I’ve been digging through the financial commentary archives of The Wall Street Journal and The New York Times to compare the tone of investment commentary in the late 1990s to the financial news in the immediate aftermath of 1987’s Black Monday in which the value of the Dow Jones dropped by 22% in a single day.
It leaves an impression to see how quickly investor attitudes changed in under ten regarding the same exact companies. On October 20th, 1987, few people were talking about the inherent quality of enterprises like Coca-Cola, Colgate-Palmolive, and Johnson & Johnson, which had been paying out annual dividend increases of almost thirty years by that time. And had been reporting steadily growing profits as well. No one cared.
Just about all common sense was abandoned. The initial prints from The Wall Street Journal and The New York Times compared the fall to the … Read the rest of this article!
In the 1990s, no stock contributed more to the earnings per share growth rate of the S&P 500 than Wal-Mart stock. It had been an elevator upward delivering 16% annual earnings per share growth throughout the decade, fresh on the heels of delivering 31.5% annual growth between 1972 and 1990. From 2000 through 2012, the party continued, as Wal-Mart grew earnings per share from $1.40 per share in 2000 to $5.02 in 2012. Although the best gains came to Wal-Mart’s early investors, participating in the growth of the business between 1972 and 2012 had been a blessing for any investor that chose to buy Wal-Mart outright instead of investing in something like an index fund.
The past three years have not been as kind to Wal-Mart shareholders. Between 2012 and 2015, earnings per share have exactly come down a bit. Wal-Mart made $5.02 in 2012, and is only expected to … Read the rest of this article!
Visa and Mastercard are distinctly different from other credit card companies like American Express and Discover Card. When you swipe something on your Visa or Mastercard, you are not actually using cards issued by Visa or Mastercard. The card itself is issued by a bank or financial institution somewhere, and the Visa and Mastercard brands represent networks that the issuing card joins. Anytime you make a purchase, the merchant has to pay a fee to the issuing bank by the end of the day, and the financial institutions have to share this fee with Visa and Mastercard.
Visa was created by Bank of America back in the 1966 to act as a way for banks to collect more from non-check purchases than the rising Mastercard which was an open-loop system created to electronically transfer funds. The important takeaway is that the Visa and Mastercard networks were created to make transactions … Read the rest of this article!
Somehow, this site developed a strong Canadian audience. There are as many Canadian readers here as readers from the state of Georgia, which is a little perplexing to me because I can at least understand why people from Atlanta end up here—practically every investor there owns some Coca-Cola, and I have enough posts on that to bring ‘em in through the search engines. But I don’t know that much about Canadian stocks and the international rules regarding taxation, although I appreciate the country’s underappreciated banking history that does not get nearly the amount of global acclaim that it deserves.
I once attended an investment conference hosted by the great great grandnephew of an early 20th century American president, and all he did was rave about his investments in Canadian bank stocks. He said that they had a superior culture to American banks because there is less pressure to act … Read the rest of this article!
It is historically unusual for Royal Dutch Shell to yield over 6%. This is a company with a very long history of having a fair value that also corresponds to a dividend yield between 5% and 6%. Given how well the American stock market has performed over the past six years, it can be wise to take a look at any large company that appears to be offering a discount.
Royal Dutch Shell does $360 billion in sales per year. Hershey, which I covered yesterday, is worth $15 billion in its entirety. To get a feel for how large Royal Dutch Shell is, you could convert the amount of crude oil and natural gas that Royal Dutch Shell sells annually to the ability to buy the entire Hershey business 24x over. It is, without a doubt, massive.
Now, when people talk about being value investors, they often express a desire … Read the rest of this article!