Gilead Sciences: Approaching Buy-And-Hold, Permanent Investment Territory

Every so often, I get an e-mail from a reader curious to know what company will be the next big player to shake up or join an industry. In response, I very rarely have something new to add to that conversation because I think it’s likely that Coca-Cola will be the next Coca-Cola, PepsiCo will be the next PepsiCo, and Dr. Pepper will be the next Dr. Pepper. Translation: The industry leaders in the beverage sector today will likely be there ten, fifteen, twenty years from now. It’s been no secret that I think they possess the brand equity and vast distribution networks to be around for a long, long time, and that … Read the rest of this article!

Investing Advice To Carry You Through The Next Decade

If you get nothing else from reading the articles on this site, you should pay attention to the strategy advocated by business scholar professor Robert Novy-Marx, whose philosophy can be summed up as follows: “Buying high quality assets without paying premium prices is just as much value investing as buying average quality assets at discount prices. Strategies that exploit the quality dimension of value are profitable on their own, and accounting for both dimensions of value by trading on combined quality and price signals yields dramatic performance improvements over traditional value strategies. Accounting for quality also yields significant performance improvements for investors trading momentum as well as value.”

You should his essay here, … Read the rest of this article!

A Great Moment To Build Wealth: Hold Expenses Steady When Income Rises

A common psychological trait that most people share is a desire to experience forward progress—the harnessing of that trait, after all, is one of the reasons why it is much easier to stick with an income investing strategy over long periods of time.

If you own a diversified basket of assets, and contribute to it regularly, and reinvest, it is almost guaranteed that you will increase your income year after year, seeing the wealth-building process unfurl before your eyes. Someone who judges himself according to the amount of income that his household income each year will experience the psychological satisfaction of seeing the amount of income that his household generates go up year … Read the rest of this article!

Income Investing And The Fixed Cost Of Life

I spent a large portion of today studying businesses that collapsed due to high, fixed costs. I studied why General Motors failed. I looked into the failures at Border’s and Barnes & Noble. The more I try to figure this whole investment thing out in the broader context of life and business, the more I realize: cash flow is the lifeblood of success.

It sounds extreme, but it’s the conclusion I’m coming towards: don’t have $200 in monthly cash flow to cover your food costs? Yeah, that’s going to make you miserable, although perhaps leaner. Don’t have $1,300 coming in to cover your rent/mortgage? See how much you like those “it’s the experiences … Read the rest of this article!

Do Bull Markets And Great Depressions Affect Your Stock Market Psychology?

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!