Fascinating mail-bag question I wanted to answer: Tim, which area of traditional blue-chip investing currently concerns you the most and why? -Alex.
Right now, my biggest concern is the blue-chip stocks related to the production of food. A lot of people blame 3G Capital for production deterioration, but it really got started with Breyers Ice Cream which has been owned by Unilever since 1993. In the late 1990s, Unilever tried raising the price of ice cream as cream, sugar, and milk shot up in price. But passing the costs onto consumers didn’t work–the sales went down a bit, and Breyers found itself not gaining much (if anything) from raising the price.
Then, it tried shrinking the size of the containers. That works, up until a point. Then, it consolidated operations and cut costs by moving all the Breyers ice cream production to Green Bay, Wisconsin and Englewood Cliffs, New Jersey. … Read the rest of this article!
People with over $500,000 in investable assets know that it is a common practice to receive heaps of unsolicited mail from financial advisors, planners, and managers that seek to take investment control over your investment accounts. Between 2004 and 2014, the top quintile of hedge fund managers delivered returns of 10.23% to their clients after charging a 2% override on total assets and then taking a 20% fee on gains over an agreed-upon threshold. This is the realistic best-case scenario, and it involves turning every $500,000 invested into $1.3 million ten years later. Most people that outsource their asset management would be satisfied with these results.
Yet, what catches my attention is the everyday opportunities that present themselves to those who go through life with their eyes open to good business deals–particularly those that do not require you to find the right manager that would put you in the top … Read the rest of this article!