[first part redacted] how am I supposed to get my kids interested in stocks and investing generally? They just don’t care…. –Scott
Ah yes, the timeless question! Once you’ve motivated yourself to do something good, how do you get the ones you love to see the same light you’ve seen?
First off, let’s identify the obstacles: Some of it is going to be genetic. We’ve all heard the story about that legendary marshmallow test performed on two year-olds in which the ones that could delay gratification for two marshmallows later ended up demonstrating more socially desirable characteristics later in life. The article “Workers Who Neglect Their Retirement Neglect Their Health, … Read the rest of this article!
I was talking with a college finance professor last week and I asked him what he thought was his best idea for portfolio management that isn’t widely accepted or encouraged as part of conventional wisdom. He told me this: “Only rebalance using cash, be it from investments or the new money you have available from your job.”
He said he learned that by forty years old when he saw the stocks he sold in his thirties to rebalance kept going up and raising dividends. You know the C.S. Lewis quote about how we are never entitled to know the answer to the question “what might have been”? Well, stock market investing is the … Read the rest of this article!
The old Philip Morris is such an important case study that offers so many lessons for investors into the nature of successful compounding because the company went over fifty years of delivering 17% annual returns while only growing the business at a rate of 11% annually. This spread is something I think about quite often because it lasted for so long. It wasn’t simply a case of a stock changing its P/E ratio from 5 to 10 during a short-term measuring period, doubling an investor’s returns. No, this was an example of some permanent condition existing in the equity markets that turbo-charged the company’s returns on a sustained basis over what can be … Read the rest of this article!
In a potential tie with the readers who contact me telling me how they are in the early stages of changing their financial life and already seeing the benefits, some of my favorite letters are from readers who have built substantial positions in great American enterprises, and write to me to tell me how much it works.
To the extent that I have been able to pick up on general conclusions, I have noticed this:
1. When people who are financially successful reflect upon their lives, there is often a small handful—sometimes even just one—of ownership interests held for a long time that end up being responsible for their success
2. The method … Read the rest of this article!
One of my friends who knows that I run an investing website recently offered this insight to me as part of a casual conversation we had (and this is my paraphrase of what he said): It seems to me that the kind of people who would do really cool things with money are broke because they are completely incapable of sitting still and letting something build, and the kind of people who can build great wealth are so boring and frugal that they never put the money to any fun use.
There’s probably some truth to that—the statistics show that the average American is far, far away from being able to generate significant … Read the rest of this article!