I went through my case files recently covering the business lessons that I learned from Warren Buffett, and I translated from my list some of the quotes that I found the most instructive. I gave special emphasis on the quality of the insight and the uniqueness of the quote:
- Buffett, on successful investing in general: “The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors.”
- On the temptation to invest in poor businesses at a cheap price, Buffett stated in his 1972 letter: “Your chairman made the decision a few years ago to purchase Waumbac Mills in Manchester, New Hampshire,
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I was thinking about how the last ten years in the American equity markets have been somewhat difficult for income investors that seek high current dividend yields as bank deposits and Certificates of Deposits saw their interest payment rates plummet, the stock market boomed making it difficult to find reliable high yielders, and various income-producing fads and overvaluations have arisen in the interim to lure those who seek dividends to support their lifestyle or build a cash-generating infrastructure so that they always have cash coming in the door to make fresh investment.
Let’s discuss the historical and present environment for income investing.
I. The High Dividend Investment Fads Of The Past Decade
Three fads came and went in response to the difficulty of finding attractive investments in the low-interest rate environment over the past ten years.
First, income investors put money into closed-end funds that paid out 15-25% annual returns … Read the rest of this article!
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.
When Amazon purchased Whole Foods, Jeff Bezos indicated that he was … Read the rest of this article!
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.
I have long paid attention to the success of the tobacco sector as an investment ever since I read Jeremy Siegel’s book “Stocks for the Long Haul” in which he pointed out that an investment in the old Philip Morris was the single best investment of the latter half of the 20th century, trumping even Warren Buffett’s amazing story at Berkshire … Read the rest of this article!