You know what makes all of this finance writing about blue chips fun for me? The continuity of almost everything.
When I started writing for Seeking Alpha in 2011, I was saying the same things about Coca-Cola then that I am saying about it now. When you own 500 brands that generate $10 billion in annual profit across 200 countries, it’s not subject to a whole lot of change. You raise prices a dime here, cut costs a nickel there, buy buck a little stock, and voila, another 8% dividend increase. It’s just so. . . easy and obvious.
In some regards, it’s probably too easy. You hear people talking about buying Procter & Gamble and Johnson & Johnson all the time non stop, it can be tempting to search out for something new, “You’re like a broken radio, man. Don’t you have any other stocks up your sleeve?” The … Read the rest of this article!
One of the first moments when it hit me that I would make a ton of investing mistakes over the course of my lifetime is when I read admissions from Warren Buffett about the investing mistakes that he made in his life. I find it funny that he claims Berkshire Hathaway, the vehicle he used to build a fortune north of $50 billion, is something that he considers a mistake. And the thing is, he’s probably right about that.
Per the interview:
(15) What has been your biggest investment mistake and how did you learn from it?
WB: It is better to learn from other peoples mistakes rather than your own. Look at all kinds of business failures. I don’t believe in beating yourself over it, you’re going to make mistakes. My biggest mistake was buying Berkshire Hathaway and trying to make it better. We had all of our
… Read the rest of this article!
One of the interesting things about owning a high-quality asset such as an obviously excellent business is that it only takes a few years of dividends and general profit growth to protect the principal amount of your investment.
Take something like Johnson & Johnson, for example.
In 2010, Johnson & Johnson earned $4.76 in profit, and paid out $2.11 in total dividends. The absolute highest price that Johnson & Johnson traded at in 2010 was $66.20 per share. That works out to a P/E ratio of roughly 14x earnings.
But look what has happened in the three years since: you collected $2.11 in dividends in 2010, $2.25 in total dividends in 2011, $2.40 in total dividends in 2012, and $2.59 in total dividends in 2013. That means each share has collected $9.35 in total dividends over the past three years.
If you had purchased some Johnson & Johnson stock at … Read the rest of this article!
When I solicited for questions right before Thanksgiving, the most common question that I received was something to the effect of: How do you get started investing if you have a low income and don’t have much by way of disposable income to get started?
Although it’s a topic that a lot of finance writers like to make needlessly emotional, for me, it’s nothing but a function of math. When we talk about turning money today into something impressive at some future point in time, there are three variables that control everthing:
The amount of money we have to invest.
The growth rate of that money.
The amount of time that we can set that money aside.
For the most part, we’re going to be looking at growth rates between 8-12%, with full dividends reinvested. I can tell you that there are 75% or so odds that Coca-Cola will … Read the rest of this article!
Take a moment and read this story I found on the Bogleheads forum. It is absolutely excellent. It is from user “sperry8”:
My quick story…
Grew up in an upper middle class neighborhood spoiled by a well to do father who gave me more than I needed. He went bankrupt when I was in an expensive University he was paying for, that I chose. I was 18 and didn’t understand. I stayed in that same University using my credit cards to pay for it and all my expenses. Ran up almost $35,000 in debt (yes, they actually gave a college kid with no history a plethora of credit). Finally at $35k, they wouldn’t give me any more. So I moved home to a local city college. Got 2 night jobs, bartending and valet parking cars for the local Jewish center, where I was embarrassed to park the cars of
… Read the rest of this article!