Thanks, VFCorp! My Earnings Are Bound For Buffett

I would have liked to see Timberland grow and make me money for years to come. But I'm not going to complain about the 73% return VFCorp delivered me by buying the boot maker earlier this week.
Now, I've got some money burning a hole in my TradeKing brokerage account.
Figuring out where to put new money is never easy. There are always going to be what ifs before and after you buy.
I've learned I have to be satisfied with what I believe is a smart choice. I've also learned to love stocks research, and I'd recommend learning the basics to any investor. It's the only way smart choices can be made. (Unless you're paying someone to make them for you.)

For me, research has come to involve a few things:

• Taking a look at companies' fundamentals
• Thinking long and hard about what the companies do, where they're headed and what their prospects for growth are
• Reading about what people a lot more experienced and knowledgeable than me have to say about these stocks

Buying Buffet
I'd been eying Warren Buffet's Berkshire Hathaway since I started investing.
I never bought BRK.B because $3,500 was out of my price range.
But I vowed last year, when the stock split, that I would revisit it someday.
That day's today.
And the stock looks pretty good to me.
Buffett's venerable Berkshire trades at a price-to-book-value below its peers. In fact, it may be selling at its lowest price-to-book value ever.
Berkshire's stock price has trailed the S&P since the stock market collapsed in Sept 2008.
What's more, it's now selling at a price below what it sold at after last year's stock split.
Yet Berkshire has out-paced its peers in sales growth over the past five years.
As this Motley Fool article notes: "... right now there's no Buffett premium. ... There's no real premium of any sort here."
Hard to imagine the vaunted Berkshire Hathaway -- once untouchable to investors like me -- selling at a discount.
But that's what I see here.
But perhaps the strongest selling point for me is Berkshire's track record. Buffet and his lieutenants have delivered their shareholders a great return for decades. Even if you go back over the last five years, Berkshire has returned more to investors than its peers by a ratio of about 5 to 3.

The bad
The company has hit a rough patch, returning less to investors last year than its industry average.
It's also been mired in controversy over former top executive David Sokol's purchase of Lubrizol shares just before he convinced Buffett to buy the company.
That hasn't helped the company's image with investors.
On top of that, there is concern over the ages of Buffett and right-hand man Charlie Munger. Both are octogenarians.
That means both are approaching their twilight, and investors worry that when a new day dawns for Berkshire under new leadership, it will never live up to the one that's already passed.

What others have to say
Motley Fool's Stock Advisor ranks Berkshire as a buy, and Matt Koppenheffer's article I referred to earlier echoes that call, albeit less bullishly.
Morningstar's Ultimate Stock Pickers include the company in their top 10 holdings, and at least three of those ultimate pickers are adding to their Berkshire holdings.

The bottom line
I'm willing to bet that Sokolgate will pass. I'm willing to wager that the line of succession at Berkshire is strong. Smart leaders surround themselves with smart people. Buffett will be handing the reins to someone he has great confidence in.
And when I strip away those concerns, I see a good deal on a great stock.
I like Berkshire here. And I'm giving it a prominent place in my portfolio.

How do you feel about BRK.B? Is there someone you'd trust to better invest your money than Warren Buffett?

When Does Investing Turn 'Unethical'?

A friend of mine who's just begun sinking some money into stocks was looking at picking up some shares in cigarette-maker Altria (MO) as a good dividend play.
"One question," he said. "Would that be unethical to invest in?"
I had no easy answer.
This is something every investor must wrestle with to some degree or another.
It's easy for folks who don't invest their own money to throw stones at those of us who choose exactly where it goes.
Seldom does a public conversation about stocks go by that someone isn't telling you to "buy solar" or some other way of "doing good" and not bad, with your dollars. 
Not long after the Massey Energy coal mine disaster killed 25 miners last year, a read an investing columnist call the stock a good buy in response to a reader's question.
His answer prompted a passionate response from a reader who happened to be a university professor. The reader found it offensive that the "wealthy" investing class would make money on a company that risked its workers' lives the way Massey did.
As I read it, I couldn't help but wonder if the the prof thought about where his own money was invested. He is guaranteed a pension upon retirement. Massey was in the S&P 500 until just a couple weeks ago when it was bought out. The odds are pretty good that professor was benefiting from Massey, too, even though he isn't part of the investing class he envisioned.

Every portfolio has 'em.
When I look at my own portfolio, there are ethical questions. I'm invested in Chesapeake Energy, whose natural gas fracking is the subject of much environmental concern here in Pennsylvania.
I don't like that, and I'm hopeful some new environmentally friendly fracking fluids help clean the process up.
Just the other day, I read a story about Buffalo News editorial staffers being asked to sacrifice pay in order to preserve jobs. The paper was threatening a 20-25 percent reduction in staff. All at a time when it was turning a $16 million profit.
As a news reporter dedicated to providing good coverage to readers, cutbacks like these are tough to read about. Cutting staff often diminishes the quality of coverage. And of course, it hurts employee morale.
But I also see management's side, mostly because the paper is owned by Berkshire Hathaway (BRK.B). Berkshire became one of my holdings earlier this year, and -- newspaper cuts or not -- I plan to add to what I have soon.

About those cigarettes
It's nice when you can feel good about the company you own, about the products it makes and the ways it goes about making them.
I have some of those in my portfolio, too. Sam Adams beer. Timberland. Cytori Therapeutics and Gilead Sciences. They all do good in their own ways.
But that can't always be the case, which brings me back to my friend's question. Would it be ethical to invest in a cigarette company? That's something only he can decide. People are going to continue to smoke. Altria will continue to take their money, and it will continue to hand back what's now close to a 7% dividend to those who hold shares of Big Mo stock.
If you are uncomfortable holding the stock, don't own it.
If you feel comfortable that you're not contributing to society's ills by keeping a piece of Big Mo for its high yield -- or you just don't care -- buy some.
What if you're feeling pretty good about it, but still have some lingering doubt that you might be contributing to people taking up the habit?
Pair it with a piece of GlaxoSmithKline (GSK) or Novartis NVS). Both make a nicotine patch.
That way, you're also helping people quit.

Where do you draw the ethical investing line?