The Peter Lynch Crayon Test Could Save Your Investment Portfolio

Peter Lynch, the gentleman that achieved 29% annual returns while running Fidelity’s Magellan Fund from 1977 through 1990, is famous for saying that you should never invest in any idea that you can’t illustrate with a crayon. A variation of this advice is that you should never own a business where it takes more than a few sentences to explain how the company turns a profit.

The highest-quality businesses can usually be explained quite simply.

Coca-Cola makes its profits by making syrup concentrates that allow them to make about $0.30 or so on every dollar once it is said and done.

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Originally posted 2013-08-07 17:13:29.

A&T Stock Looks Intriguing At 6% Dividend Yield

AT&T (T) stock has long fascinated me. It’s the staple of nearly every income investor’s portfolio. And for good reason. If you get your hands on a meaningful block of AT&T stock early enough in your life, you can have a whole lot of fun with it.

Ten years ago, a mere $20,000 investment could have gotten your hands on 1,000 shares of T. Since that time, AT&T has paid out $19.80 per share in dividends. If you paid $20 per share, you have essentially gotten your investment back in a decade of your life without any need to reinvest.

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