Why Do Some Families Get Richer With Each Generation, And Others Get Poorer?

There was a write about a half-century ago named John O’Hara. He was a cranky guy with a wide variety of interests, and although he had a large number of critics, he was good enough to persuade fellow writer Fran Lebowitz to dub him “the real F. Scott Fitzgerald.”

One of his caricatures that he liked to create in his writings were hypothetical dialogues between characters that represent “Old Money” interacting with young men that were on a quest to get rich in a hurry. It would be hard for a writer like O’Hara to become generally mainstream today, because O’Hara relied on a mixture of strong moral condemnation mixed with relentless stereotyping, and that would create a strong mismatch with the rising sensitivities and general tendency to take abstract insults personally that generally typifies the current socio-political climate.

Why, then, do I bring O’Hara up? Because one of his … Read the rest of this article!

Chevron, Occidental, Anadarko, and Berkshire: What Just Happened

Investors sometimes forget that oil is not quite like other common stock investments because it involves a non-renewable resource. Oil companies constantly seek replacement rates of 100% or greater because it means they are replacing what they produce. If their replacement rate is below 100%, it is producing faster than it is replacement, and eventually, the company would be left with no assets.

This is why the five supermajors are constantly playing the repurchase stock and engage in M&A course of action as a matter of strategy. They repurchase the shares to increase the price per share of the stock and then issues the same stock as currency in a subsequent merger to get its hands on the target company’s oil reserves to maintain the status quo of growing profits 6-8% over the long haul while yielding 3-5% as a formula that involves extended (sometimes even decade-long) periods of underperformance … Read the rest of this article!