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Archive for the ‘Investing’ Category

1-Footers

Posted in Investing, Leadership, Philosophy, Quotes, tagged , , , , on May 23, 2023| 3 Comments »

I don’t look to jump over 7-foot bars:  I look around for 1-foot bars that I can step over.
    —     Warren Buffett
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Click here (23 May) to see the posts of prior years.  I started this blog in late 2009.  Daily posting began in late January 2011.  Not all of the days in the early years (2009-2010) will have posts.

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You Get What You Pay For

Posted in Investing, Philosophy, Quotes, tagged , , , , on January 7, 2023| 4 Comments »

It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
    —     Warren Buffett
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Click here (7 January) to see the posts of prior years.  I started this blog in late 2009.  Daily posting began in late January 2011.  Not all of the days in the early years (2009-2010) will have posts.

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Widening The Moat

Posted in Economics, Investing, Leadership, Philosophy, Quotes, tagged , , , , , , on April 16, 2022| 2 Comments »

Every day, in countless ways, the competitive position of each of our businesses grows either weaker or stronger.  If we are delighting customers, eliminating unnecessary costs and improving our products and services, we gain strength.  But if we treat customers with indifference or tolerate bloat, our businesses will wither.  On a daily basis, the effects of our actions are imperceptible;  cumulatively, though, their consequences are enormous.
When our long-term competitive position improves as a result of these almost unnoticeable actions, we describe the phenomenon as “widening the moat.”  And doing that is essential if we are to have the kind of business we want a decade or two from now.  We always, of course, hope to earn more money in the short-term.  But when short-term and long-term conflict, widening the moat must take precedence.  If a management makes bad decisions in order to hit short-term earnings targets, and consequently gets behind the eight-ball in terms of costs, customer satisfaction or brand strength, no amount of subsequent brilliance will overcome the damage that has been inflicted.  Take a look at the dilemmas of managers in the auto and airline industries today as they struggle with the huge problems handed them by their predecessors.  Charlie [Munger] is fond of quoting Ben Franklin’s “An ounce of prevention is worth a pound of cure.”  But sometimes no amount of cure will overcome the mistakes of the past.
    —     Warren Buffett
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Click here (16 April) to see the posts of prior years.  I started this blog in late 2009.  Daily posting began in late January 2011.  Not all of the days in the early years (2009-2010) will have posts.

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Historians, Not Librarians

Posted in History, Investing, Philosophy, Quotes, tagged , , , , , , , , on January 7, 2022| Leave a Comment »

If past history was all there was to the game, the richest people would be librarians.
    —    Warren Buffett
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Click here (7 January) to see the posts of prior years.  I started this blog in late 2009.  Daily posting began in late January 2011.  Not all of the days in the early years (2009-2010) will have posts.

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A Model Democrat

Posted in Humor, Investing, Philosophy, Quotes, tagged , , , , , , , on October 4, 2021| Leave a Comment »

Whatever the future holds, I make you one promise:  I’ll keep at least 99% of my net worth in Berkshire for as long as I am around.  How long will that be?  My model is the loyal Democrat in Fort Wayne who asked to be buried in Chicago so that he could stay active in the party.  To that end, I’ve already selected a “power spot” at the office for my urn.
    —    Warren Buffett
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Click here (4 October) to see the posts of prior years.  I started this blog in late 2009.  Daily posting began in late January 2011.  Not all of the days in the early years (2009-2010) will have posts.

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The Margin Of Safety

Posted in Economics, Investing, Philosophy, Quotes, tagged , , , , , , , on August 26, 2021| Leave a Comment »

Leaving the question of price aside, the best business to own is one that over an extended period can employ large amounts of incremental capital at very high rates of return.  The worst business to own is one that must, or will, do the opposite – that is, consistently employ ever-greater amounts of capital at very low rates of return.  Unfortunately, the first type of business is very hard to find:  Most high-return businesses need relatively little capital.  Shareholders of such a business usually will benefit if it pays out most of its earnings in dividends or makes significant stock repurchases.
Though the mathematical calculations required to evaluate equities are not difficult, an analyst – even one who is experienced and intelligent – can easily go wrong in estimating future “coupons.”  At Berkshire, we attempt to deal with this problem in two ways.  First, we try to stick to businesses we believe we understand.  That means they must be relatively simple and stable in character.  If a business is complex or subject to constant change, we’re not smart enough to predict future cash flows.  Incidentally, that shortcoming doesn’t bother us.  What counts for most people in investing is not how much they know, but rather how realistically they define what they don’t know.  An investor needs to do very few things right as long as he or she avoids big mistakes.
Second, and equally important, we insist on a margin of safety in our purchase price.  If we calculate the value of a common stock to be only slightly higher than its price, we’re not interested in buying.  We believe this margin-of-safety principle, so strongly emphasized by Ben Graham, to be the cornerstone of investment success.
    —     Warren Buffett
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Click here (26 August) to see the posts of prior years.  I started this blog in late 2009.  Daily posting began in late January 2011.  Not all of the days in the early years (2009-2010) will have posts.

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Four Buffett’s

Posted in Investing, Philosophy, Quotes, tagged , , , , , , , , , on August 9, 2019| Leave a Comment »

Risk comes from not knowing what you’re doing.
    —    Warren Buffett
Price is what you pay.  Value is what you get.
    —    Warren Buffett
Rule No.1:  Never lose money.  Rule No.2:  Never forget rule No.1.
    —    Warren Buffett
In the business world, the rearview mirror is always clearer than the windshield.
    —    Warren Buffett
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Click here (9 August) to see the posts of prior years.  I started this blog in late 2009.  Daily posting began in late January 2011.  Not all of the days in the early years (2009-2010) will have posts.

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Thinking Ahead

Posted in Investing, Philosophy, Politics, Quotes, tagged , , , , , , on May 5, 2018| Leave a Comment »

If you are thinking a year ahead, sow a seed.  If you are thinking 10 years ahead, plant a tree.  If you are thinking 100 years ahead, educate the people.
     —    Kuan Tzu
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Click here (5 May) to see the posts of prior years.  I started this blog in late 2009.  Daily posting began in late January 2011.  Not all of the days in the early years (2009-2010) will have posts.

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Stock Market Sets More Records Under #DumbDonald

Posted in Economics, History, Investing, Politics, tagged , , , , , , , , on February 8, 2018| Leave a Comment »

And the records just keep on getting set this week:
1) First President to ever have the Stock Market fall 1,000+ points in one day during his administration  —  Donald Trump
2) First President to ever have the Stock Market fall 1,000+ points in one day TWICE during his administration  —  Donald Trump
3) First President to ever have the Stock Market fall 1,000+ points in one day TWICE in one week during his administration  —  Donald Trump
4) First President to ever have the Stock Market fall 1,000+ points TWICE during his first term  —  Donald Trump
As I said in a prior post, most market gains are not directly attributable to any specific action by a President, neither are most market losses.  But, when you take “personal” credit for the gains “since getting elected”, I think you should also accept the blame when there is a market loss – “correction” or otherwise – during your administration.  Oh, but not “TeflonDon”…  After all, the economy is still fundamentally sound.  Or, so we’re being told.
And, yes, Mr. President we’re tired of winning!  Please, make it stop!!
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Click here (8 February) to see the posts of prior years.  I started this blog in late 2009.  Daily posting began in late January 2011.  Not all of the days in the early years (2009-2010) will have posts.

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Two Views Of The Starting Line

Posted in Investing, My Journal, Quotes, tagged , , , , , , on July 26, 2017| 2 Comments »

The foundation of wealth is the first decision well made.
    —    John Pierpont (J. P.) Morgan
It is very much easier for a rich man to invest and grow richer than for the poor man to begin investing at all.
    —    Barbara Ward
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Click here (26 July) to see the posts of prior years.  I started this blog in late 2009.  Daily posting began in late January 2011.  Not all of the days in the early years (2009-2010) will have posts.

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Knowledge Pays

Posted in Economics, Investing, My Journal, Philosophy, Quotes, Science and Learning, tagged , , , , , , on January 27, 2017| 3 Comments »

An investment in knowledge always pays the best interest.
    —    Benjamin Franklin
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Click here (27 January) to see the posts of prior years.  I started this blog in late 2009.  Daily posting began in late January 2011.  Not all of the days in the early years (2009-2010) will have posts.

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Accepted Fraud

Posted in History, Investing, Movie Review, Movies, Politics, tagged , , , , , , , , , , , , , , on July 7, 2016| Leave a Comment »

“The Big Short”  (2015)  —  movie review
Last night I watched “The Big Short“, which is a movie about how the banking, finance, credit bureaus  and real estate industries defrauded the American public (actually the entire world) and got away with it.  The movie stars Christian Bale, Steve Carell, Brad Pitt and Ryan Gosling and is rated “R” for language and frontal nudity (brief scenes with strippers).  The movie uses cut-aways to random famous people to provide “definitions / explanations” and (I guess) a bit of levity.  This act of having the person on camera “speak” to the audience is known as “breaking the fourth wall”.
For some time now, about forty years ago, the banking industry moved away from traditional “banking” and started trying to make money off of making money.  This began as an attempt to monetize risk into products which could be sold.  This was done via derivatives, which is a fancy way of saying “money for nothing”.  It is not really “nothing”, it’s position, options, leverage, coverage, insurance, or any number of other names for financial security – or rather, the illusion of financial security.  Some people think of it as shared risk.  I think it’s more traditional name is gambling.
Okay.  I’ll get off my soap-box and get back to the movie.  Four groups of financial players discover the housing market is being fraudulently (and criminally) propped up and, in fact, is in a giant bubble.  A “bubble” happens when greed takes over common sense in a market and prices for the items in the market are far higher than the actual value of the item and / or the ability of the buyer in the market to purchase the item.  Theoretically, when you lose the ability to pay for something, you should stop buying it.  However, in a true bubble, because “everyone” expects the price to continue to increase, the buyers continue to buy under the assumption the price will continue to go up and just before you lose the item (foreclosure for realty), you sell the item and take whatever profit you can.  IF you can time your exit correctly and get out with a profit, you win.  However, this is not true investing.  It is merely speculating.  This speculation is what is at the heart of the movie.
That is the “before” side of the movie.  The four groups know there is a bubble and one of them creates a derivative to profit (vastly) if the housing market bubble bursts.  The other three parties  get wind of the derivative and essentially go “all-in” to bet on the crash.  This is all happening in roughly 2005.  The expectation is the crash will happen in early 2007 when a percentage of mortgage loans which are variable rates with short-term fixed rate teasers have the teaser expire.
When 2007 rolls around and the housing market does crash, the derivatives don’t initially pay out because the banks / credit agencies / insurance companies  and government don’t want the national economy to collapse.  Essentially, the U.S. Taxpayer (via the government) foots the bill for the losses of the restructuring financial market.  Inevitably, a few of the large financial players “go away” (get bought up at severe discount) and the global economy is saved.   Here, the key point of the movie is that the little guy in America loses their home, but none of the fraudulent bankers and financiers goes to jail.  The irony is they (the banks and financiers) have prevented legislation which might stop this from happening again in the future, and we are back on the same roller coaster again.
Final recommendation:  highly.  This is a complicated movie about a complex subject.  The average person seeing the movie will probably not understand the financial portions of the movie.  They will (probably) understand the effects of the bubble burst because most of us have been living through the results (recession) over the last ten years (and still going).  This is not a great movie, but it is an honorable attempt to educate the working people of America.
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Click here (7 July) to see the posts of prior years.  I started this blog in late 2009.  Daily posting began in late January 2011.  Not all of the days in the early years (2009-2010) will have posts.

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Economic Engines

Posted in Investing, Leadership, Politics, Quotes, Science and Learning, tagged , , , , , , , , , , , on June 23, 2014| Leave a Comment »

In addition, at least in America, science has been treated sort of cavalierly, not only by the public but also by government.  The idea that science is just some luxury that you’ll get around to if you can afford it is regressive to any future a country might dream for itself.  Innovations in science and technology are the engines of the 21st-century economy;  if you care about the wealth and health of your nation tomorrow, then you’d better rethink how you allocate taxes to fund science.  The federal budget needs to recognize this.
    —    Neil DeGrasse-Tyson
Quoted by Rachel Edidin in the March 2014 Wired magazine article titled:  “Neil DeGrasse Tyson on Why Cosmos Will Be Better Than Ever“
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Click here (23 June) to see the posts of prior years.  I started this blog in late 2009.  Daily posting began in late January 2011.  Not all of the days in the early years (2009-2010) will have posts.

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Honest Wants

Posted in Investing, My Journal, Philosophy, Quotes, tagged , , , , , , , , on June 11, 2014| Leave a Comment »

Contentment consists not in great wealth, but in few wants.
    —    Epictetus
The surest way to remain poor is to be an honest man.
    —    Napoleon Bonaparte
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Click here (11 June) to see the posts of prior years.  I started this blog in late 2009.  Daily posting began in late January 2011.  Not all of the days in the early years (2009-2010) will have posts.

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Creating Interlocking Fragility

Posted in Investing, Quotes, tagged , , , on May 1, 2012| Leave a Comment »

Globalization creates interlocking fragility, while reducing volatility and giving the appearance of stability.  In other words it creates devastating Black Swans.  We have never lived before under the threat of a global collapse.  Financial Institutions have been merging into a smaller number of very large banks.  Almost all banks are interrelated.  So the financial ecology is swelling into gigantic, incestuous, bureaucratic banks – when one fails, they all fall.  The increased concentration among banks seems to have the effect of making financial crisis less likely, but when they happen they are more global in scale and hit us very hard.  We have moved from a diversified ecology of small banks, with varied lending policies, to a more homogeneous framework of firms that all resemble one another.  True, we now have fewer failures, but when they occur …. I shiver at the thought.  The government-sponsored institution Fannie Mae, when I look at its risks, seems to be sitting on a barrel of dynamite, vulnerable to the slightest hiccup.  But not to worry:  their large staff of scientists deem these events “unlikely”.
    —    Nassim Nicholas Taleb
From his book:  “The Black Swan“
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Click here (1 May) to see the posts of prior years.  I started this blog in late 2009.  Daily posting began in late January 2011.  Not all of the days in the early years (2009-2010) will have posts.

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