Back in 2003, Microsoft stock traded in the $20s. And guess what happened? It continued to do so every year for the next decade that followed. Between 2003 and 2013, there was at least one trading day in each year in which the software giant traded in that price range. During this 2003-2013 stretch, Microsoft’s earnings grew incredibly from $0.97 to $2.65 per share. The profits quadrupled!
As Seth Klarman once said in Margin of Safety:
“Investors are sometimes their own worst enemies. When prices are generally rising, for example, greed leads investors to speculate, to make substantial, high-risk bets based upon optimistic predictions, and to focus on return while ignoring risk. At the other end of the emotional spectrum, when prices are generally falling, fear of loss causes investors to focus solely on the possibility of continued price declines to the exclusion of investment fundamentals. Regardless of the market … Read the rest of this article!
If you are a marathon runner and you take a couple months off to check out which toppings at Fortel’s Pizza Den are the best while spending your evenings trying to determine which of Baskin Robbins’ 31 flavors is truly the best, what do you think will happen?
Among other things, you probably won’t be able to run a marathon anymore. That is because marathon running is the type of life skill that is in need of constant maintenance—if you take a couple months off from running, you’ll have to go back to nearly scratch and build up your stamina all over again. No matter how fast you once were, if you take a couple months off from exercising, you’re not in all that much better shape than the person with a similar profile that had never been in such good shape in the first place. With most physical activities, … Read the rest of this article!
Lately, I have been reading the biography of Wal-Mart founder Sam Walton, titled “Made in America.” I haven’t finished it, but I came across this quote from David Glass (an eventual CEO of Wal-Mart) that gives a pretty good snapshot into the kind of guy that Walton was:
When Sam feels a certain way, he’s restless. Two things about Sam Walton distinguish him from almost everyone else I know. First, he gets up every day bound and determined to improve something. Second, he is less afraid of being wrong than anyone I’ve ever known. And once he sees he’s wrong, he just shakes it off and heads in another direction.
When some people go to Wal-Mart, they might think of a “big box” retailer that is usually associated with corporate greed and excess by squeezing every penny out of vendors and paying wages to entry-level employees that flirt with the … Read the rest of this article!
I have begun studying the life of Bernard Arnault, the richest man in France who is most well-known for being the CEO of the unweildily named luxury brand company LVMH Moet Hennessy Louis Vuitton SE. It turns out, the extended name is instructive in giving us a clue as to the sheer number of luxury brands that are owned by the Louis Vuitton umbrella.
It dominates the luxury alcohol market with Dom Perignon and Moet & Chandon. It dominates watches with Tag Heuer and Zenith. It dominates fragrances with Dior and Givenchy. It dominates retailing with Sephora and DFS.
The stock is controlled by Arnault through his family holding company, appropriately named Arnault Family Group, which trades on the Euronext exchange. Because it is a French company, it has largely evaded the attention of American investors.
I believe this omission, if due to ignorance, comes at the cost of an … Read the rest of this article!
This is one of those posts of me “thinking out loud.” It’s a chance for me to reflect upon one of the most sensitive topics in personal finance: trying to find the right amount of money to give to charity when you are in the beginning stages of wealth accumulation.
One of the “life models” that I keep in mind has been the path that Warren Buffett has chosen to follow with his own charitable giving. For most of his 20s and 30s, he did not give much to charity. He had set up The Buffett Foundation to give $20,000 here and $75,000 there to specific causes, and according to Roger Lowenstein’s Buffett biography, that only constituted 3-5% of his annual income. According to Lowenstein, most of Buffett’s early charitable acts were done at the behest of his wife Suzzie, and he generally viewed charity as a hindrance in the … Read the rest of this article!