In the 1980s and 1990s, one of the reasons why it was enjoyable to be a long-term shareholder of Coca-Cola stock is that the soda giant was able to grow volumes while simultaneously raising the prices of its drinks. Since around 2005 or so, Coca-Cola has struggled more so to grow volumes at the same time the company decided to raise prices—the company has resorted to holding prices steady or instituting temporary price hikes coupled with reductions (e.g. raise $1.25 soda to $1.50 then back to $1.25 so the $1.25 seems cheaper and the eventual $1.50 seems less lofty because it’s an already reached high).
By the way, that entry paragraph should not … Read the rest of this article!
In 1923, a lawyer from Columbia University named Robert Lee Hale wrote the charmingly titled “Coercion and Distribution in a Supposedly Non-Coercive State” to argue that there is a significant gap between the theory of a how is supposed to work and how it actually gets applied in practice. It was Hale’s work, along with the Supreme Court opinions written by justice Oliver Wendell Holmes, that helped give rise to a school of philosophy called legal realism in which you focus on the real-world effects of laws rather than regarding laws as self-executing principles that get properly applied as intended.
A similar shift is taking place in the field of investing … Read the rest of this article!
Warren Buffett’s investment in Apple stock is particularly interesting because it is the only example of a Berkshire investment in a large-cap stock that is both repurchasing shares aggressively and does not require Berkshire to sell the stock at certain levels do to pragmatic legal reasons. For instance, he would never allow the Bank of America, Wells Fargo, or American Express holdings to ever eclipse more than 20% of each stock even as they repurchase their own shares because it would activate the “financial strength” (sometimes called “source of strength”) doctrine that requires the parent entity of a failed financial institution to pay for liabilities.
In other words, if you own 19.9999% of … Read the rest of this article!
In 2012, Kellogg sold $14.1 billion worth of cold cereals, cookies, crackers, waffles, snack bars, pastries, and those Lord-knows-what things you put into a toaster. In 2013, Kellogg sold $14.7 billion. In 2014, Kellogg sold $14.7 billion. And, over the course of 2015, Kellogg is expected to sell $14.7 billion worth of its food. The revenue growth has been sluggish, and absent a large buyback program to act as a countervailing force, this explains why Kellogg does not get nearly as much coverage as other companies in the blue-chip sphere.
On conference calls, Kellogg executives have described the breakfast tastes of Americans (who contribute $950 million towards the $1.4 billion in annual profits … Read the rest of this article!
Since Christmas Eve, the price of Procter & Gamble stock has declined 8.5% from $93.89 to $85.90 to give the consumer giant a 3.00% yield for those contemplating buying the stock right now. That is something that catches my attention because, in the past 25 years, Procter & Gamble never had a year in which its dividend had an average yield of 3% or higher until 2010 (however, during the 2010-2015 stretch investors could have purchased Procter & Gamble with a 3% yield or better in each of those years).
Does Procter & Gamble yielding 3% indicate that the stock is worth buying, given its favorable dividend valuation compared to the past generation? … Read the rest of this article!