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The Fed, Explained

Q: What’s “the Fed”? — A.T., Ely, Minnesota

A: Created in 1913, the Federal Reserve is America’s central bank, responsible for managing monetary policy to optimize employment, inflation and interest rates; monitoring and promoting the health and safety of U.S. financial institutions; and protecting consumers — among many other duties. Its Federal Reserve Board of governors is appointed by the president and confirmed by the Senate, and it’s accountable to Congress. The Fed encompasses 12 Federal Reserve banks across the country and the Federal Open Market Committee, which manages the nation’s money supply. You can learn more about the Fed at FederalReserve.gov.

Q: I know that Warren Buffett is famous for his educational and informative annual letters to shareholders. What other CEOs issue letters worth reading? — P.H., Baton Rouge, Louisiana

A: It’s a good idea to read the letters from CEOs of the companies in which you’re invested. Beyond that, some of the many other informative and often educational letters include those from Markel co-CEO Tom Gayner, Alleghany CEO Weston Hicks, Fairfax Financial Holdings CEO Prem Watsa, Cimpress CEO Robert Keane, Sykes Enterprises CEO Charles Sykes, Trupanion CEO Darryl Rawlings, and past letters from Amazon.com CEO Jeff Bezos, who is stepping down. BlackRock CEO Larry Fink’s annual letters to CEOs are also good.

JPMorgan Chase CEO Jamie Dimon’s letters are worth a read, too. And anyone who hasn’t been reading Warren Buffett’s letters can find all of them at BerkshireHathaway.com. Various studies, such as those by Rittenhouse Rankings, have linked candid CEO letters with companies that outperform. You may not understand some jargon or industry metrics in some good CEO letters, but you’ll likely walk away at least a little smarter.

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