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Table of Contents
1. Feature Article: Speculative Bubble or Investment In Our Future?
2. Company Profile: Berkshire Hathaway (BRK.A)
3. Tip of the Month
4. Questions and Answers

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Feature Article: Speculative Bubble or Investment In Our Future?
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The Internet explosion and the investing mania that occurred in the 1990s is now being viewed in a negative light by virtually everyone. This "speculative bubble," as the media is fond of calling it, is now being blamed for all sorts of harm to the economy and investors. If only we could have invested our money in less risky investments than the stock market, then we would all feel better.

Certainly, there are reasons to be upset. Many investors, including myself, lost money on companies that did not succeed as expected. Accounting scandals and bankrupt companies have also taken their toll. However, few people are willing to acknowledge that there is a huge silver lining in the investment boom that took place over the last decade.

Without the huge investment in technology during the 1990s, the United States would not be the dominant player in the Internet market, a market that will be the driver of the world economy for decades to come. All great advances in civilization require the assumption of risk and the realization that not all ventures will be successful. For every company that succeeds, many others fail. The introduction of cars and railroads transformed society, but it was not done without risk and loss of investment capital. Both of these inventions started with an investment boom followed by an investment bust. But in the end, the standard of living increased, many new companies were created and society benefited. 

In fact, what we are experiencing now is not unlike what has typically occurred during any period when civilization went through a rapid period of innovation. Companies with outdated business models suffer and society must adjust to the new paradigm being created. Why are so many supposedly big, blue chip companies doing so poorly? Large companies are not nibble and tend to cling to the old business models that created their success in the past. Stock market averages tend to be over weighted with large, blue chip companies. Because of this, widely recognized stock market averages often fall much more than people expect during times of rapid change. The truth is, while everyone is afraid to invest, a new generation of companies that are embracing and in some cases transforming society are being born. These small companies and the few large companies that are nimble enough to survive will be great investments over the next several decades.

So the next time you hear the word "speculative bubble," realize that this sometimes painful cycle of boom and bust is the necessary engine of change. In fact, where would we be today if our ancestors decided that investing in the future was too risky? 

Investors are the true architects of society, and future generations will benefit from the investing risks we accept today.

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Company Profile: Berkshire Hathaway (BRK.A)
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If Warren Buffet is the greatest investor of all time, why not give him your money? You can do just that by buying Berkshire Hathaway stock. While the stock market has been falling, Berkshire Hathaway stock is actually up 5 percent for the year. Warren Buffet is known for making great investment decisions while everyone else panics. If you want a safe, diversified investment, Berkshire Hathaway is a good bet. Instead of buying publicly traded companies, Warren Buffet has been buying private companies that would not otherwise be available to small investors. Also, because Berkshire Hathaway is really a conglomerate of many companies, it is more like a mutual fund than an individual stock. The only drawback is that you will have to come up with about $2,500 for a single share of Class B stock. Warren Buffet hates stock splits, so the price of one share is fairly high. In fact, until a few years ago the only way to invest in Berkshire Hathaway was to own Class A shares at about $60,000 to $70,000 per share.

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Tip of the Month
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Think small at the beginning of an economic cycle. Small companies are more nimble than large companies, and tend to prosper in the beginning stages of an economic recovery.

Tax liens are an interesting and lucrative real estate investing method that few people know about. Tax liens work like this: When a business or a person cannot pay their property taxes, the county that collects the property taxes puts a tax lien on the property. The tax lien essentially makes it very difficult to sell or transfer the property until the property taxes are paid. However, placing a tax lien on the property offers no immediate way for the county to collect the back taxes that are owed. Therefore, the county sells the tax lien to investors at yearly tax lien auctions to get their money as soon as possible. If the investor pays the amount of the tax lien, in most counties the investor gets a tax lien certificate on the property. The tax lien certificate pays a specified interest rate, often 16 to 18 percent or more per year. When the delinquent property owner decides to pay the back taxes, they must pay off all taxes owed and the amount of interest due to the investor. This creates an incentive for the investor and a little extra time for the delinquent property owner to come up with the money. In most states, if the delinquent property owner does not pay the back taxes after a specified period of time, usually two years or less, the tax lien investor gets the entire property for just the taxes owed. When you consider all the factors, tax liens are a fairly safe and unique real estate investing technique that can produce high investment returns.

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Disclaimer: There are no guarantees in investing. I make no assurances regarding the investment information presented in the Rogue Investing Report.

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