You read last week about putting margin of safety to work in your portfolio. I told you about three strategies we use to pick stocks with the margin of safety in mind. The first and most important is that the only stocks we buy pay dividends. Below you’ll read an excerpt explaining the benefits of dividend investing from our free special report, Collecting Rare and Hard to Find Dividends. I’ll detail the other strategies in the weeks ahead. Reduce Risk with Dividend Stocks What’s more, dividends help reduce portfolio volatility. Figure 3 shows that high-yielding stocks have been less … [Read more...]
Words from the Wise
Richard Russell's timeless Rich Man, Poor Man has been there for me when I needed some perspective. I hope it will do the same for you. RICH MAN, POOR MAN: In the investment world the wealthy investor has one major advantage over the little guy, the stock market amateur and the neophyte trader. The advantage that the wealthy investor enjoys is that HE DOESN'T NEED THE MARKETS. I can't begin to tell you what a difference that makes, both in one's mental attitude and in the way one actually handles one's money. The wealthy investor doesn't need the markets, because he already has all the … [Read more...]
The Investment Idea that made Warren Buffett Billions
Last week E.J. posted part I in his series on Benjamin Graham’s The Intelligent Investor. You may have heard this from us before, but it is worth repeating for the benefit of those who have not. The Intelligent Investor truly is the best investment book ever written. It is a timeless classic that remains as relevant today as it was when it was first published over six decades ago. Not a single investment book comes close to providing the fundamental insights that Graham so masterfully delivers in The Intelligent Investor. If you don’t yet have a copy, order one today. It will be the best … [Read more...]
Who’s the Sucker?
This story doesn't have a happy ending. You see this often in the late stages of a bull market. After missing the bulk of the rally in the stock market from the prior bear market lows, the general investing public gets greedy. Those investors who couldn't find a thing to like about the investment climate become the biggest cheerleaders for a permanent prosperity. The regret of missing most of the bull market gains pushes many to make up for lost time by getting too aggressive. Stocks with questionable business prospects that most wouldn't touch during the prior bear market become the most … [Read more...]
The Intelligent Investor: Part III
“It is surprising how little attention has been paid by economists and by Wall Street to this development. The debt of corporations has expanded nearly fivefold while their profits before taxes a little more than doubled,” wrote Benjamin Graham in The Intelligent Investor. What Ben Graham was referring to was the expansion of Net Corporate Debt from $140.2 billion in 1950 to $692.9 billion in 1969—a fivefold increase—compared to the expansion of Before Income Tax Profits from $42.6 million to $91.2 million—only a little more than double. A fivefold increase in debt only to double profits … [Read more...]
The Biggest Buyer of Stocks
"Stockholders as a class are king. Acting as a majority they can hire and fire managements and bend them completely to their will." - Benjamin Graham, The Intelligent Investor Corporations have been buying back shares at a record pace, buying mores stock than any other group of investors today including: Hedge funds, foreigners, insiders, pension funds, insurance companies, and individual investors. In the first quarter of this year corporations purchased $188 billion of stock—the highest quarterly amount since 2007, according to Birinyi Associates. We all know how stocks did after … [Read more...]
The Global Imperative
Check out this chart on oil demand. The black line shows oil consumption of major developed markets. This is basically the U.S., Japan, and developed Europe. The grey line is oil consumption of the rest of the world, which is dominated by emerging markets. Up until about 15 years ago, if you were interested in the oil market, you focused on demand in the world’s largest economies. But in recent years, developed market demand has become a marginal influence on prices. The most important driver of global oil markets today is demand from the rest of the world. The U.S., Japan, and … [Read more...]
Mission Paris
Last week I told you about The Best Table in Newport. After TSK, Chad Hoffer and Tyler Burnley felt Newport needed a good burger joint so they opened up Mission, which in no time created a cult like following. I had that confirmed on a recent trip to Paris, France. In May, Becky and I visited her parents Debbie and Dick Young who spent the month there. One of the many memorable dinners we had was on the Left Bank at L’Epi Dupin. It was a short walk from our Hotel de L’Abbaye and right near the famous Paris department store Le Bon Marche. I would have never expected such fine food except … [Read more...]
The Intelligent Investor: Part II
“You Can Observe a Lot Just by Watching”—Yogi Berra You may recall the summer of 1963 when The Beach Boys’ Surfin U.S.A hit #3 on the charts and the stock market was riding the tail end of a 1949 to 1964 wave, where it averaged a 10% return per year. Stocks were hot and that was it. End of story. Much like today. In 1964, as Benjamin Graham points out in his the book The Intelligent Investor, “Few people were willing to consider seriously the possibility that the high rate of advance in the past means that stock prices are ‘now too high’, and hence that ‘the wonderful results since 1949 … [Read more...]
The Intelligent Investor: Part I
“To me, Ben Graham was far more than an author or a teacher”, writes Warren Buffett in the preface to the 1973 edition of The Intelligent Investor, “More than any other man except my father, he influenced my life.” In a remembrance of Graham (1894-1976) published in the Financial Analysts Journal, Buffett wrote, “A remarkable aspect of Ben’s dominance of his professional field was that he achieved it without that narrowness of mental activity that concentrates all effort on a single end.” I received my copy of The Intelligent Investor as a Christmas gift back in 1997 from Dick and Debbie … [Read more...]
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