Royal Dutch Shell Stock: The Consequences of Past Dividends

The business of Royal Dutch Shell is one of the most impressive in the entire world. If I had to make a list of thirty buy-and-hold forever stocks, Shell would get a spot. It owns such a staggering amount of assets that I once tried to specifically tally and itemize everything it owns, it took a few days to just put the basics together. That is what happens when a single corporate umbrella controls sixteen billion barrels of oil and 40 trillion cubic feet of natural gas to account for.

When these oil majors fluctuate, as it as inherent for them to do, I caution against worry and advocate focusing on how low stock prices are often the basis for very lucrative returns down the road.

Continue Reading!

A Fantastic Quote To Start Your Day

Check out this great quote from Charles Swindoll:

“The longer I live, the more I realize the impact of attitude on life. Attitude, to me, is more important than facts. It is more important than the past, than education, than money, than circumstances, than failures, than successes, than what other people think or say or do. It is more important than appearance, giftedness or skill. It will make or break a company…a church….a home. The remarkable thing is we have a choice every day regarding the attitude we will embrace for that day. We cannot change our past…we cannot change the fact that people will act in a certain way. We cannot change the inevitable. The only thing we can do is play on the one string we have, and that is our attitude…I am convinced that life is 10% what happens to me and 90% how I react to it. And so it is with you…we are in charge of our attitudes.” -Charles Swindoll

Continue Reading!

Originally posted 2013-08-09 03:54:15.

Food Stock Investing For Dividends

I pay close attention to consumer brands for the following reason:

“The best stocks to buy create a product that nobody else can legally produce then delivers that product using super-efficient distribution channels. This results in hard-to-replicate economies of scale. The product is protected by trademarks, patents, and copyrights, allowing the company to price higher than it otherwise could, accelerating the virtuous cycle as it generates higher free cash flow that can then be used for advertising, marketing, rebates, and promotions. Most people don’t reach for the knockoff Hershey bar or Coca-Cola bottle. They want the real thing, with the price differential being small enough there is no utility trade-off on a per-transaction basis.”

Continue Reading!

An Investing Lesson From The Greek Philosopher Epicurus

I’m a sucker for ancient Greek and Roman philosophers that made observations about life two thousand years ago that still hold up today. One of my favorite is the observation that the Greek philosopher Epicurus famously made about “the rich man’s new vase.”

It goes like this:

(1) A rich man buys a new vase, and feels a moment of pleasure with his new purchase.

(2) The feeling of joy begins to dissipate, and so he shows his friends the new vase he bought. The joyous feeling returns.

(3) The rich man repeats this demonstration—showing the new vase to his friends—until all of his friends see it. The feeling of joy fleetingly returns each time he shows it to a friend, but after the final friend sees it, the new vase no longer brings the rich man joy.

Continue Reading!

Originally posted 2013-08-08 10:37:32.

The Next Wells Fargo

I have long been intrigued by the fact that the most famous value investors, ranging from Charlie Munger and Warren Buffett to Seth Klarman, have all made it a point to invest meaningful sums of their investor’s capital into Wells Fargo at various points over the past several decades.

I recently analyzed the characteristics that led to Wells Fargo’s historic outperformance, and I identified a much smaller financial institution that is publicly traded and has a fair chance of being the Wells Fargo over the next half-century.

Continue Reading!