When the stock market rises in a hurry, it obviously becomes more difficult to find good investment deals. Fortunately, as I often remind myself, it is only necessary to identify one investment candidate at a given time in order to put capital to work successfully. I have a new update over on Patreon regarding my recent purchases of stocks that are still trading at prices close to the March 2020 lows. To become a subscriber, please click here.… Read the rest of this article!
During the 1980s and 1990s resurgence of book when Barnes & Noble and Border’s would deliver record profits on behalf of shareholders, the company was successfully implementing a “high fixed cost and then everything flows to profit” business model (this is in contrast to a business model when you make roughly the same profit whether you sell 1,000 or 100,000 widgets).
This kind of business model comes with one particular risk: You must sell X number of goods to to avoid losing money. In the case of Barnes & Noble, the first $1.5 billion in 1998 went towards paying expenses–the required payments to content publishes, employees, high rents to operate the large stores, and so on. If you sell $1 billion worth of books that year, too bad–you’re going to lose $500 million. If you sell $3 billion, then great–your costs might only go up to $1.55 billion to account … Read the rest of this article!