of return. Photo: Drazen/Shutterstock

There's one absolutely foolproof way to become a better investor: Don't leave free money on the table. Designing your portfolio so that it takes best advantage of the tax code is a risk-free way to boost your true, after-tax return.

The basics: Use tax-advantaged accounts first

Before you make any other investments, max out your 401(k) and Individual Retirement Account options first. Deductible traditional IRAs and 401(k)s allow you to invest pre-tax dollars now and have the money accumulate tax-free until you make withdrawals in retirement. The withdrawals are then taxed as ordinary income.

With a Roth IRA, you pay the taxes up front — that is, unlike with a traditional IRA, your contributions aren’t deductible. But withdrawals in retirement are tax free.

There are limits to how much you can contribute to either kind of IRA, and some high earners might not be able to contribute to a deductible IRA or directly to a Roth. There is, however, a “back door” into a Roth for those above the income limits. You can contribute to a non-deductible IRA and then immediately convert to a Roth. (Caution: If you hold other money in traditional IRAs, there are potential tax consequences to this move. So read “The other way to invest in a Roth IRA” before making this move.)

Roth or traditional IRA?

In general, a traditional IRA makes sense if you think you will face a lower tax rate in retirement than you do today. But of course you can’t be 100% certain what tax rates will be when you retire, so some advisers say it makes sense to hedge your bets by holding some money in both kinds of tax-advantaged accounts.

Investments that hold down the tax bill

Once you’ve exhausted your tax-advantaged options, look for investments that minimize what you’ll owe. If you are investing in stocks, an index fund is usually a good option. Because these funds tend to hang onto the stocks they buy, they are less likely than most actively managed funds to incur lots of taxable capital gains that must be distributed to shareholders.

Income-seeking investors can consider tax-exempt municipal bonds, either directly or via a fund. These bonds are generally issued by state or local governments, and the income they pay is free from federal taxes. They may also be free from state income taxes, depending on where you live and where the bond was issued.

Road to Wealth: The college savings cheat sheet

Because the tax break is valuable, these bonds don’t have to offer yields as high as comparable fixed-income investments. That means they make the most sense for high-income investors who face relatively high income-tax rates.

Currently, however, a number of factors have combined to make municipals look attractive to a broader range of investors. In particular, the rates on other types of bonds remain low, and municipal bonds appear to have been unfairly stigmatized by a few high-profile recent crises like those in Detroit and Puerto Rico; as a result, tax-exempt munis are worth a look even if you’re not in a high tax bracket.

Location, location, location

Investors with significant assets spread across both tax-advantaged and taxable accounts should think carefully about which investments go where. Investments that pay out ordinary income, such as bond funds, may be best suited to tax-advantaged accounts, since that income faces higher rates than long-term capital gains or qualified stock dividends.

TIME Investing

Warren Buffett Richer Than Ever

Exclusive Portraits Of Berkshire Hathaway Inc. Chief Executive Officer Warren Buffett
Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., speaks during an interview in New York, Oct. 22, 2013. Scott Eells/Bloomberg via Getty Images Scott Eells—Bloomberg/Getty Images

Berkshire Hathaway, the investing conglomerate helmed by Warren Buffett for more than 50 years, reaped a record $19.5 billion in profits in 2013 -- far exceeding analysts' expectations of $18 billion

Warren Buffett’s investing conglomerate saw record profits in 2013 of $19.5 billion, riding a wave of economic improvement in the United States, the company said in its annual report released Saturday.

Buffett’s holding company Berkshire Hathaway exceeded analysts’ expectations of $18 billion and saw significant gains over 2012, when it posted net profits of $14.8 billion.

The company’s stellar performance depends on well-known consumer goods and services that do well in economic boom times, as Buffett chiefly invests in established, large companies like Walmart, General Motors, American Express, and Coca-Cola.

Buffett’s annual shareholder letter, known for its rustic tone, emphasized his commitment to supporting American companies for the long term.

“Who has ever benefited during the past 237 years by betting against America? If you compare our country’s present condition to that existing in 1776, you have to rub your eyes in wonder. And the dynamism embedded in our market economy will continue to work its magic,” the so-called “Oracle of Omaha” said in the letter. “America’s best days lie ahead.”

Berkshire purchased major assets of NV Energy and H. J. Heinz Geico, which “will be prospering a century from now,” Buffett said. Berkshire’s insurance company reported a $394 million operating profit in the fourth quarter.

Buffet’s conglomerate didn’t edge out the S&P 500, which grew at a phenomenal rate of 32.4% last year, while Berkshire saw a gain in per-share book value of 18.2%. Since 1965, Berkshire has seen a compounded annual gain of 19.7%, while the S&P 500 has increased 9.8%.

Buffett, 83, has helmed Berkshire for more than half a century and overseen its growth into a $288 billion holding company.

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