Jealousy, Envy, and Greed Are Great Tools For Destroying Wealth

Over the past year, Best Buy has returned 59.24%.

Citigroup has returned 78.92%.

Netflix has returned 332%.

That’s real money. If you put $100,000 into Netflix this time last year, you’d have $332,000 today. That money is the difference between having neighbors that drive bouncy cars and having neighbors that own the used car dealership that sells the bouncy cars.

I owned none of those companies at any point in my life, and in all likelihood, I never will. And it’s not because I’m content with being inferior—rather, making that kind of money with Best Buy, Citigroup, and Netflix would be an example of me trying to play a game I’m not cut out for.

As far as I’m concerned, Best Buy has too many similarities to Blockbuster and Borders. It has been an anachronism ever since Amazon went mainstream. People go to Best Buy, test the electronic goods they … Read the rest of this article!

Adobe Stock And The Trust Factor

Like many else in the financial media, I spend my fair share of time thinking about the future of technology companies. From an investment perspective, it is not so much the excitement of tech-related products that draw me in so much as it is the incredibly high profit margins in the industry as well as the immense profitability that results from ease of scalability. In essence, that is the promise of the Internet. You can go from selling 1x to 10x in a way that you never could if your sole operating asset was a restaurant in the rural Midwest.

Having said that, I am also quite aware that, historically, the long-term survival rate of tech companies is quite low and the result of a competitor with a better product tends to be displacement rather than subordination of the inferior product–i.e. If you build a better house, the inferior house … Read the rest of this article!

Why Visa Stock Perpetually Outperforms

Barnett Helzberg Jr., whose family sold the eponymously named Helzberg Diamonds to become part of Warren Buffett’s collection of subsidiaries at Berkshire Hathaway, said that the hardest part of growing his business involved (1) the high capital expenditures necessary to open up new jewelry stores and (2) the difficulty in determining the highest and best use of Helzberg’s business opportunities, as it is not always apparent ahead of time whether resources should be dedicated towards strengthening high-performing stores or combating the weaknesses at low-performing stores.

I have made no secret of the fact that Visa stock is the most essential stock that can be owned in one’s collection of investments because of the company’s market dominance (it processes more transactions daily than its nearest competitors Mastercard, Discover, and American Express combined) and the long-term megatrend in favor of electronic rather than cash transactions (this latter insight is not original to … Read the rest of this article!

Wisdom From Warren Buffett, Charlie Munger, and Steve Jobs

If you have an hour or two to kill today or sometime this weekend, these three Youtube clips should give you the chance to spend your free time learning from the best.

(1) The first video is a Warren Buffett speech/Q&A session at the University of Georgia a decade or so ago. As is often the case with video footage featuring Warren Buffett, the commentary runs from the straightforward (e.g. Buffett explains why Coca-Cola is an ideal investment because it is a brand name that generates good feelings among customers and is the type of product that can be consumed regularly) to the general funny life advice we’ve come to expect in a Buffett interview (he explains that the ideal trait in a romantic partner is low expectations). The reason why I like these types of clips so much is because they provide a chance to get past what Buffett … Read the rest of this article!

Saved By Facebook’s Lack of A Dividend

Earlier this year, I didn’t pay Facebook much mind. With only one unique exception, I have never had much of an interest in staking real money on business models that rely upon digital advertisements because I know darn well how quickly the rate that companies pay to advertise declines during a recession.

The last real recession was almost a decade ago, from 2008 through 2010 or so. Facebook did not have its IPO until 2012. The investor community has not yet witnessed how quickly Facebook’s profits could fall during a recession. We are talking 50-70% declines in overall profitability in as quick as a months-long timespan.

I even anticipatorily felt bad for money managers across the country who have received client praise for investing in Facebook over the past few years because I know quickly that praise could turn into a scolding under any ordinary adverse turn in the business … Read the rest of this article!