Compounding investing wisdom...
Fortune has a good article on the flat market we’ve experienced so far this year. It gets into the possible reasons why, what history has to say about what to expect next, and why you shouldn’t read too much into it.
I have a simpler answer. Markets need to pause every once in a while. Continue Reading…
Baseball is one of the few sports where you can fail 70% of the time and still have a great year. Players are paid millions to do just that. And the mutual fund industry follows a similar model. But I digress.
Only 13 MLB players have breached the .400 barrier since 1900. In 1941, Ted Williams hit .406 while the league average was .262.
He was the last to do it. He was one of the greatest hitters ever because of his tireless work ethic, obsession for hitting knowledge, and discipline.
Over time, Williams simplified his batting process down to only swinging at good pitches he could hit. He stacked the odds in his favor.
Always a fan of analogies, Buffet uses Williams’ process to explain his investment philosophy: Continue Reading…
If you’re not listening to the Masters in Business podcast, you’re missing out. The podcast has become a free, weekly course on investing, business, psychology, and more. I set aside time some time each week to listen. If you have any interest in learning more, subscribe and do the same. You won’t regret it.
This week’s guest teacher was Howard Marks. Marks is one of the most followed people in the industry because of his Memos. Continue Reading…
Show a chart of a bear market and I guarantee someone will say: The market went nowhere for years. What a terrible investment! Who would want to own stocks that long just to break even? How are you supposed to make money if it happens again?
Of course, it’s true. The market did go nowhere. Invested money went somewhere. An index, like the S&P 500, is not the same as investor returns.
To the untrained eye, the assumption is investors made no money during that time. I’m sure many investors didn’t. But some investors did. And neither’s returns looked anything like the chart. Continue Reading…
I ran across a PDF where Charlie Munger explains the important difference between companies that make more money than they know what to do with (cash cows) versus companies that always need cash to maintain growth (cash hogs).
So cash cows are obviously better than hogs. And the best cash cows have some type moat – pricing power, economies of scale – and a great capital allocator. See’s Candy is a good example. Continue Reading…
I’m not a fan of high yield bonds. I say this because I subscribe to the view that stocks drive returns while bonds help cushion any falls.
I know this because when the stock market acts crazy, investors consistently run from stocks into bonds for safety. High-quality government bonds benefit and help offset stock losses.
However, high yield bonds don’t. Continue Reading…