Successful Investing
As a happy owner of stock in Berkshire Hathaway, I enjoyed reading your articles on Warren Buffett ["How to Make Money the Buffett Way," August 6]. But you missed the core of his methods. Buffett notes in an annual report that the secret is to use other people's money without borrowing it. The core business of Berkshire is profitable insurance, and from this he derives the float that is the use of premiums now that are taken in to pay for losses later. The second secret is to pay the minimum possible in taxes. Since Berkshire pays no dividend, there is no capital-gains tax unless one sells the stock. This is different from a mutual fund that holds a comparable array of assets and has to pass on each year to the fund holders taxable dividends and capital gains.
JOHN SLOAN
Manassas, Va.
You quoted Buffett about index funds: "Diversification is a protection against ignorance. It makes very little sense if you know what you're doing." In The Little Book of Common-Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns by Vanguard founder John C. Bogle, Buffett is quoted as saying, "A low-cost index fund is the most sensible equity investment for the great majority of investors." Since very few actively managed mutual funds will outperform the market, and Buffett's unparalleled career is drawing down, I will take his advice and consistently utilize an indexing approach.
JEFFREY PAYNE
Lodi, Calif.
In addition to the new Buffettology, I recommend The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market by Pat Dorsey, director of stock analysis at Morningstar ["Bringing Buffett to the Beach"]. Chapter 10 walks the reader thoroughly through the process of intrinsic value calculation.
CHARLES A. WESTON
Annandale, N.J.
Elusive Ways of the CIA
Regarding "Beyond the CIA's Veil" [August 6], the interview with Tim Weiner, and his historical book about the CIA, Legacy of Ashes: I'd like to refer to Merle Miller's interview book with Harry Truman, Plain Speaking: An Oral Biography of Harry S. Truman. Truman was quoted as saying that the organization and chartering of the CIA was a mistake. Truman added that had he known what was going to happen, he never would have authorized the agency. He also chided President Dwight Eisenhower's administration for letting the CIA get out of hand. As a Marine officer in Vietnam in 1969, I had the occasion to bump into two "spooks" on a helicopter pad. Both were wearing safari jackets and .38-caliber revolvers in shoulder holsters. As we were waiting for the helicopter, I asked them where they were going. They smiled and looked away, never answering my question.
FRANK MCADAMS
Dana Point, Calif.
U.S. Mind-Set
In "Our National Funk" [August 6], Michael Barone spins the Pew Global Attitudes Project poll into a partisan issue. So "almost all" the Democrats are unhappy about the nation's future, and the country should be kvelling that we have not repeated 9/11 and the economy is growing? Reality tells us that the time between the first and second World Trade Center attacks was eight years; our enemies are nothing if not patient. Should we be patting ourselves on the backs for making it to six? There is also the simple fact that real wages have not done well, even though corporate profits have done so. Remember that Bush's first term was the first time since Herbert Hoover that a president ended his term with fewer jobs than when he started. In this case, sometimes belief that the country needs a change of course is not simply a partisan thing.
DAVID J. MELVIN
Chester, N.J.
I believe that there is more to happiness than just money. Even in these good times, middle-class wages are relatively stagnant while the cost of almost everything from gas to healthcare keeps going up. Also, our national morale depends on how we feel about ourselves as Americans. Today, we pre-emptively invade other countries, imprison and torture our ?enemies, and spy on our own people. Billions of dollars have gone to rebuild Iraq while our own infrastructure decays and collapses.
ALEX STANIOCH
University Place, Wash.
Barone does not mention the Iraq war as a major factor in the prevalent pessimism he discusses. Four and a half years old and failing with no good end in sight are hardly causes for optimism. No mention of the obvious Iraq problem is an omission significant by its very absence.
JOSEPH R. VALINOTI
Port Washington, N.Y.
Barone's oh-so-gentle chastisement of the American people for our lack of pluckiness was beautifully juxtaposed with Mortimer B. Zuckerman's "The Golden Age Is Ending" [August 6], a realistic analysis of our national situation, showing who is truly "in tension with reality."
DAVID WILSON
Saratoga Springs, Utah
Economic Anxiety
In "The Golden Age is Ending," Zuckerman is overly pessimistic when he concludes that "We are no longer as dominant in the world's economy as we were. Everybody's lives will be affected by that." No doubt economies in countries like China and India are growing at rates of 10 percent, posing a challenge to the United States in the global marketplace. But an American company like Boeing, whose order books are overflowing with requests for planes from Asian countries, can tell us a different story. Asian countries' well-equipped hospitals and care centers can provide high-tech healthcare developed in the United States. It stretches our credulity that China will reach the U.S. standard of affluence and personal well-being this century.
KANGAYAM R. RANGASWAMY
Waunakee, Wis.
I recall overwhelming optimism that returning veterans from World War II felt, as we suddenly found college available to us through the GI Bill, only a dream before the war. That bill provided the foundation for a solid middle class, the backbone of America. We have since gone from being a manufacturing economy to a consumer society. Will the United States be held hostage by competing economic powers as a result of a huge percentage of our national debt being foreign owned?
BURT NEWBRY
Mesa, Ariz.
The China Challenge
China today proves to be a charade centered on massive overpopulation and pollution few in the West understand ["China's Global Reach," August 6]. I've traveled all over China. Seventy percent of its rivers suffer pollution, as many cities pump raw sewage into them. Those rivers are not fit for agricultural, industrial, or human use. Yes, the Chinese will eat us alive economically as they become the manufacturing center of the world, but their environmental dilemmas surpass anything on Earth.
FROSTY WOOLDRIDGE
Louisville, Colo.
Thank you for the excellent coverage of the relationship between China and the rulers of Sudan ["The Quest for Oil," August 6]. This was the first time I had read about how the people of Darfur were driven out of their homes in the south where the oil fields are located--oil that Arab rulers of Sudan sell to China. A group of American high school students recently participated in a hearing of the Oversight and Government Reform Committee to bring attention to China's involvement in Sudan and a possible boycott of the 2008 Beijing Olympics.
JOSEPH S. KAROL
Glendale, Ariz.
As a Foreign Service officer stationed in Hong Kong in the 1960s, I reported to Washington on the nationwide disaster Mao Zedong had brought about in China under his Great Leap Forward economic and agricultural program. Washington was woefully ignorant of what was taking place in China. The CIA directed the U.S. Information Agency to kill the report, "Famine: Grim Specter Over China," insisting there was no famine. Decades later, it was acknowledged that the famine had killed as many as 35 million Chinese. Today, China has another Great Leap Forward program underway. If China continues its present growth, it will force the United States into a secondary position among the commercial giants of the world. The United States must decide if it will support the defense of Taiwan, the island republic that has been a stalwart friend for decades.
WES PEDERSEN
U.S. Foreign Service (Retired)
Chevy Chase, Md.
In your otherwise excellent commentaries concerning the People's Republic of China, you didn't mention two important facts: the more than 800 missiles that China has aimed at Taiwan and the nuclear warhead missiles aimed at the United States.
ROBERT S. KENNEDY JR.
Camarillo, Calif.
"Is China Taking Over the World?" Yes, it is. One recall at a time.
RALPH M. GILBERT
Macon, Ga.
Correction: The first name of former Arkansas Gov. Orval Faubus was misspelled in "Central High Still All About Politics" and "In Little Rock, a Matter of Justice" [August 13-20].
This story appears in the September 3, 2007 print edition of U.S. News & World Report.