What screws a lot of people up from accomplishing good things in life is this desire to wait for the moment to be perfect before beginning. The problem with that mentality is this: there will never come a moment when everything seems perfect for you to get started.
I remember how my writing on the website Seeking Alpha got started. At the time, I was working for a Missouri Congressman from 8:00 AM to about 6-6:30 PM. For a while, I told myself that I’d wait for things to “settle down” before I’d get started. Eventually, I realized that I was only two weeks away from returning to college (and I’d be busy doing lord knows what, then) and if I didn’t hunker down and start writing, it would never happen.
I had this vision in my head of being able to sit down for an afternoon and pour through … Read the rest of this article!
More so than most, I have long been intrigued by the 1960s fad of investing in conglomerate stocks. You have these beautiful, completely unrelated businesses that churn out profits under nearly all economic conditions, and, if properly managed, are immune from bankruptcy unless the conglomerate itself takes takes on too much debt or an insurance liability that could take down the parent entity if manifested.
The downside of conglomerate investing is that, as a class, conglomerate indices tend to underperform the S&P 500 Index. The theory is that each member of the portfolio is unable to reach its potential due to a lack of focus as individual business lines become neglected because no individual part receives extensive care and attention.
However, I believe that the underperformance of the conglomerate is tolerable because, in the event that there is a corporate spin-off event, you were already sitting there at the low … Read the rest of this article!
In his 1993 letter to shareholders of Berkshire Hathaway, Warren Buffett provided an interesting historical aside about Coca-Cola’s long-term performance:
“Let me add a lesson from history: Coke went public in 1919 at $40 per share. By the end of 1920, the market, coldly re-evaluating Coke’s future prospects, had battered the stock down by more than 50%, to $19.50. At year-end 1993, that single share, with dividends reinvested, was worth more than $2.1 million. As Ben Graham said, ‘In the short-run, the market is a voting machine—reflecting a voter-registration test that requires only money, not intelligence or emotional stability—but in the long-run, the market is a weighing machine.”
For those of you who are curious, that share is now worth either slightly below $10 million or slightly above $10 million depending on the latest market fluctuations.
What I picked up from Buffett when I first came across this passage is … Read the rest of this article!
From 1911 through 1991, American tech stocks delivered returns of 8.3% annualized, almost two percentage points below what a general basket of large-cap American stocks produced over the same time frame. And much of that was driven by IBM. If IBM were removed from this historical measuring period, the tech stocks would have only produced 5.2%.
Why? Because of the immense wipeout risk. Unlike a candy bar manufactured by Mars, Inc. or Hershey, which can be slightly tweaked and repackage and sold for profit over and over again, the typical life cycle of a technology company has been that (1) a new product is introduced; (2) it saturates a market, creating an avalanche of wealth within a few short years; and (3) the product is replaced by the better mousetrap, leaving sales of the former product to wither due to obsolescence as bankruptcy or some sort of dulitive event occurs.… Read the rest of this article!
This is a random fact about my blog writing—I keep Elmore Leonard’s “Ten Tricks For Good Writing” handy with me whenever I work my way through a post I want to add to my website. Leonard, the author of Get Shorty and Rum Punch, gives these ten pieces of advice for writing a book:
1. Never open a book with weather.
2. Avoid prologues.
3. Never use a verb other than ‘said’ to carry dialogue.
4. Never use an adverb to modify the verb ‘said’, I admonish you gravely.
5. Keep your exclamation points under control. You are allowed no more than two or three per 100,000 words of prose.
6. Never use the words ‘suddenly’ or ‘all hell broke loose.’
7. Use regional dialect, patois, sparingly.
8. Avoid detailed descriptions of characters.
9. Don’t go into great detail describing places and things.
10. Try to leave out the
… Read the rest of this article!