Life-Changing, Big Money Stock Investments

Normally, I cover the “batting average” type of issues associated with wise stewardship of one’s money. Spending less than you earn, doing something with the surplus like diversifying into ownership interests in the most profitable companies the world has ever seen, and so on.

There is another component to it that is less often discussed–and this is the “home run” component, or the magnitude effect of your decisions.

You may have previously encountered the Warren Buffett quote that, when it is raining gold, it is better to reach for a bucket than a thimble. This advice was summed up well by Charlie Munger in Poor Charlie’s Almanack with the following quote on page 26:

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The Glory Of Investing In Utility Stocks

water

I love me a good utility stock. As far as defensive investments go, they are often about as stable an investment as you can find in this world. There are no sure things in life, but betting on people to continue to use water and electricity is about as close to a guarantee as you can find in common stock investing.

York Water is one of those utility investments that should make an income investor want to sing. It really has the most beautiful dividend history of any company I have ever come across. York Water has been paying uninterrupted dividends since 1816. That is awesome in every single sense of the word. Your great-great-great-great-great grandfather could have come over on the boat from Europe, bought 100 shares of York Water stock, and you, the great-great-great-great-great grandchild would still be collecting the cash payments every ninety days today. Oh, and the dividend has grown three thousand fold since then, so you would literally be a water baron right now.

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Originally posted 2013-06-08 13:02:19.

Tilray Stock Is Horribly, Offensively Overvalued

Remember around Christmastime when Bitcoin pushed towards a price of over $19,300 for a single Bitcoin? It was an absurd bubble in that Bitcoin has no intrinsic value, and some order has been restored as the price has come down to $6,300. Eventually, it will all wither away.

But in the meantime, marijuana/pot stocks appear eager to pick up where Bitcoin left off. In particular, it has come to my attention that Tilray (TLRY), a medical marijuana production firm with $20 million in revenues, and somewhere between $200,000 and $3 million in net profits, has increased from $35 per share to $214 per share for a valuation of around $20 billion.

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The Fun Thing About Planting Dividend Trees

moneytree

If I had to make a short list of my favorite things about following a dividend growth investing strategy, one of the spots would be devoted to the fact that even if you hit a tight spot in your life and cannot continue to invest, the companies that you have acquired continue to chug out profits and dividends. In other words, your dividend tree continues to grow even if you stop watering it with fresh cash contributions.

I’ll give an example. Let’s say you find yourself in a situation like this: You have $5,500 to invest in a Roth IRA account this year, but next year, you expect money to be tighter (maybe you are getting a new roof, sending kids to college, etc.) and won’t be able to make any investments. Some people may think that if you have to take investing “pauses” at some point in your life, you are somehow messing up. That is not the case at all. While the continual addition of capital can help the compounding process along nicely, the fact that you stop making new additions still means that the money already invested continues to compound. That is the fun thing about the snowball nature of compounding: even if you stop adding to the size of the snowball on your own, it still continues to get bigger even if you do nothing.

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Originally posted 2013-06-07 09:00:09.

Investing In A Late Stage Bull Market

There is an old Wall Street adage that says a bull market moves in three stages–in the early stage, only a few perceptive individuals or entities are able to pick out glimmers of prosperity in the future. These are the investors who go on to reap the biggest gains. Then, halfway through a bull market, investors are “starting to come around”, and those investors tend to reap moderate gains. And lastly, everyone becomes excited about investing, and those investors tend to reap the fewest gains as most businesses become priced at a point that all but guarantees mediocre returns.

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