How Warren Buffett Became a Billionaire

Earlier this week, we lost an investing icon when Charlie Munger died at the age of 99...

Munger was Warren Buffett's longtime business partner and vice chairman at Berkshire Hathaway, Buffett's famous holding company.

Munger and Buffett first met in 1959, and it didn't take long for Munger to become Buffett's right-hand man. A major reason why is that Munger taught Buffett a simple fact of knowing which stocks to buy...

Quality works.

Here's what Buffett wrote in his 2012 annual letter to Berkshire shareholders, recounting a conversation with Munger...

More than 50 years ago, Charlie told me it was far better to buy a wonderful business at a fair price than to buy a fair business at a wonderful price.

Despite the compelling logic of his position, I have sometimes reverted to my old habit of bargain-hunting, with results ranging from tolerable to terrible.

This quote reveals that investing in quality isn't an obvious choice. At first thought, you may think, "Of course I want quality businesses. I don't want to buy bad businesses."

However, you must remember that in the markets, you get what you pay for. Quality businesses trade for higher prices. Markets are not perfectly efficient, but you generally pay more for a profitable business than you do for an unprofitable one. That means buying a quality business doesn't always feel like you're getting a good value.

Over the long term, does quality justify its higher price? Or has the market figured out its quality, so you need to find another edge?

Quality really does win out.

Quality businesses are the companies that will survive no matter what's happening in the economy, who's in the White House, or whether a global pandemic is shutting down the world.

My friend Joel Litman is a master at identifying quality businesses. He developed a proprietary system for analyzing stocks, which clears up distortions in companies' financial statements to demonstrate their true worth.

On December 6, Joel is stepping forward to reveal the one trade that could have grown your money by 4,000% during the recessions of the past 40 years. And with recession warning signs starting to show, it's time to position your portfolio to protect you.

Click here to make sure you don't miss Joel's 2024 Financial Lifeline event.

Now, let's dig into some questions... As always, keep sending your comments, questions, and topic suggestions to [email protected]. My team and I really do read every e-mail.

Q: In your produce issue, you didn't mention if I should buy them organic or not. My wife always buys organic, but is it worth the extra money? – J.Y.

A: It depends on what you're buying...

Longtime subscribers know I follow a list of clean and dirty produce. The Environmental Working Group released its annual list in March: the Dirty Dozen. The organization analyzes produce throughout the year to show which 12 products are notoriously laced with chemicals likely harmful to humans.

This year's Dirty Dozen are, starting with the most harmful: strawberries, spinach, kale and collard and mustard greens, peaches, pears, nectarines, apples, grapes, bell and hot peppers, cherries, blueberries, and green beans. I recommend buying organic for the Dirty Dozen.

The same group also publishes a "Clean Fifteen" list of foods that rarely have pesticide contamination. They are avocados, sweet corn, pineapples, onions, papayas, frozen sweet peas, asparagus, honeydew melons, kiwis, cabbage, mushrooms, mangos, sweet potatoes, watermelons, and carrots. So tell your wife she can save some money and buy the non-organic versions of these fruits and vegetables.

Also, note that "organic" farms still use various chemicals and pesticides. They just use ones certified by the National Organic Standards Board. Two of the most common organic pesticides are rotenone and pyrethrin. At high exposure levels, rotenone has a possible link to Parkinson's disease, and pyrethrin can cause people to have tremors, aggressive behavior, and excessive salivation.

That's why it's so important to wash your produce. I recommend a rinse made from three parts water to one part vinegar. I let everything soak for a few minutes and then rinse the fruits and vegetables off with just water.

Even a simple run under the tap helps a lot... A study published in the Journal of Food Protection cleaned samples of different fruits and vegetables using veggie-wash soap, electrolyzed oxidizing water, ozone, and chlorine bleach, and compared the results with simply running the food under cold tap water for 15 seconds.

Researchers concluded that while irregularly shaped foods like broccoli benefit most from being soaked rather than rinsed, the tap water was just as effective at removing E. coli and salmonella as the other treatments for smooth foods like tomatoes. And rinsing always reduced the concentrations of those harmful contaminants. That's good for folks who don't like the taste of vinegar in their salads.

What We're Reading...

Here's to our health, wealth, and a great retirement,

Dr. David Eifrig and the Health & Wealth Bulletin Research Team
December 1, 2023