One of my favorite Benjamin Graham investments to review is his early career investment in the Northern Pipeline. In 1911, the Supreme Court ordered that the Standard Oil Trust be broken into over fifty separate entities, and he began to study the various pipelines that were being split up into eight entities.
Since the pipelines amounted to less than one-seventh of the overall Standard Oil empire, and since the Northern Pipeline was just one of the eight pipeline entities becoming its own after the breakup, the Standard Oil income statements do not classify Northern Pipeline according to anything that would resemble a balance sheet overview–investors were only given access to the net income and other similar figures.
When Graham himself began to study the pipelines, he personally traveled to Washington, D.C. in order to pick up copies of each of the … Read the rest of this article!
William Danforth—He founded Purina Mills, the company that would soon become Ralston-Purina, in St. Louis, Missouri, during the summer of 1894. As of the early 2000s, Ralston-Purina is now a part of Nestle, combining two of my favorite companies (the only other merger of equal beauty during my lifetime occurred when Procter & Gamble picked up Gillette).
The reason why I like William Danforth so much is because he understands the connection between business and the rest of your life (I have a tendency to gravitate towards the investor/philosopher types). He is the gentleman that wrote the book “I Dare You”, which I plug on this site as the summer read of 2013.
In I Dare You, Danforth explains what he believes to be the key to successful. He argues that a successful life is essentially about balance a four-square: our economic interests, our physical health, our intimate/social … Read the rest of this article!
This distinction rarely comes up, but the United States’ Prohibition against alcohol between 1920 and 1933 did not actually ban the consumption and possession of alcohol, but rather, the manufacture and sale of alcohol.
The wording of the now-repealed 18th Amendment to the United States Constitution made this clear:
“After one year from the ratification of this article the manufacture, sale, or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States and all the territory subject to the jurisdiction thereof for beverage purposes is hereby prohibited.”
In the early months of Prohibition, saloons would claim that they stockpiled beer from before Prohibition’s effective date, and then host events within the saloon that would charge customers for participating in the event and then provide “free” alcohol as a courtesy (these types of events came to be called “blind … Read the rest of this article!
What is a reason why stock prices of a particular company falls down lower than historical norms would suggest? One reason is when there is a general feeling in the air that, Amazon, Alphabet, or any of the remaining wave of new-age tech companies has a change of disrupting the company’s industry and core profit engine.
But, by the same token, it also stands to reason that one of the best places to find an investment is an industry where the investor community believes that disruption is likely to occur but, in fact, will not cause the scope of disruption that is anticipated.
This is arguably one of the most important investing principles to every apply correctly as it can result in wealth far beyond what you would ever expect. From 1956 through 2003, the old Philip Morris (now Altria, Philip Morris International, Mondelez, and a portion of Kraft-Heinz) delivered … Read the rest of this article!
I recently received this comment and question from reader “DB”, and once I saw that my response had crossed the 1,000 word threshold, I decided it was worthy of its own post. The question is about why it can be inadvisable to jump into the market all at once upon receiving some kind of windfall. Specifically, here is what DB had to say:
“Hello Tim – Thanks for this article! I like your writing style. I am just now constructing a dividend portfolio and it has been quite the learning process. I am wondering if you can address a question I have on building the portfolio regarding actually making purchases. I have seen a few authors caution the new dividend investor to not buy all your stock picks at once but to make the transition over time. Why is this? I assume the authors are telling us to identify the