Every now and then, you
might encounter something in the stock market that makes you wonder: Am I
crazy, or is everyone crazy? With what is going on at Tesla right now, I want
to offer you the reassurance that it is the Tesla shareholder base that is completing
disregarding the long-term intrinsic value of the corporation as the price of
the stock has climbed from $35 last year to $585 now for a valuation of $555
The stock, which is set
to be added to the S&P 500 in the coming days, is offering us a real-time
lesson on why Jeremy Siegel’s papers concluded that investors would be better
off owning the original S&P 500 without any of the additions that occur
over time (the reasoning being that booted stocks usually are trading at too
low of a price while the newly added stocks are getting there in … Read the rest of this article!
You know what I would like to read? A biography of the successful life decisions made by biographers using the knowledge acquired while covering the strategies of other successful people. I have this in mind anytime I read an interview with Alice Schroeder in which she discusses how her intense study of Warren Buffett’s tactics and philosophy have made her a better investor.
Specifically, she has mentioned that early in her career, she would often put up a mental block against purchasing companies that are trading at a higher price than existed when she first studied the stock or first purchased shares. It’s a very human form of mental anchoring. Joseph Steinberg, the founder of Leucadia National, has written that it’s difficult for him to buy a $10 hamburger because he remembers being a kid when it cost $0.10.
There are two logical ways to work through this mental block … Read the rest of this article!