I usually don’t read too much into it when a corporate executive sells stock in a company they are associated with (or formerly associated with) since there are many reasons why someone might sell shares of stock that are unrelated to the fundamentals of the business. Also, even if an executive does sell a stock for “fundamental reasons” relating to expectations of future business performance, so what? If you look up any great-performing business over the past twenty years, you will find some executives sharing shares every quarter. Heck, in 2008, there were five executives at Visa (V) that sold stock at a price between $16 and $18 per share that is now … Read the rest of this article!
The old Philip Morris is such an important case study that offers so many lessons for investors into the nature of successful compounding because the company went over fifty years of delivering 17% annual returns while only growing the business at a rate of 11% annually. This spread is something I think about quite often because it lasted for so long. It wasn’t simply a case of a stock changing its P/E ratio from 5 to 10 during a short-term measuring period, doubling an investor’s returns. No, this was an example of some permanent condition existing in the equity markets that turbo-charged the company’s returns on a sustained basis over what can be … Read the rest of this article!