All of my articles, summed up into one:
#1. If you want to own companies that you can hold for three decades without thinking about hardly at all, then you have to avoid banks and the tech sectors entirely. Things like Wells Fargo and IBM will probably do very well over that time frame, but they require the steady guidance of montoring—the amount of debt a bad management team could put on a bank’s balance sheet quietly or the quickness of technological change over a short period of time make these stocks ineligible for permanent capital categories. If you want to think about “forever” investing, you need to focus on food, beverages, and … Read the rest of this article!
Hi Tim. I have seen Warren Buffett mention that the threat of nuclear weapons is what scares him the most about the future of America. I understand that this is a personal question, but I hoped you would share what you consider the greatest threat to the American economy, and how to prepare for it if possible. Okay thanks… -John
Interesting question, John. I like it because not only do you want to know what I consider to be the biggest problem, but what I consider to be the solution as well. I like receiving questions where I can already tell that the person asking the question has a fighting spirit.
As we … Read the rest of this article!
When Warren Buffett started his investing career, he would respond to general questions about whether the stock market was overvalued or undervalued by pointing to the ratio between the market capitalization of American stocks and America’s GDP. If the market cap of all publicly traded American stocks exceeded the gross domestic product of what the nation produced (i.e. was a ratio over 100%), then the stock market would be considered overvalued. And if the ratio was below 100%, the stock market would be considered undervalued. Right now, the market cap to GDP ratio is 147%, which would historically suggest that stocks in aggregate trade at 1.5x their overall value based on Warren Buffett’s … Read the rest of this article!
When you build an ownership collection of the best companies in earth—I have in mind firms like Visa, Coca-Cola, Johnson & Johnson, and Chevron—there is a pleasant occurrence you can come to expect: These companies will regularly grow their profits, causing your calculations of the firm to constantly be subject to upward revision.
It came to my attention when I was in dialogue with a reader that had an average cost basis in Chevron stock somewhere around $63 or $64 per share, and couldn’t bring himself to pay $115 per share even though he thought the stock seemed like a good deal at the price. That’s a behavioral force worth examining—previous experience with … Read the rest of this article!
Royal Dutch Shell pays out a dividend of $0.94 per quarter, or $3.76 per year. The price of the stock currently sits at $69.83 per share, an inch above the company’s fifty-two week low price of $68.29 that was reached during Friday’s trading. I find it to be a chronically underrated company, with annual returns of over 14% from 1914 through 2014 and over 11% annual returns since having globally scaled operations in 1986.
It is also a company that has served an important purpose in helping me develop and improve my overall understanding of investing, as Royal Dutch Shell had cut its dividends six times over the course of delivering 14% annual … Read the rest of this article!