How Jeff Bezos Positions Amazon Forever

At a recent Berkshire Hathaway shareholder meeting, Warren Buffett indicated that he made a mistake in underestimating the business brilliance of Amazon founder and CEO Jeff Bezos. Buffett has since lavished praise on Bezos, calling him the greatest businessman alive. Bezos’ leadership over Amazon has been so great that John Malone has described Amazon as the “death star” approaching every business industry in the world for eventual destruction.

I have long been interested in the steps that business leaders take to ensure continuity, or in other words, plan their own obsolescence. The best business leaders set aside the ego gratification that would come upon the subsequent generation’s failures to step into their shoes and instead take efforts to “institutionalize” the business so that it would continue to prosper even if the brilliant founder were no longer running the show.

Continue Reading!

Philip Morris International Stock’s Steep Drop

Philip Morris International stock, which had been trading around $100 per share, fell sharply to $83 per share before closing the day at $85 per share. For long-term shareholders of this international tobacco giant, the 15-17% one-day jolt is something that hasn’t been seen since the financial crisis of almost a decade ago. It is a very real reminder that the cautionary warnings about stock market fluctuations are not merely some ancient vintage proverb from your grandmother’s generation, but an actual reality that accompanies any form of equity ownership.

Continue Reading!

Dr. Pepper: The Beverage Prince

The story of Dr. Pepper is one of the greatest stories in the history of American business that almost never gets discussed. The founder of the beverage, Charles C. Alderton, actually beat Coca-Cola to the punch—obtaining a patent for Dr. Pepper’s formula in 1885 while John Pemberton didn’t start swirling Coca-Cola in Atlanta until 1886, making Dr. Pepper the oldest carbonated beverage in the world.

The company had drugstore roots. Alderton was a pharmacist in Waco, Texas who worked for a sole proprietor named Wade Morrison at “Morrison’s Corner Drug Store.” The invention of the soda foundation was losing its novelty because everything was flavored vanilla which did not mix well in the Texas heat in a world before air conditioning—either the vanilla sodas would be warm, or they’d be loaded with ice and the sodas would taste flat as the ice melted.

Continue Reading!

Warren Buffett’s Million-Dollar Commission on Berkshire Hathaway Stock

I recently reviewed Warren Buffett’s first purchase of Berkshire Hathaway stock. On December 12, 1962, Warren Buffett obtained 2,000 shares of Berkshire through his investment partnership at a price of $7.50 per share. He paid his broker Tweedy Browne & Co. $20 to execute this trade.

It is crazy to calculate the half-century impact of this $20 brokerage trade. If Buffett bought his initial shares of Berkshire Hathaway through one of these modern discount brokerage houses that offer two months of free trades or something similar, he would have ended up with approximately 3 more shares of Berkshire Hathaway. More specifically, he could have bought 2.8888 more shares of Berkshire.

Continue Reading!

About Those $4.95 Charles Schwab Brokerage Fees

Americans were rightly jolted last summer upon learning of the Equifax hack that comprised the data of nearly half of America, giving hackers access to sensitive information such as social security numbers, mother’s maiden names, and in some cases, even estimates concerning the amount of assets that each individual owns.

The safeguards necessary to protect electronic data of customers will deservedly occupy the attention of regulators in the coming years, as it is the type of harm that is easy to ignore—from the point of view of the data custodian, there is no immediate business payoff to protecting data and the risk of hacking seems like a remote possibility.

Continue Reading!