Bloomberg Surveillance’s Tom Keene interviewed GAMCO Investors CEO Mario Gabelli (Trades, Portfolio) about value investing, philanthropy and Warren Buffett (Trades, Portfolio) on Aug. 29. Here’s a summary of Gabelli’s thoughts on investing.
What are the things five years out that you care about?
The stock market delivered 10% type of returns over time. But can the stock market return 6-8% type of returns over the near future? Are current multiples sustainable over time? When will the next economic slowdown occur? What will the tax rate be? What does the yield curve inversion mean? Gabelli thinks about all of these, but doesn't have or provide the answer.
Will Berkshire be broken up?
Warren Bufett is in Omaha. He sleeps well, eats well and invests well. The power of the company is to invest in a Graham-Dodd type way. Buffett has achieved that with the team he’s put together, Gabelli said. Gabelli does not appear to expect a break-up at all if Buffett steps back, but mostly a continuation of established practices.
How do you teach kids about security analysis?
Gabelli tells kids to buy a share of Ferrari (RACE), Disney (DIS), A baseball team, a basketball team, a soccer team and a share of whatever social media they like.
Create options, don’t let anyone tell you what to do and do things your way, he advised.
What is the future of security analysis?
If you study companies, you study growth and business dynamics, and you learn how to buy or create a business. There is a large amount of intellectual talent required. You should learn a few annual reports like: JPMorgan JPM, Facebook FB and Berkshire Hathaway BRK.ABRK.B.
Top Holdings for Gabellia are:
- Ryman Hospitality Properties (RHP)
- Madison Square Garden (MSG)
- American ExpressAXP
- American Express Sony (SNE)
- Honeywell HON
Portfolio heatmap:
Disclosure: no positions.
