Money Rehab with Nicole Lapin - Shocking Investing Advice From the MVP Investor Warren Buffett

Episode Date: May 8, 2024

At his annual shareholder's conference, the iconic investor Warren Buffett shared which stocks he's bullish and bearish on— and the answers will surprise you!

One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that

I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime. Feels like progress. Banking services and debit card provided by the Bancorp Bank N.A. or Stride Bank N.A. Members FDIC. SpotMe eligibility requirements and overdraft limits apply. Boosts are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details.

I love hosting on Airbnb. It's a great way to bring in some extra cash, but I totally get it that it might sound overwhelming to start or even too complicated if, say, you want to put your summer home in Maine on Airbnb, but you live full time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your

reservations, messaging your guests, giving support at the property, or even create your listing for you. I always want to line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look guest-friendly. I guess that's the best way to put it. But I'm matching with a co-host so I can still make that extra cash while also making it easy on myself. Find a co-host at Airbnb.com slash host. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. Well, the Berkshire Hathaway Annual Investor Conference just happened,

which founder and CEO Warren Buffett calls the Woodstock of capitalism. But this is a big deal. This is a multi-day event where thousands of investors gather in Omaha, Nebraska, to hear Buffett speak about his company's investments, his predictions on the economic future, and beyond. Buffett is one of the greatest investors of all time, so when he talks, we gotta listen. When he spoke at the conference, there were two big takeaways that investors should factor into their investing strategy. Number one, Buffett sold billions of dollars of his Apple stock, but he's still bullish. Buffett said at the conference that Apple is a better company than some of the other blue chip companies that he's heavily invested in, including American Express and Coca-Cola. This is a little backwards, right? Why would you sell a stock if you think it's going to continue

to go up? Well, one word, taxes. Buffett expects that taxes are going to increase in the not so distant future, and that will include a bump in capital gains taxes, the kind of tax that you pay when you sell a stock for more than what you bought it for. If you hold onto a stock for longer than a year and you sell it at a profit, you could be taxed 0, 15, or 20% of your return depending on your income tax bracket. Buffett thinks that the government is going to do the latter, not reduce spending, but try to increase the money available to pay down that debt. And one of the sources of government funding is, yes, taxpayer dollars. Buffett thinks that in order to pay down the national debt,

the levels at which we're going to get taxed will rise, so much so that it might wipe out the gains of some of his most promising investments, like Apple. Number two, Buffett gave an unexpected announcement on his investing in Paramount. Paramount is, of course, the parent company of a ton of beloved networks like MTV, Showtime, Comedy Central, Nickelodeon, BET, which are the home to fan favorite shows like The Colbert Report, Billions, Dexter, Yellow Jackets, Homeland, RuPaul's Drag Race, and The Daily Show. The Daily Show, by the way, is averaging about 62% higher viewership thanks to Jon Stewart's return as a host on Monday nights,

which is great news for Paramount. In recent years, Berkshire Hathaway had become the largest non-voting shareholder in Paramount, owning about 10% of the company at 63.3 million shares. And at his investors meeting, Buffett said that he sold his entire stake in Paramount, all 63 million shares, and at a loss. Because despite the catalog of critically acclaimed content, Paramount is struggling. Paramount, which trades under ticker symbol PARA, at the time I'm recording this, is trading below $13 a share. It is down 23% over the last year and down a staggering 73% over the past five years. I will say it wasn't an easy year for TV networks with the writers strike, the actors strike, eating into network profits, and the fierce competition between TV giants like Paramount,

Warner Brothers Discovery, Disney, Netflix, Peacock, known as the streaming wars, has forced these big networks to try and outdo each other, which really means outspend each other. But not all streaming companies have suffered quite like Paramount. Netflix is up 82% over the last year and up 67% over the last five years. And you might remember in my episode with Scott Galloway, he said he was bullish on Warner Brothers Discovery, which I will say is down 41% over the last year and down 68% over the last five years. But Galloway said he's bullish on Warner Brothers Discovery in part because it's an election year and Discovery is the home to CNN, which is one of the go-to destinations for election coverage. Between The Daily Show and Colbert, Paramount will probably also get a lift in viewership

from the election cycle as well. But there are some issues that have been unique to Paramount that influenced Buffett's decision to sell. As recently as last week, there was a big C-suite shakeup and the CEO, Bob Backish, resigned. And most notably, Paramount significantly decreased its dividend payment from 24 cents per share to just 5 cents per share. Paramount's leadership said that they were reducing the dividend payout so that they could reinvest in their streaming capabilities and boost profitability. But Buffett said that cutting dividends is never good news. And I do agree. If a company wants to reinvest in itself, you would hope that they'd have enough profit to do so without having to dip into investors' returns. So net-net, bullish on Apple, bearish on Paramount, and pricing for taxes. For today's tip, you can take straight to the bank. Again, when Buffett talks, we gotta listen.

If he thinks taxes are gonna go up, we should probably think about planning accordingly. One relatively easy way to hedge against rising taxes is to max out your Roth IRA, or to open one if you don't have one. A Roth IRA is a type of retirement account where you contribute post tax income. So that means when you take the money out in retirement, it is completely tax free. For 2024, the Roth IRA contribution limit is $7,000 if you're under 50 and 8K if you're over 50. And you don't need to contribute all in one go, by the way, you have until you file your 2024 taxes in April of 2025 to max out your contributions for this year. One of the most stressful periods of my life was when I was in

credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that I got from buying a $7 latte and how I am still

very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime. Feels like progress. Banking services and debit card provided by the Bancorp Bank N.A. or Stride Bank N.A. Members FDIC. SpotMe eligibility requirements and overdraft limits apply. Boosts are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits.

Terms and conditions apply. Go to Chime.com slash disclosures monthly limits. Terms and conditions apply. Go to chime.com slash disclosures for details. I love hosting on Airbnb. It's a great way to bring in some extra cash, but I totally get it that it might sound overwhelming to start or even too complicated if, say, you want to put your summer home in Maine on Airbnb, but you live full time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high-quality local

co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your reservations, messaging your guests, giving support at the property, or even create your listing for you. I always want to line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look guest-friendly, I guess that's the best way to put it. But I'm matching with a co-host so I can still make that extra cash while also making it easy on myself. Find a co-host at Airbnb.com slash host. Money Rehab is a production of Money News Network.

I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at moneynews and TikTok at moneynewsnetwork for exclusive video

content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.