Dear Friends and Family,

Below are three thoughts based on Warren Buffett’s advice over the years in his shareholder letters for Berkshire Hathaway:

• Buy companies, not stock certificates or lottery tickets.
• When the news is bad, liquidate your securities portfolio immediately AFTER you sell your house and business. Oh — you’re not going to sell your house just because of some bad news? Need I say more?
• Keep your investment fees low compared to performance. Performance is not just beating the market. It’s outperforming what you would do without a financial advisor — someone who keeps you calm in uncomfortable markets and keeps you out of markets that make you feel greedy. (Of course, beating the market is an acceptable additional service.)

Please note: in last month’s cover letter, we suggested that the Alibaba IPO might disturb the market. At $25 billion, it was the largest IPO ever. There was a lot of security selling to cover the $25 billion and a large secondary selling wave to cover the aftermarket — $50 billion of trades. Our best guess is that in two weeks the effects of the IPO will wear off and positive third-quarter earnings announcements will provide a boost to the market.

Sincerely,

Katz Family Financial

In the case of a discrepancy between Fidelity Investments monthly statements and Katz Family Financial monthly portfolio statements, Fidelity Investment statements should be deemed as the correct and accurate reporting source.