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!
VWEHX, the Vanguard High-Yield Corporate Fund, has been a great to investors since its inception in December 1978. VWEHX has generated 8.41% annual returns durings its thirty-two years in existence, which would turn a $10,000 investment into $146,000 over that time frame. Better yet, VWEHX has been the near perfect bond fund to own if you are after high current over the long run, as $108,000 of those gains would have come from income generated from the bond holdings that would be passed on to you.
The terms of a VWEHX would have been this: For every dollar you put into the investment, you got to collect $10.80 in total over the span of regular monthly payments that occurred over the following 30+ years. VWEHX has been the best way to enter the junk bond market, as the strategy involves buying over four hundred companies with low credit quality and … Read the rest of this article!
Gilead Sciences caught my attention in February when the price of the stock fell to $82 from its 2015 high of $125 per share. I wrote it about it then, likening the anxiety that was dragging down the price of pharmaceuticals to the anxiety that dragged down the price of weapons manufacturers Lockheed Martin and Boeing during the political talks of sequester.
Gilead, whose signature drug is Sovaldi, has come under scrutiny for pricing its Hepatitis C drug at $1,000 a pill or $84,000 for a three-month regimen. France, Spain, and India have threatened to invalidate Gilead’s patents for Hepatitis C, and the Veterans Administration in the United States has sought to add political pressure to Gilead’s American operations by using media pressure and the threat of congressional regulation to get Gilead to voluntarily the price of Sovaldi.
Unlike Sovaldi, that proposition may prove a tough pill to swallow because … Read the rest of this article!
Middle-aged Midwestern farmers did their part during WWI by dropping significant chunks of their food off with local U.S. government food officials that transported the food to the Allied Cause in exchange for Liberty bonds. A liberty bond was exactly what you think it is–a low-interest bond that was created by the United States government to facilitate borrowing to fund the war effort.
It was heavily marketed as a patriotic duty, with movie stars like Douglas Fairbanks and Mary Pickford rallying the public to delay gratification and accept as any bonds in lieu of cash as was possible to survive, and Liberty bond posters decked the local churches and government halls.
By the time the Allies had secured armistices from Austria-Hungary and Germany in November 1918, many Nebraska farmers were looking to unload their Liberty bonds. It wasn’t just for the liquidity purpose of getting their hands on cash that … Read the rest of this article!