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The headlines today reference Warren Buffet’s successor. Unfortunately, no one except for Mr. Buffet seems to know who that is. One thing is for sure, whoever this person is, he or she will clearly have a Buffetesque approach to investing. Here are five lessons from Mr. Buffet that we can all learn from:

1. Buy low, sell high. Cliche? Sure. But how many people truly follow this? This is precisely why Buffet skipped the Internet boom of the late 90’s. While everyone else was piling into high-flying Internet stocks, Buffet continued to seek out value plays. After the bubble burst, he was standing tall while many investors were wiped out.
2. Cash is king. Look for companies that a.) have cash and b.) generate cash. In the end, you really can’t go wrong with cash. The only problem that might surface is when a company has too much cash and nothing to do with it. Overall, that can be a good problem to have.
3. Understand the business model. If you don’t understand what the company does, why would you invest in it? It’s easy to fall for the next big thing but when that big thing doesn’t even have a defined business model, it’s best to stay away.
4. Do your homework. Preparing to make an investment is like studying for an exam. Read the press releases, study the industry and analyze the financial statements. This will ensure the best grade in the class…or highest return on investment.
5. Be patient. Stocks go up and down for many reasons but if you believe in what you own, you should have the patience to ride out a downturn. This is not to say you should hold on to a dying company but if you believe the company is sound and the future looks bright, hang
in there.

Let’s hope Mr. Buffet’s successor can teach us as much about investing as Mr. Buffet has.

Apple stock recently reached an all time high and a critical psychological threshold of $500 per share. Given Apple’s meteoric rise and tremendous growth prospects, many analysts believe Apple could very well become the world’s first trillion-dollar company. Whether that happens or not remains to be seen. What could impact the stock, at least in the near term, is what Apple does with the approximately $100 billion in cash on its balance sheet. Let’s consider the options.

Doing nothing for the time being certainly creates a nice cushion for Apple. Even a Recession 2.0 would have difficulty derailing a company with this much cash. You can pay for quite a few employee lunches with $100 billion. On the other hand, investors grow anxious when cash lies dormant as one percent money market returns rarely appeal to stock market investors. Another option would be for Apple to simply return some or all of the cash to the shareholders. Dividends are a nice bonus for patient shareholders and would allow them to seek higher returns elsewhere. The problem is that if Apple establishes itself as a dividend paying company, perceptions could change as the company might resemble a Microsoft or worse, a utility! In other words, investors fear the growth story is over when dividends are paid. Finally, the company might institute a share buyback. This reduces the shares outstanding and in turn, increases earnings per share. The problem, of course, is that they would be paying a hefty price to buy back the shares at current prices.

As Apple has proved to be on the leading edge of technology, it’s likely their cash management strategies will have a similar effect on the financial world and inspire CFOs everywhere. Stay tuned.

Groundhog Day was last week but lately every day in the world of financial markets feels like Groundhog Day, at least as it was portrayed in the classic Bill Murray movie. Low interest rates, a surging stock market and Internet IPOs at sky-high valuations make 2012 seem a lot like the happy golden bygone days from a few years back. Will this time around be different? Let’s look at the facts.

The Fed pledged to keep interest rates low until at least 2014. In essence, we have access to cheap money for a few more years. However, banks remain reluctant to lend to individuals and small businesses. Corporations, on the other hand, should fare better in terms of access to capital. Speaking of which, if the emerging euphoria surrounding Facebook’s planned IPO continues to push the stock market higher, you can bet on more corporate stock offerings. This access to capital can help corporate expansion initiatives, create jobs and create a positive wealth effect for consumers.

So is it Groundhog Day? On the surface, perhaps. But upon closer examination, 2012 is different from years past. Today, the financial markets today just might help the consumer and the job market. Let’s hope so.