Buffett Assails Money-Manager Fees as Berkshire Reports Profit Rise

Billionaire also declares victory in his $1 million bet with another asset manager that low-cost index funds would out earn hedge funds over a decade

 Warren Buffett intensified his attacks on Wall Street money managers Saturday, saying that investors wasted more than $100 billion over the last decade on expensive advice.
.. “The bottom line,” Mr. Buffett wrote, is that “when trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients.”
.. Book value, a measure of assets minus liabilities that is Mr. Buffett’s preferred yardstick for measuring net worth, rose 10.7% in 2016, compared with a 12% total return in the S&P 500, including dividends.

.. Berkshire’s BNSF railroad subsidiary. Net earnings at Berkshire’s railroad fell 16% in 2016 due largely to a drop in coal demand.
.. Ajit Jain, widely considered to be one of the leading candidates to take the Berkshire CEO job when Mr. Buffett is no longer on the scene
.. Berkshire, he said, is still willing to buy back its shares if prices fall below 120% of book value.
.. Mr. Buffett praised some companies, including Bank of America Corp., for buying back shares. “Some people have come close to calling [buybacks] un-American—characterizing them as corporate misdeeds that divert funds needed for productive endeavors,” Mr. Buffett said. “That simply isn’t the case.”
.. Berkshire has warrants to buy 700 million shares of Bank of America at $7.14 apiece. The stock closed Friday at $24.23, so Mr. Buffett is looking at a paper gain of about $12 billion.
.. He attributed America’s “miraculous” economic growth to “human ingenuity, a market system, a tide of talented and ambitious immigrants, and the rule of law.”
.. He instead saved his sharpest comments for pricey money managers who pledge to beat the market, saying that in his lifetime he has identified “ten or so professionals” who can do so successfully.
.. “If 1,000 managers make a market prediction at the beginning of a year, it’s very likely that the calls of at least one will be correct for nine consecutive years,” he wrote.
.. In 2007 Mr. Buffett bet $1 million that his chosen index fund, the Vanguard 500 Index Fund Admiral Shares, would outperform hedge funds over the next decade.
.. Mr. Buffett in his letter Saturday praised Vanguard founder Jack Bogle as a “hero.”
.. “If a statue is ever erected to honor the person who has done the most for American investors, the handsdown choice should be Jack Bogle.”

The National Death Wish

A few weeks ago, Tom Cotton and David Perdue, Republican senators from Arkansas and Georgia, introduced an immigration bill that would cut the number of legal immigrants to this country each year in half, from about a million to about 500,000.

.. Cotton offered a rationale for his bill. “There’s no denying this generation-long surge in low-skilled immigration has hurt blue-collar wages,” he said. If we can reduce the number of low-skill immigrants coming into the country, that will reduce the pool of labor, put upward pressure on wages and bring more Americans back into the labor force.

.. Nationwide, there are now about 200,000 unfilled construction jobs, according to the National Association of Home Builders. If America were as simple as a lake, builders would just raise wages, incomes would rise and the problem would be over.

.. construction is highly cyclical. Hundreds of thousands of people lost construction jobs during the financial crisis and don’t want to come back. They want steadier work even at a lower salary.

.. In other words, the labor shortage hasn’t led to higher wages; it’s reduced and distorted the flow of the economic river. There’s less home buying, less furniture buying, less economic activity. People devote a larger share of their income to housing and less to everything else. When builders do have workers, they focus on high-end luxury homes, leaving affordable housing high and dry.

.. immigrants did not push down wages, but rather freed natives to do more pleasant work.

.. For the life of me, I can’t figure out why so many Republicans prefer a dying white America to a place like, say, Houston.

.. The large immigrant population has paradoxically given the city a very strong, very patriotic and cohesive culture, built around being welcoming to newcomers and embracing the future

.. Cotton and Perdue are the second coming of those static mind-set/slow-growth/zero-sum liberals one used to meet in the 1970s. They’ll dry up the river. I wish they had a little more faith in freedom, dynamism and human ingenuity.

Trump at CPAC: Right’s Unlikely Hero Renews Attack on Press

reiterating his charge that “fake news” outlets are “the enemy of the people.”

The opening portion of the president’s free-range, campaign-style speech centered on a declaration of war on the news media — a new foil to replace vanquished political opponents like Hillary Clinton.

.. Mr. Trump, who once posed as his own public relations man to plant news stories in New York tabloids — and spoke frequently with reporters off the record during the campaign — called for an end to the use of “sources,” meaning anonymous sources.

.. “A few days ago, I called the fake news the enemy of the people because they have no sources — they just make it up,” he said. He added that his “enemy of the people” label applied only to “dishonest” reporters and editors.

.. After spending 10 minutes listing the shortcomings of the news media, Mr. Trump said criticism “doesn’t bother me.”

.. Mr. Trump’s speech this year — which included a promise to throw illegal immigrants “the hell out of the country” and a recitation of his law-and-order campaign promises — represented a not-entirely friendly takeover of CPAC, an establishment Republican group whose leadership once viewed the party’s surprise standard-bearer as a noisy interloper.

.. He followed his attack on the news media with a far-ranging preview of Tuesday’s address before Congress, offering an unspecified plan to improve the Affordable Care Act, ratcheted-up enforcement of immigration laws and a request for increases in spending that will result in “one of the greatest military buildups in all of history.”

.. Mr. Trump told the audience this year that the real reason he skipped the meeting was because his policy positions were “too controversial.”

Top U.S. Officials Met With Defiance in Visit to Mexico

Secretaries of State and Homeland Security encounter objections to hard U.S. line on deportations

MEXICO CITY—Top U.S. officials arrived for talks here Wednesday to find a defiant Mexican government refusing to accept President Donald Trump’s tougher immigration and deportation policies.

.. “We won’t accept it because we don’t have to,” he added, in an apparent reference to U.S. plans to return illegal migrants to Mexico, regardless of their nationality.

 Mr. Videgaray’s declaration spelled trouble for Secretary of State Rex Tillerson and Homeland Security Secretary John Kelly, who a White House official said were sent to “talk through the implementation” of Mr. Trump’s guidelines.

.. The guidelines issued separately this week suggested the U.S. would seek to have people arriving from countries other than Mexico await their deportation proceedings in Mexico rather than in the U.S. At the end of that process, those people would be returned to their country of origin, officials said.
.. Ahead of the visit, Mexican officials suggested that a U.S. pullout from Nafta would affect all aspects of U.S.-Mexico ties.
“Logically, there wouldn’t be incentives to continue collaborating on the issues most important to national security in North America, such as the issue of migration,
.. Mexico and the U.S. have collaborated for decades on efforts to fight drug cartels, police the border and prevent terror attacks.
.. Mexican officials want to use issues including national security and migration as leverage for future talks about Nafta, experts said