Stock Ownership Trumps Intelligence Every Time

For those of you that followed this weekend’s Wall Street Journal, you may have caught Professor Jordan Ellenberg’s op-ed piece on how she believes that child geniuses ought to treated by family and wider society in general. Apparently, if you are a 13 year-old that hits 700 or above on the math portion of the SAT and 630 or above on the verbal reasoning portion, you become a part of this lifetime tracking study conducted by Vanderbilt University. It’s a very nice editorial, but this statistic that relates to finance caught my attention about the long-term earnings power of child geniuses:

Those students, now in their early 40s, have filed regular reports on their intellectual and professional development for decades. They’re pretty developed: Some 44% of them have doctoral degrees (only 2% of the general population does); their median income was $80,000, about twice the U.S. average for people

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Costco Stock’s Special Dividends Are Great

In the summer of 2012, Costco traded at $78 per share. It was earning $4 per share in profits and was trading at a valuation of 19.5x earnings. The stock had climbed ten-fold over the previous twenty years, and had increased almost 100-fold since its 1982 initial public offering. Its sales per store were astounding, as it was one of the only brick-and-mortar retailers that had reported same-store sales growth of at least 5% annualized. It was generating almost $700 million in cash from its members who have to pay an annual subscription fee (that is now $60) in order to join. The dividend, having been initiated in 2002, had risen in every year of its existence and only consumed 27% of the annual profits. And it was sitting on nearly $10 billion in cash. It seemed to meet all the criteria of a wonderful business trading at a fair … Read the rest of this article!