I view investing in the stock market under the following terms: (1) about 75% of one’s investments should be dedicated to owning shares in the most dominant business holdings in the entire world, and the bulk of the wealth should come from the “sitting” as earnings per share growth marches onward and dividends get paid out for reinvested into additional shares that can also participate in the earnings per share growth and pay out dividends of their own, and (2) about 25% of one’s investments should be directed towards the purchase of undervalued securities that are selling for less than they are worth, and can deliver more rapid capital appreciation that is usually the result of earnings growth interacting with P/E expansion.
The best part of buy-and-hold investing, or Category #1 investing, is that you do the hard work amassing capital and researching the dominant business, and then you get … Read the rest of this article!
Brunswick has one of the greatest legacies in the history of American business. How many companies out there have track records dating back to before the Civil War, as Brunswick does with its inception back in 1845?
The obvious downside with a business like Brunswick is that a majority of its product sales are cyclical. Manufacturing and boats are great, except during a recession. That can be tolerable, as the average years and good years can provide high enough profits to roll the muck that is encountered during the down years.
My fear is that, upon seeing the announcement that Brunswick is spinning off its fitness business, which includes the brands Life Fitness, Hammer Strength, and Cybex, Brunswick is forgetting about the importance of diversification that is necessary to weather the inevitable recessions.
Most analysts seem to approve of the 2019 scheduled spinoff of the fitness business, saying things like: … Read the rest of this article!
When investing, there are three to keep in mind that can erode the purchasing power of each dollar that we have:
(1) The first one is inflation. If inflation runs at 4.0% annually, that means it will take $1.04 in 2014 to buy what cost you $1.00 in 2013.
(2) The second thing is taxes. If you own 1,000 shares of ExxonMobil in a taxable account, you will receive $2,520 in annual dividends. But, if you are in the 15% tax bracket, you will have to send $378 to Uncle Sam, effectively giving you $2,142 in oil well money from Exxon that you can use to spend as you please.
(3) The third way that you can lose money is by paying mutual fund fees. If you have $100,000 in an account that charges a 1% annual expense fee, you are paying someone else $83 per … Read the rest of this article!