Read, Read, Read Is Warren Buffett's Investment Advice

What's the secret of mutlibillionaire Warren Buffett's success as one of the world's most successful investors? And where does he get his investment ideas?

"I just read. I read all day," he told a group of 150 Wharton business school students and Fortune magazine in early April.

As an example, he noted that his investment of $500 million in Petrochina five years ago (which he sold for $4 billion in 2007) was based simply on reading the company's annual report. "All I did was read the annual report," he said.

Index Funds Are a Good Investment for Non-Professional Investors

For those who are not professional investors, Buffett had the following advice. "If they're not going to be an active investor -- and very few should try to do that -- then they should just stay with index funds. Any low-cost index fund. And they should buy it over time. And they should buy it over time. They're not going to be able to pick the right price and the right time. What they want to do is avoid the wrong price and wrong stock. You just make sure you own a piece of American business, and you don't buy all at one time."

Some further advice for investors amid today's economic slowdown and market turmoil: "You don't want investors to think that that what they read today is important in terms of their investment strategy. Their investment strategy should factor in that: (a) if you knew what was going to happen in the economy, you still wouldn't necessarily know what was going to happen in the stock market. And (b), they can't pick stocks that are better than average.

Buffett's Contrarian Viewpoint

"Stocks are a good thing to own over time. There's only two things you can do wrong: You can buy the wrong ones, and you can buy or sell them at the wrong time. And the truth is you never need to sell them, basically. But they could buy a cross-section of American industry, and if a cross-section of American industry doesn't work, certainly trying to pick the little beauties here and there isn't going to work either. Then they just have to worry about getting greedy. You know, I always say you should get greedy when others are fearful and fearful when others are greedy. But that's too much to expect. Of course, you shouldn't get greedy when others get greedy and fearful when others get fearful. At a minimum, try to stay away from that. "

Based on that contrarian thinking, Buffett says that now is the right time to be on the greedy side," because many are so fearful today. "Stocks are a better buy today than they were a year ago. Or three years ago."

I, for one, have little doubt that Buffett will turn out to be correct on this point.

Global Impact of U.S. Slowdown

Economic reports from Asia and Europe released today highlighted the damage a U.S. recession could do to exporting nations, and "raised questions about the extent to which China and other fast-developers can fill the void," according to a news analysis from Reuters.

"Japanese trade data for March illustrated both sides of that story, and business surveys in Europe suggested [that] manufacturers may be heading for a period of weaker global demand, with the euro's strength making it even harder to compete on price."

Japanese exports rose 2.3% in March compared with March 2007, Reuters said, but exports of cars and other goods to the U.S. fell 11%, data from the country's finance ministry showed.
Exports to China and Asia rose broadly, but the rise was the smallest in three years, the ministry said.

The smaller rise in exports "provided little comfort to those who argue or hope that fast-growing emerging-market economies will make up for at least a significant part of lost export demand" from the U.S., Reuters noted.

In Europe, business surveys showed that new manufacturing orders, including export orders, shrank in the euro zone for the first time in three years, Reuters noted. It cited a drop to 50.8 in April from 52.0 in March for the RBC/NTC Eurozone Purchasing Managers Index for the manufacturing sector, its lowest since August 2005, while the gauges for new orders fell below 50, signalling contraction.

However, a similar index for the services sector, which accounts for a larger share of total economic activity in developed economies, registered an acceleration in the pace of activity growth in April, Reuters said.

"The overall softening in economic activity in the euro zone is still very gradual," one economist said.

Polls conducted by Reuters and published on Wednesday showed economists are lowering their growth forecasts and raising their inflation forecasts for most of the world's big industrialised economies.

Continued Drops in Home Sales and Prices Provoke Concern Over a Possible Deep Recession

Every day brings more negative economic news. Today's news that sales of existing houses fell 2% in March, while the median price of a house tumbled 7.7% on the heels of an 8.2% decline in February, provoked further concern that a prospective recession may be quite deep.

In New Haven, Yale University economist Robert Shiller, cautioned that the slump in the housing marketing could cause prices to fall more than they did during the Great Depression of the 1930s, according to a report from the Associated Press. Shiller said that bailouts will be needed to prevent millions of people from losing their homes.

According to the AP, Shiller, a pioneer of the widely-watched S&P/Case-Shiller home price index, said that there's a good chance that housing prices will fall further than the 30% drop that took place during the Depression. Home prices already have fallen 15% since their peak in 2006, he noted.

"Basically, we're in uncharted territory. It seems we have developed a speculative culture about housing that never existed on a national basis before," he told the AP.

Meanwhile, gasoline prices rose above $3.50 a gallon on average for the first time across the country, the AAA said on Monday, as fears about energy suplies and a falling dollar drove prices to new records, The New York Times reported. The report said that gasoline prices have risen by 22% in the past year, and some analysts expect prices close to $4 a gallon, on average, this summer, when demand is at a peak.

When added to the problems being faced by a broad array of financial institutions, it's clear that the economy is likely to decline significantly from here.

Impressive Customer Relations at Manhattan Movie Theater

The AMC 19th Street movie theater in Manhattan scored an impressive customer relations coup on Saturday following the breakdown of the projector halfway through a showing of the new movie "Mr. Brooks," starring Kevin Costner and William Hurt.

When they could not fix the problem after about half an hour, the theater gave out free passes to see another movie at any AMC theater -- plus it refunded the patrons' admission price for good measure.

While some of the patrons had been impatient following the breakdown, I detected a strong positive feeling about this gesture among them as I waited in line for my refund.

This is the way that businesses of all types can score big with their customers: Go out of your way to show your appreciation for their patronage.

Pure Nickel Inc. of Toronto Anticipates Growth Over Next Two Years

Jay Jaski, CEO of Toronto, Canada-based Pure Nickel Inc., last night presented a financial and operating outlook for this nickel exploration company

Jaski, an executive with over 25 years of corporate, financial and business experience, has assembled an experienced and knowledgeable team of technical and business experts, to explore for high-grade nickel in a number of sites in Canada and elsewhere.

Four of its projects include: MAN Ni-Cu-PGE in Alaska; FOND du LAC Ni-Cu, in Saskatchewan; FOX RIVER Ni-Cu-PGE in Manitoba and XSTRATA NICKEL CANADIAN PROPERTY PACKAGE in William Lake, Manibridge and South Raglan properties.

In the case of Xstrata, the company recently signed an agreement to acquire ten nickel exploration properties from Xstrata Nickel. "This dramatically expands NIC's potential as it moves into the ranks of being one of North America's largest nickel exploration companies," the company said in a press release.

Jaski presented a case for high-grade nickel deposits in all of these locations. And with his strong background in business and finance, and the experienced team behind him, he expects that its valuation will increase substantially over the next two years from its current approximately $1.50 per share price

Pure Nickel became a publicly traded company in March 2007. Shares of Pure Nickel are listed on the TSX Venture Exchange under the symbol “NIC” and on the NASDAQ OTC Bulletin Board under the symbol ”PNCKF”".

May Issue of Institutional Investor Interviews Dozens of the Most Influential Business and Investment Leaders

I just scanned the cover story of the May issue of Institutional Investor Magazine. It contains interviews with some of the most influential individuals in the investment and business communities today and the recent past. These include such illustrious figures as Alan Greenspan, Robert Rubin, Warren Buffett, John Reed, Maurice Greenberg, Felix Rohatyn, John Gutfriend, Charles Schwab, and many many others.

The interviews are forward-looking, and provide a strong sense of where business and the economy are likely to be heading.

While I haven't been a continuous reader of II over the years, for the sheer scope of and range of the special, and for the ability to obtain interviews with these individuals, in my judgment, this is probably one of the most informative and broad-based issues of the magazine ever to be published.

There is a short piece about Michael Bloomberg, but due to its brevity, one can infer that he declined to be interviewed.

I recommend reading this series of interviews in its entirety.

John Walker, An Engineer from London,
Comes to New York To Begin a Venture Capital Career

On Thursday, May 24, I had coffee with John Walker, a new acquaintance I met at the most recent meeting of the Management Committee of the Columbia Business School Alumni Club of New York.

John, an engineer by training, recently arrived in New York from London, taking a position as a technology specialist with Chart Venture Partners (CVP) (www.chartventure.com), a venture capital firm based in Rockefeller Center that is focused on investing in homeland security ventures. He has been in the Business School's Executive MBA Program (EMBA) for the past year, majoring in Finance.

A native of Scotland, John began the EMBA program while working in London as the director of technology for a London-based manufacturing company.

While CVP has been in existence as an advisory firm since 1994, it only closed on its first venture fund about a year ago. To date, the fund has invested in five homeland security-related firms, and is seeking additional investment opportunities.

In our conversation, John displayed a high degree of knowledge of defense-related technologies, which I am sure will help his new firm to identify potentially strong companies for the fund's
portfolio.

John has been to the U.S. previously, most recently several times in connection with his EMBA studies. He said that for some time, he had been seeking an opportunity that would enable him to come to New York on a longer-term basis. Living in the Soho-Greenwich Village area of Manhattan, he said he wants to absorb and enjoy the positive experiences of New York, as well as build his new career in the venture capital business.