2014: The Year Big Banks Returned To Trouble
Six years. That’s how long it takes financial institutions to start forgetting the scars and nightmares of the credit crisis that came out in full force in September 2008 and extended throughout much of 2009. Wells Fargo, the strongest of the “Big Four” banks in the United States, has re-entered the market of subprime lending: A less-than-perfect credit score is no longer an obstacle to buying a single-family home or townhouse in Southern Nevada. Following a recent decline in demand […]
Six Investing Principles From Warren Buffett’s 2013 Shareholder Letter
You don’t need to be an expert in order to achieve satisfactory investment returns. But if you aren’t, you must recognize your limitations and follow a course certain to work reasonably well. Keep things simple and don’t swing for the fences. When promised quick profits, respond with a quick “no.” Focus on the future productivity of the asset you are considering. If you don’t feel comfortable making a rough estimate of the asset’s future earnings, just forget it and move on. No […]
My Dear, Albert Camus Could Flat Out Write
My dear, In the midst of hate, I found there was, within me, an invincible love. In the midst of tears, I found there was, within me, an invincible smile. In the midst of chaos, I found there was, within me, an invincible calm. I realized, through it all, that… In the midst of winter, I found there was, within me, an invincible summer. And that makes me happy. For it says that no matter how hard the world pushes […]
The Kelly Blazek Kerfuffle, Walt Disney, And Second Chances
Add this to the list of things I’ve been thinking about but haven’t reached a conclusion—whether the “fall” of Kelly Blazek is a good thing or a bad thing for our civilization. For those of you who haven’t followed the news: Kelly Blazek is a professional woman in Cleveland, OH that runs a job bank with over 7,000 contacts. For most of her life, she has enjoyed an impeccable reputation for helping job seekers find work and for being someone […]
When Professionals Fail In Their Personal Lives
To any remaining readers of this site— I apologize for my unexpected hiatus from the site—hopefully I’ll get some good updates up in the next week or so. My absence has been due to primarily two things: 1. I’ve spent the past few works participating in legal work that doesn’t just affect me. Normally, if it’s just my own schoolwork, I don’t mind going at about a 75% effort level so that I can have time for pet projects and […]
Dividend Stocks Forever: An Endangered Species?
In One Up On Wall Street (p. 19), Peter Lynch once remarked that “if anybody’s responsible for the disappearing dividend, it’s the U.S. government, which taxes corporate profits, then taxes corporate dividends, for so-called unearned income. To help their shareholders avoid this double taxation, companies have abandoned the dividend in favor of the buyback strategy, which boosts the stock price. . . Reducing the supply of shares increases the earnings per share, which eventually rewards shareholders, although they don’t reap […]
What Is The Best Argument Against Blue-Chip Dividend Investing?
I received an interesting private question from a reader recently, asking me what I thought was the best argument against blue-chip dividend investing. I loved that question, and with his permission, I included parts of my answer below. When you think about owning a diversified basket of high-quality assets for a long period of time, one of the virtues of the strategy is that it is almost fail-proof. Part of me wants to reach out and say, “Yeah, well, maybe […]
First Impressions! Anchoring! Underrated Forces Of The Universe!
I want to discuss with you a phenomenon that has applications in the investing world and beyond: anchoring. Simply put, anchoring occurs when someone tells you a fact or opinion, and then you use that information to make a series of decisions thereafter (that are based on that first bit of information). If someone performs their own analysis and concludes that Berkshire Hathaway is worth $150 per share, the fact that the price is $115 per share at the time […]
Wealth Inequality In The United States
I’m showing you this video not for the editorial content—one of the deep flaws in arguments about wealth is that, when someone is making $1,000,000 compared to someone making $50,000, the rhetorical question “Does that person really work 20x as hard as the other?” usually follows. The problem with that question is that it equates effort with value. Imagine someone owns 3.65 million shares, or about 1%, of the Kellogg’s corporation. Because of what he owns, he is delivering $18 […]
Why Do Some Families Get Richer With Each Generation, And Others Get Poorer?
There was a write about a half-century ago named John O’Hara. He was a cranky guy with a wide variety of interests, and although he had a large number of critics, he was good enough to persuade fellow writer Fran Lebowitz to dub him “the real F. Scott Fitzgerald.” One of his caricatures that he liked to create in his writings were hypothetical dialogues between characters that represent “Old Money” interacting with young men that were on a quest to […]