Among the readers with whom I have had private conversations, the biggest investing regrets have generally been one of two things:
(1) Either the person invested extensively in bank stocks prior to the financial crisis of 2008-2009 that wiped out 75-95% of the value of many supposedly safe financial stocks, or:
(2) They owned some high-quality stocks that they had to sell to meet an inevitable need that crops up over the course of an investing lifetime.
It is the second point that I want to discuss.
Successful investing over the long-term, defined as regularly increasing your purchasing power over most rolling three-year periods, is quite easy. If you figure inflation is going to run somewhere around 4% annually over the next fifteen years and you had to make a list of twenty companies that have a very good chance of increasing profits by more … Read the rest of this article!
One of the best things that Calvin Coolidge, the 30th President of the United States, ever said was this: “If we judge ourselves only by our aspirations and everyone else only by their conduct, we shall soon reach a very false conclusion.”
What I find so appealing about that Calvin Coolidge quote is that it completely cuts through any tendency we might have to give ourselves credit for things we have not yet accomplished—the exercise not yet run, the book not yet written, the degree not yet completed, and so on.
You don’t get credit for having dreams—you get credit for pursuing dreams. Knowing about how Coca-Cola, Johnson & Johnson, Colgate-Palmolive, ExxonMobil, and Procter & Gamble make people rich over twenty and thirty year increments is nearly useless if you do not actually go out there and acquire the money necessary to establish ownership positions in these excellent companies. … Read the rest of this article!
Here in the Midwest, it is a gorgeous Sunday afternoon, and I would completely understand if you have better things to do with your time than read this article, so I’ll boil it down for you in one sentence: If you want to smarter than almost anyone you encounter on the street, and more importantly, put yourself in the position to build wealth for the long haul by thinking in terms of purchasing power rather than superficial dollar amount changes.
Now for the five-minute version.
If you read Yahoo News headlines today (actually, right now), you will see an article titled “Bad News For Social Security.”
The article is generally a complaint that the cost-of-living adjustment for the upcoming year of Social Security checks is only 1.5%. The article includes the obligatory quotes from Social Security recipients that remember previously receiving 3% or even 4% cost-of-living increases. The … Read the rest of this article!
As investors, we do not put together successful investing lives by getting world events to happen that we desire. Rather, we put together successful investing lives by reacting intelligently to the events that do happen.
Although I personally regard it as a low probability event, the upcoming issue that is dominating the global financial newswaves is the prospect of a potential United States government default on its debt.
The real issue there is that the United States will not be able to pay interest rates on its debt to creditors (this means both foreign entities like China’s vast stockpile of US government debt, as well as American corporations and individual investors that held US bonds), and this will conceivably lead to: a (temporary) crash in the United States dollar as it loses its historical credibility to meet its debt obligations in all instances, the dollar loses its status as the … Read the rest of this article!
Before I launch into the substantive part of this article, read this almost Aesopian tale first:
One day, a scorpion looked around at the mountain where he lived and decided that he wanted a change. So he set out on a journey through the forests and hills. He climbed over rocks and under vines and kept going until he reached a river.
The river was wide and swift, and the scorpion stopped to reconsider the situation. He couldn’t see any way across. So he ran upriver and then checked downriver, all the while thinking that he might have to turn back.
Suddenly, he saw a frog sitting in the rushes by the bank of the stream on the other side of the river. He decided to ask the frog for help getting across the stream.
“Hellooo Mr. Frog!” called the scorpion across the water, “Would you be so kind as
… Read the rest of this article!