… Read the rest of this article!
By the age of twelve, Warren had saved $120. In the spring of 1942, he enlisted his sister Doris as a partner and purchased three shares of Cities Service Preferred. The stock plunged from $38.25 to $27. When the stock recovered to $40, Warren sold, netting a $5 profit for the two siblings. He was, however, shocked to see the stock then continue to rise until it hit $202 per share a short period of time later. Warren realized that if he had held off selling a little bit longer, he and his sister would have netted a profit of almost $500.
Alice Schroeder’s note: Warren learned three lessons and would call this episode one of the most important of his life. One lesson was not to overly fixate on what he had paid for a stock. The second was not
In August 2011, I wrote my first financial piece online. Even though I’ve been at it for three years, that has not been enough time to cover a full business cycle. Really, since 2009, the stock market and the economy has been moving in the same direction: up.
That leads to all sorts of distorted impressions, complicated by the fact that the constant updates about stocks (which we can sell at a click of a button!) that make it easy for us to rent company ownership positions on a yearly, monthly, or even weekly/daily basis without actually applying anything resembling a long-term framework.
For instance, I recently wrote something about The Craft Brew Alliance, which was trading at $11.06 last week when I wrote an article about it on Seeking Alpha. I pointed out some things I liked about the company: it was charging high premiums for its craft beer … Read the rest of this article!
I’ve finally got the chance to take a look at the Kinder Morgan consolidation, and am finally getting around to that promised post on the deal. The Kinder Morgan investments have fascinated me for awhile because it’s probably the highest-quality American firm that never quite reached blue-chip status in the eyes of the casual investing public. It’s always been seen as a few notches below Exxon, Chevron, and Conoco.
If I had to guess why that perception exists, my speculation would be that people think “Kinder came from Enron. Enron bad. Used to be friends with Ken Lay. Therefore, Kinder-Morgan will eventually blow up.” Even though most people would agree that guilt by association logic is bunk, it has probably crept into the analysis of Kinder Morgan (perhaps even non-deliberately).
For those of you who haven’t followed Kinder Morgan’s growth in the past two decades, the firm is often-cited as … Read the rest of this article!
If you look for wisdom from people who are dedicated to long-term investing—creating the kind of financial investment situations where you make decisions in 1990 that are still affecting you in 2014, you will often hear them talk about not selling overvalued stocks.
There are a lot of reasons why this is the case—when you sell something outside of a charity, retirement account, or certain trusts, you have to pay taxes so the amount of money that you have available to make a new investment might put you in a worse spot than had you never sold the stock.
Other times, the cost of dealing with the overvaluation doesn’t merit selling—after all, would you really want to let go of Colgate-Palmolive, Emerson Electric, 3M, and Procter & Gamble just because the price of the stock reached a point where the future forward returns from that price point would be 9.5% … Read the rest of this article!
Hi Tim. I’ve been reading your site for the past six months… [a few paragraphs I removed]… I’m just starting out, and I gotta say, receiving my first $100 dividend check completely changed everything for me! I’d rather make $100 for owning a stock than make $200 in a day from my job I know im odd. Thank you so much for your site, and keep up the writing! I check for updates every day! Signed, Graydon.
There. Right there. Graydon, you get it. The understanding of almost every individual in this country is that, in order to generate money, you have to give up your time and do something. If you don’t show up to work on Monday, Tuesday, and Wednesday, you’ll be lucky to still have a job, and you almost certainly won’t be receiving any cash for those three days missed. Even if you own a small … Read the rest of this article!