Check out this gem from page 23 of Peter Lynch’s classic “One Up On Wall Street” that explains the wisdom of always staying fully invested: “If you put $100,000 in stocks on July 1, 1994, and stayed fully invested for five years, your $100,000 grew into $341,722. But if you were out of stocks for just thirty days over that stretch—the thirty days when stocks had their biggest gains—your $100,000 turned into a disappointing $153,792. By staying in the market, you more than doubled your reward.”
That’s why I can’t really relate to people who want to sell Johnson & Johnson at $92 and repurchase it at $80, or sell Coca-Cola at $40 … Read the rest of this article!
“Well, I spent six or seven years after high school trying to work myself up. Shipping clerk, salesman, business of one kind or another. And it’s a measly manner of existence. To get on that subway on the hot mornings in summer. To devote your whole life to keeping stock, or making phone calls, or selling or buying. To suffer fifty weeks of the year for the sake of a two-week vacation, when all you really desire is to be outdoors, with your shirt off. And always to have to get ahead of the next fella. And still — that’s how you build a future.” –Arthur Miller, Death Of A Salesman
Of the … Read the rest of this article!
Donald Yacktman, one of my favorite investors once you get past the list of usual suspects that everyone knows, conducted an interview with Consuelo Mack a month or two ago that explained the rationale for his old-fashioned investing style (his portfolio typically owns large chunks of Procter & Gamble, Coca-Cola, and PepsiCo). My favorite quote from the episode is when he recalls a dinner conversation with his son in which his son explained the Yacktman investing style: “Basically, what you are saying is, if you buy above average businesses at below average prices, then on average, it is going to work” (That quote starts a little after the 14:30 mark).
The largest holdings … Read the rest of this article!
Estee Lauder sells $15 billion worth of beauty products per year, with approximately half of the revenues coming from makeup and half coming from skin care. It has increased in value from $1,000 in 1946 to $58 billion today, for an annual compounding rate of 24.7%. You would have been better off finding Estee and Joseph Lauder a year after WWII ended and demanding that you could join them as an investor in their company than you’d have been finding Warren Buffett at any point in his life and demanding the same.
The reason why great fortunes can be made in the beauty sector is because the profit margins are extreme once a … Read the rest of this article!
Although I strongly encourage any of you to read Benjamin Graham’s classic “The Intelligent Investor” if you have not done so already, I do know that “life happens” and it’s a lot easier to find fifteen minutes to read an article than it is to hunker down and read a dry, detailed text for 4-5 hours straight. So for those of you don’t have the time to read The Intelligent Investor or simply want to get a summary to help you determine whether the book is worth reading, I’ll try and share with you the four general principles that I took away from reading the book.
(1) Price Matters. A lot.
(2) Stock … Read the rest of this article!