Weekly Wrap: Berkshire Buys and Diversification in 2021

Editor's note: Read the latest on how the coronavirus is rattling the markets and what investors can do to navigate it.

These days, everyone wants to know what Cathie Wood is buying and selling. (The latest I've heard: buying Shopify SHOP and selling Square SQ, FYI.) And I understand why. Wood's theme-based ARK Innovation ETF ARKK returned a stunning 153% last year. Of course people are curious about what she's investing in to generate those kinds of results.

The antidote to all the talk about hot stocks and speculative plays is taking place this weekend: Berkshire Hathaway's annual meeting. Warren Buffett's thoughtful, fundamentals-based approach (and Morningstar's, for that matter) may seem out of touch in a market where Tesla TSLA trades at a 99% premium to our fair value estimate and social media is considered a valid source of stock research.

Even I, a longtime Morningstar employee, have to admit: There may be room for ultra-aggressive investing (or speculation, as many would call it) in some portfolios--that's what dollars earmarked as "mad money" are for. But mad money is money you can afford to lose. It's not the money you're relying on to build wealth to fund retirement, pay for college, or finance any other goal. No, you need "sane money" (and a decent savings rate) to bankroll those dreams.

The good news is that the sane money approach isn't complicated, as Buffett noted in his annual letter to shareholders earlier this year: "All that's required is the passage of time, an inner calm, ample diversification, and a minimization of transactions and fees."

Looks like investors today can still learn quite a bit from Buffett.

--Susan Dziubinski

Editor's Picks 10 Stocks Buffett Might Buy, if He Could The investing legend might take an interest in these high-quality firms if Berkshire were nimble enough. In Praise of Target-Date Funds To critics of target-date funds: Are you seeing what I'm seeing? How to Diversify Your Portfolio in 2021 Diversification strategies that worked in the past may not work in the future. Rising Rates and Prices Won't Doom the U.S. Housing Market But more-affordable homes will be needed to realize millennials' ownership potential. Why Wall Street Issues So Many Buy Recommendations The reasons are not entirely nefarious. Introducing the New Alternative Morningstar Categories We've split, retired, and merged the old alternative categories into new and existing categories.

Portfolio Planning and Personal Finance With Christine Benz Where to Invest When Yields Are Low How does an investor extract a livable income stream from a retirement portfolio in such a low-yield environment? Where and When to Take Income From Your Retirement Portfolio Taking money from your retirement fund is just as important as adding investments.

Mutual Funds and Exchange-Traded Funds Pulling Back the Curtain on the People Pillar Rating of Bond Funds A look under the hood. Funds That Buy Like Buffett, 2021 These funds hold the same stocks that the Oracle of Omaha does. IVA Founder Charles de Vaulx Has Died The respected value manager died in an apparent suicide, police said. Emerging-Markets Sovereign Bonds: A Risk Worth Taking? Their yields are certainly compelling in this low-rate environment. The Best Value Funds These value-focused mutual funds and ETFs all earn Morningstar Analyst Ratings of Silver or better. Sustainable Fund Flows Reach New Heights in 2021's First Quarter Green funds are blossoming this spring.

Stocks Best Stocks for the Coming 5G and Cloud Infrastructure What to look for and what to avoid in this area. What's Berkshire Hathaway Worth Today? Here's our view ahead of its annual meeting. Questions We'd Like Answered at Berkshire Hathaway's Meeting The impact of the coronavirus, taxes, cash, and succession planning are topics that we hope Warren Buffett will address on Saturday.

Stock Analyst Updates Tesla's First Quarter Is an All-Time Company Record We are increasing our Tesla fair value estimate to $354 from the time value of money adjustment in our model. Cutting Through Noise, the Trend Is Positive for Visa Processed transactions in the quarter were up 8% year over year. GE on Solid Footing; We Raise FVE We increase our General Electric fair value estimate to $15.10 from $14.10 previously, primarily due to interest rate tailwinds in GE's pension liability, as well as time value of money. AMD Calls for 2021 50% Revenue Growth After Strong Q1 AMD reported its sixth consecutive quarter of double-digit revenue growth thanks to broad-based PC, server, and game console strength. Alphabet's Q1 Beats All Expectations; FVE Up to $2,925 Continuing strength in ad revenue due to the economic recovery, which drives more brand ad spending, and higher direct-response ad spending drove growth higher. The strong ad business was combined with the firm's successful revenue diversification as the cloud segment is benefiting from digital transformation and wider adoption of cloud by businesses of all sizes. Q1 a Mixed Bag but Starbucks' U.S. Recovery Encouraging Strength in the U.S. market was encouraging, and we modestly raise our fair value estimate to $107 per share (from $106 previously), and view shares as modestly overvalued at current prices. Microsoft Delivers Strong Quarter; Raising FVE to $278 Wide-moat Microsoft is benefiting from a second wave of digital transformation as well as strength in gaming, which helped the company once again drive material upside compared with its revenue and EPS outlook for the quarter. Fed Holds Rates Steady, No Hints of Tapering We expect the Fed to hold off on hikes until inflation is at or above 2%. 737 MAX Deliveries Improve Boeing's First Quarter We are maintaining our fair value estimate for the wide-moat company.

Rekenthaler Report How Many Stocks Beat the Indexes? Unlike the children of Lake Wobegon, most companies are below average.

Advisor Insights With Biden Tax Proposals, Charitable Strategies Rise in Importance Charitable giving might become the best way for wealthy investors to lower their taxes.

The Long View Podcast Mike Piper: Delaying Social Security Not Always a Good Deal The author and Social Security expert discusses the best and worst times to claim Social Security, Roth versus traditional IRAs, and how retirees can protect against a weak market.

Policy Could a Government Program Turn More Kids Into Investors? A policy proposal that would benefit children from low-income families and close the racial wealth gap. Commentary 9 Value Funds Whose Performance Has Flip-Flopped These reversals highlight the spectrum of value strategies.

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