Starbucks Stock: Should You Buy Now?

I have only studied three companies in my life in which the following the following standard did not produce a good investment: Look for companies with high earnings per share growth that are supported by strong revenue growth and trading at a reasonable valuation. The only times this hasn’t worked out before involved General Electric, Wachovia, and Hostess (the first two had debt and liquidity problems, and the last had labor disputes that destroyed what should have been an excellent lifelong holding.)

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The Foregone Riches of Blue-Chip Value Investing

There are some people who look at The NASDAQ Index taking fifteen years to pass its 2000 highs and conclude that is some proof that the stock market is “rigged” or a “casino.” After all, if buying the largest technology names and holding them for fifteen years earns you 1% nominal returns (because of the dividends) and -2% actual returns (because of the inflation), then it seems to follow that a super-long period of no wealth-building would result in some skepticism about stock market participation in general.

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Arbitrage: Brown Forman A Shares and Brown Forman B Shares

It is not terribly unusual for some companies to create a dual class structure for the stock. Hershey, Google, and Ford immediately come to mind. In every example of this I have ever studied, the purpose is to keep ownership control in the hands of a select few that want to maintain control over the company by scaling back their investment in it. It’s a controversial practice—people think that investors with $500 million worth of stock should wield 10x as much influence as someone with $50 million in the firm. Others find the practice tolerable because investors have notice of the arrangement at the time they make their investment, and plus, the original founding families that own the firm through the decades may have more of a long-term orientation than some random guy that gets his hands on a large block of stock.

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