Motley Fool: Investing with the Oracle of Omaha

Many people would love to invest like Warren Buffett and get his kind of returns. Over nearly 60 years, his company Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has grown in value by an annual average of around 20% – twice the S&P 500’s 10%.

Few of us are as smart as Buffett, though.

Instead we can just invest with him, by buying Berkshire Hathaway stock, and share in Berkshire’s growth. (Note that since Berkshire is now worth more than $775 billion, it’s not likely to grow quite as fast as it has in the past.)

What do you get if you invest in Berkshire Hathaway? Well, it encompasses dozens of wholly owned subsidiaries, such as GEICO, Benjamin Moore, See’s Candies, Fruit of the Loom, the McLane trucking company and the entire BNSF railroad network. Many of them – such as those in energy and insurance – are defensive in nature, meaning that people will keep buying them in any kind of economic environment.

Berkshire also holds hefty positions in stocks, recently owning 5.6% of Apple, 12.8% of Bank of America, 20% of American Express, 9.2% of Coca-Cola and 5.7% of Chevron.

Buffett is 93, and his vice chairman and good friend Charlie Munger recently died at 99, but the company has been built to last – it has talented lieutenants waiting in the wings. (The Motley Fool owns shares of and has recommended Berkshire Hathaway.)

Ask the Fool

Q. What are municipal bonds? – S.W., Strasburg, Virginia

A. Bonds are essentially loans, with entities such as the federal government or companies borrowing money from investors and promising to pay it back with interest.

When a state, county or local government issues bonds, they’re referred to as municipal bonds, or “munis.”

Municipal bonds are often used to raise money for projects such as the building of a school or the repair of bridges, or perhaps to address a community’s housing or transportation needs.

Municipal bonds vary in their riskiness, depending on the financial health of their issuer.

There are two main kinds of munis: “General obligation” ones are backed by the issuer’s credit, while “revenue bonds” depend on the project being funded to generate the needed revenue and are therefore riskier.

One reason investors like municipal bonds is that the interest they pay is usually exempt from federal taxation, and often state taxation as well – though capital gains on munis are taxable.

They often sport lower interest rates than corporate bonds, due to their tax-exempt interest.

Learn more about them at MunicipalBonds.com and Fool.com/investing/how-to-invest/bonds/municipal-bonds.

Q. When is “earnings season”? – P.V., Overland Park, Kansas

A. There are four earnings seasons per year.

Publicly traded companies in the U.S. must issue earnings reports quarterly, as well as issuing a more detailed annual report – which is typically accompanied by a data-heavy “10-K” report.

Most companies end the first quarter on March 31, reporting on it between April 15 and May 31.

The next quarters generally end on June 30 (reporting between July 15 and Aug. 31), Sept. 30 (between Oct. 15 and Nov. 30), and Dec. 31 (between Jan. 15 and Feb. 28).

My Dumbest Investment

I’m a foreigner, and when I first came to the U.S., I thought I’d share my good fortune and donate to some charities.

I don’t know what they did with my money, but I sure do know what they did with my name, address and phone number!

They sold them all, making my life a misery.

I now receive lots of mail and phone calls begging for money.

After only three years in the U.S., I had nearly 10,000 complimentary address labels – from charities I never donated to. I no longer give to any charity. – K.E., Charleston, South Carolina

The Fool responds: You may not be able to stop receiving all such communications, but try these strategies.

When donating, include a note requesting to not have your personal information shared.

You can also send a note after donating, expressing your communication preferences.

At DMAchoice.org, you can register for $4 and have your information removed from gobs of mailing lists (but not all) for 10 years.

If a charity doesn’t honor your request, you can report it at the Better Business Bureau’s Give.org site.

It’s well worth supporting charities addressing issues and areas you care about, such as hunger, poverty, the environment or the arts.

Hearing from them can be annoying, but that’s how many great charities generate a lot of the money they use to do good and important work.