The Peter Lynch Crayon Test Could Save Your Investment Portfolio

Peter Lynch, the gentleman that achieved 29% annual returns while running Fidelity’s Magellan Fund from 1977 through 1990, is famous for saying that you should never invest in any idea that you can’t illustrate with a crayon. A variation of this advice is that you should never own a business where it takes more than a few sentences to explain how the company turns a profit.

The highest-quality businesses can usually be explained quite simply.

Coca-Cola makes its profits by making syrup concentrates that allow them to make about $0.30 or so on every dollar once it is said and done.

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Why I Stopped Reading Get Rich Slowly After J.D. Roth Left

When I first started reading personal finance articles, a website called “Get Rich Slowly” that was founded by J.D. Roth became one of the personal finance sites that I would read on a daily basis. J.D. had a great way of explaining his plans to get out of debt and documenting each step he took on his journey, often taking the time to explain how your relationship with money seeps into your relationship with others, attitude toward work, general self-esteem and contentment with life, and so on. Because he was brutally honest in acknowledging his mistakes along the way, he developed a huge following. His personal touch definitely gave his website that “it” factor that separated his blog from the generic financial content that is commonplace on the internet.

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Seth Klarman’s Margin Of Safety: The Most Legendary Book In Personal Finance

If you regularly follow Berkshire Hathaway message boards, you may be aware that Seth Klarman has repeatedly been the dark horse candidate to replace Warren Buffett at Berkshire Hathaway when the time comes. He has a very unique style: he holds lots of cash, invests very conservatively (his brand of conservatism is not necessarily in buying the highest quality companies around, but buying companies that are so cheap that you can’t help but turn a profit). He has done things like post 22% returns while holding almost half of the portfolio in cash.

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You Can Sell Stocks In Only Five Minutes


You know what makes stock investing so dangerous? The fact that we can instantaneously combust a long-term strategy merely if we are having a bad day. The amount of damage we can wreck on our portfolios in under five minutes simply by logging onto a computer account is absolutely crazy. That is why I favor stock certificates, because it is a great way to build some friction and resistance between yourself and the stock you are trying to sell, as well as make it easier upon yourself to remember that you are a long-term owner of your stock.

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