A Nice Investing Tip From Warren Buffett in 1982

In the 1982 Letter to Shareholders of Berkshire Hathaway, Warren Buffett included spent a few paragraphs explaining the accounting realities that come into play based on whether or not you own at least 20% of a company in which you invest. Basically, it works like this: if you own less than 20% of a company, your balance sheet only reflects the dividends that the company pays to you on the balance sheet. If you own more than 20% of the company, your balance sheet reflects both the dividends that the company pays you and the retained earnings that the company keeps.

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Originally posted 2013-07-04 08:31:34.

Embrace The Thrill Of Long-Term Investing in America

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If you have a minute, check out this article from  The New York Times that came out sometime last month:

Since many of us use the Standard & Poor’s 500-stock index as a proxy for the market, let’s take a look at the period from 1950 to 2012 to see how often we’re likely to feel positive, based on how often we check our investments:

If you checked daily, it would be positive 52.8 percent of the time.

If you checked monthly, it would be positive 63.1 percent of the time.

If you checked quarterly, it would be positive 68.7 percent of the time.

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Originally posted 2013-07-03 04:09:35.

Three Quotes From Henry Ford About Overcoming Failure

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Henry Ford had a lot of spunk. His famous quote, “Sir, you can have a Ford in any color you want, as long as it is black” is a great little encapsulation of his attitude towards business and life. Perhaps my favorite thing about him is that he embraced failure, but rejected the kind of negative attitudes that largely accompany failure.

When it comes to investing, I am not particularly interested in owning the kinds of companies that will be growing the fastest in good times. Rather, I am interested in owning the kinds of companies that will still be churning out profits without much of a hitch in an environment similar to The Great Recession economy of 2008-2009.

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Originally posted 2013-07-02 15:44:20.

The Disadvantage of Joint Spousal Wills

In traditional nuclear families especially, both spouses often have a desire to draft joint wills that give everything to their surviving spouse and then an equal distribution to their children. This gives rise to the intuitive question: Is it wise to draft a single will instrument that is on behalf of two separate persons, such as a husband and wife?

While a joint will is legal in most states, it is almost never wise to do so.

There are three primary reasons why spouses should not execute a joint will:

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Why You Should Only Buy High-Quality Dividend Stocks

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If you ever read Phil Fisher’s “5 Points” on the questions to ask yourself when looking for a stock to buy, you may remember Mr. Fisher’s point number two that you should ask yourself “Does the management have a determination to continue to develop products or processes that will still further increase total sales potentials of currently attractive product lines that have largely been exploited?”

The problem, of course, is that unless you are the wife or husband of a top executive, you probably have little indication ahead of time regarding whether a management team is sufficiently motivated to grow profits and take care of shareholders over time (as opposed to resting on its laurels). Seriously, how the hell are we supposed to know whether the CEO at Procter & Gamble is any more motivated than the CEO at Philip Morris International? It’s just rank speculation.

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Originally posted 2013-07-02 05:03:53.