Do Not Be A Cooter Brown Investor

Back at the start of the Civil War, Southern legend says that a man named Cooter Brown lived at the dividing line between the North and South. In addition to an unclear home, Cooter had friends and family that were declaring their allegiances to both the Union and Confederate causes.  Because of the mixed loyalties around him, Cooter was unsure whether to side with the Yankees or Southerners. As the war started, Cooter devised a shifty plan to remain in a state of permanent intoxication—he drank himself into alcoholic oblivion every night so that he would be useless to either the Union or Confederate causes. Throughout the war efforts, Cooter’s assistance was sought by no side, as the drafters found him to be more trouble than he could possibly be worth.

Although the story of Cooter Brown is one of caricature, the moral lesson is that an extended period of … Read the rest of this article!

The Thin Line Between Poverty And Wealth

If you read finance content regularly, most of it is a blur. There are only so many different ways that a person can say: diversify, live below your means, set aside an emergency fund, and so on. It’s like reading about weight loss. Everyone knows the answer to the question is some derivation of “put the cheeseburger down” and “hop on a treadmill”, but people are always on the look out for something new.

I mention all of that for one reason—it’s hard for a particular personal finance article to get “stuck” in my head. If you skim through 15-20 articles in less than 25 minutes of reading per day, it takes something special (or anti-special) to catch my attention.

For some reason, I keep finding myself going back to this article I read in the St. Louis Post-Dispatch this week about a family that found themselves in $22,000 worth … Read the rest of this article!

You Must Buy Stocks Today, Tomorrow, And Next Year

I’m very skeptical of writing of writing about “social contracts” in the American employment landscape because there is a good argument to make that they never existed in the first place. Namely, large employers do not hire people for the joy of “creating jobs”, but rather, because they actually need a living, breathing human being to do something in order to make a profit (unless you own a cemetery, in which case you will also need non-living, non-breathing human beings to make a profit).

Johnson & Johnson does not hire an engineer to make Listerine more effective at fighting cavities simply because they desire to pay someone $180,000 per year, but rather, because successful innovations will make Listerine a more indispensable item in the bathroom cupboards of Americans nationwide, and will drive up sales and ultimately make more profits. More profits mean bonuses for executives making the calls, and nice … Read the rest of this article!

Philip Morris International Stock: Ready to Roar

Irving Fisher’s “The Money Illusion” is a life-changing economic treatise because it strongly advances the principle of thinking in terms of purchasing power rather than nominal dollars. We all have the intuitive sense to recognize this over long periods of time, as we know when we hear stories of grandpa making $1 per day or buying five-cent milk shares.

We are less cognizant of this over the intervals of our own life. If you have a $500,000 collection of investment assets, and inflation runs at 3.5% per year, you must have $517,500 in total at the end of a twelve-month period in order to maintain the status quo. How many people would correctly observe that their purchasing power had diminished if their account stated $515,000 at the end of the period? Not many.

In that spirit, I have paid attention to an unlikely source to gauge metrics of purchasing power–prisoners. Read the rest of this article!

Finding Stocks To Create Wealth Is Like Taking A Walk Through Wal-Mart

With the typical blue-chip stocks I discuss, the volatility is pretty limited. With the exception of the 2008-2009 Financial Crisis, you don’t really see Coca-Cola, Johnson & Johnson, Colgate-Palmolive, PepsiCo, and Procter & Gamble experience 50% declines in stock price. That is because everyone knows these companies are excellent and the earnings per share increase over almost every three-year rolling period.

I mention this for one reason—even though I write frequently about judging companies based on business performance rather than stock price fluctuations, the typical companies I discuss do not have wild swings in volatility because they are largely followed and most people with a steady pulse are aware of their excellence.

But sometimes, there are examples of companies that have wildly volatile stock prices that do not regularly reflect the true strength of the underlying business performance, and may require you to wear your cowboy hat if you want … Read the rest of this article!