One of the social theories out there that seems intuitively appealing (at a minimum) is the notion that the market conditions that exist at the time you came of age has an outsized influence on your subsequent behavior. If you find people who have lived through the Great Depression, they have socks hidden throughout their houses with balls of $100 bills in them. The post-death inventorying of the possessions of their estates is a macabre Easter egg hunt where you stumble upon assets in the most unexpected of places. Because of the widespread availability of credit and lack of society-wide severe economic hardship, Americans coming of age during the 1990s aren’t conditioned to … Read the rest of this article!
I have long been interested in the history of Ralph Lauren stock, which has defied the typical short-lifespan of fashion retailers to become an actual compounder for its investors. Almost twenty years ago, the stock could have been purchased for $18 per share. Now it trades above $100 per share, and almost $18 per share in dividends have been paid out along the way. Its eighteen-year compounding rate has been 11.1%, counting dividends but not assuming reinvestment.
It’s not the type of company that I take seriously as an investment. This summer alone, the Wall Street Journal has reported on the bankruptcy of Barney’s and (soon) Forever 21, and that’s about what you’d … Read the rest of this article!
If you pay close attention to the financial sector investments in the Berkshire Hathaway portfolio, it becomes clear that these holdings all enjoy a common characteristic. Namely, they are all paying out dramatically lower dividends than they are generating in profits and simultaneously engaging in abnormally large share repurchases.
Bank of America is repurchasing $32 billion in stock, JP Morgan is repurchasing $30 billion in stock, Wells Fargo is repurchasing $25 billion, Goldman Sachs is repurchasing $10 billion, Bank of New York is repurchasing $6 billion, and U.S. Bancorp is repurchasing $4 billion.
Normally, this does not come up unless a company is repurchasing many shares quickly (such as the financial firms noted … Read the rest of this article!
One of the ridiculous components of the annual “Forbes 100 List” that outlines the richest people in the world is that it is written with the frame of reference that every member of that list is actively trying to get richer over time. In the case of Carlos Slim, that is undoubtedly true. In the case of Bill Gates, that is undoubtedly false.
When Microsoft went public in 1986, Bill Gates owned 46.7% of the stock. Microsoft is now a company in the $350 billion range. Had Gates decided to let his ownership stake silently compound without any interference from him, he would be sitting on a $163 billion fortune (and that is … Read the rest of this article!
When you study the personal lives of most great value investors, be it Charlie Munger, Warren Buffett, John Neff, Richard Cunniff, Bill Ruane, or Donald Yacktman, you will find that among the many things that they share in common, one of them is this: they have all been internally motivated. When you get your hands on biographies of their lives, you get the impression that even from an early age, they didn’t really care a whole lot what other people thought of them. They weren’t needlessly combative or anti-social, but they weren’t afraid to fade away and do their own thing.