Regarding the identification of excellent long-term stock investments, Warren Buffett made the following observation in his 1977 shareholder letter:
“Most companies define ‘record’ earnings as a new high in earnings per share. Since businesses customarily add from year to year to their equity base, we find nothing particularly noteworthy in a management performance combining, say, a 10% increase in equity capital and a 5% increase in earnings per share. After all, even a totally dormant savings account will produce steadily rising interest earnings each year because of compounding.
Except for special cases (for example, companies with unusual debt-equity ratios or those with important assets carried at unrealistic balance sheet values), we believe a
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On the list of investments that I should have recognized, but ultimately failed to recognize in real time, is the success of Adobe, Inc. (ADBE) as a software as a service company. Back in 2011, when Adobe stock was at $27 per share, Adobe was the type of business where you would pay a one-time fee to acquire.
Want to access, edit, and highlight a PDF? Pay Adobe $99, and boom, you’ve got the privilege to do so for life. That was a great business model. It turned Adobe into a billion-dollar company because it didn’t cost anything additional to acquire a customer. Nothing wrong with that.
But then, Adobe took an action … Read the rest of this article!
Wendy’s is not a company that gets a whole lot of attention simply because it has played fourth fiddle to Dairy Queen, Hardee’s, Burger King, and the star of the show, McDonald’s. With McDonalds growing profits and dividends like clockwork around the globe every year, and being the one source of truly lucrative long-term wealth creation within the fast food industry, it can be easy to overlook some of the contributions to human understanding brought about by some of the secondary players.
Today, I want to shine a quick spotlight on a strategy employed by Dave Thomas, the founder of Wendy’s. From the beginning, Thomas had to work cut out for him—when he … Read the rest of this article!
Check out this gem from page 23 of Peter Lynch’s classic “One Up On Wall Street” that explains the wisdom of always staying fully invested: “If you put $100,000 in stocks on July 1, 1994, and stayed fully invested for five years, your $100,000 grew into $341,722. But if you were out of stocks for just thirty days over that stretch—the thirty days when stocks had their biggest gains—your $100,000 turned into a disappointing $153,792. By staying in the market, you more than doubled your reward.”
That’s why I can’t really relate to people who want to sell Johnson & Johnson at $92 and repurchase it at $80, or sell Coca-Cola at $40 … Read the rest of this article!
“Well, I spent six or seven years after high school trying to work myself up. Shipping clerk, salesman, business of one kind or another. And it’s a measly manner of existence. To get on that subway on the hot mornings in summer. To devote your whole life to keeping stock, or making phone calls, or selling or buying. To suffer fifty weeks of the year for the sake of a two-week vacation, when all you really desire is to be outdoors, with your shirt off. And always to have to get ahead of the next fella. And still — that’s how you build a future.” –Arthur Miller, Death Of A Salesman
Of the … Read the rest of this article!