Compounding investing wisdom...
by Jon
Amazon’s 2017 letter to shareholders was released a couple days ago. It’s a regular read for me the past few years.
Jeff Bezos’s message hasn’t changed much since the first letter in 1997. His long-term process-oriented approach and willingness to fail is rare in the business world. It also translates well to investing.
This year, Bezos shares a few things he’s learned about maintaining standards in the company. This one stood out: Continue Reading…
by Jon
There are a lot of ways to invest. Value investing is the most counterintuitive, but that counterintuitiveness, when followed, typically prepares value investors better in seizing opportunities during market drawdowns. It’s also why it’s so hard to follow.
2008 was an extreme example of this. It was, potentially, the worst-case scenario. The crisis had multiple possible outcomes and on October 2nd of 2008, all of it was on the table.
Only a week before, Wachovia and Washington Mutual were “saved” in forced acquisitions and the first attempt at a financial bailout plan failed in a House vote. A week before that, Lehman collapsed. Then the next day, October 3rd, Congress came to its senses, passing the Emergency Economic Stabilization Act — the bailout — which President Bush signed later that day.
That was just in the U.S. It was global and it was only the beginning. The timeline of events is extraordinary. Continue Reading…
by Jon
I try to read a decent number of books each year, slightly more than average. According to a Pew Research study from 2016, the average number of books read by Americans is 12 (the median number is 4). For men, the average is only 9.
So my “slightly more than average” isn’t saying much. I wanted to step it up this year and read more books. The hard part is figuring out what to read.
I save reading lists whenever I come across a decent one. Well, I found one this week, tweeted by Phil Ordway (credit where it’s due).
If you’re looking for good suggestions outside of investing, this list is from an interesting source — the Defense Intelligence Agency. Here’s what the DIA Director has to say about reading: Continue Reading…
by Jon
Way before Amazon, Apple, and Google there was the Computing-Tabulating-Recording Co (CTR). CTR had the hippest new tech in town.
The merging of four companies combined together into one in 1911, put time clocks, punch card equipment, and weighing scales (and a few other bits of new tech) all under one roof.
A few years later, a budding young investor on Wall Street felt CTR was a worthy recommendation:
In 1915, while just a beginner on Wall Street, I suggested that the firm recommend a low-price stock, the Computing-Tabulating-Recording Co. But my employer, a conservative fellow, pointed out that the company’s bonds weren’t covered by its assets. He said, ‘How can you touch such a speculative stock?’ And I returned to my desk a very chastised young man. Years later the public company changed its name to IBM.”
CTR, now IBM, was the “Amazon” of its time. Graham recommended what became IBM when it was a measly $4 million market cap stock. Continue Reading…
by Jon
The first quarter of 2018 is on the books. The stock market got off to a great start, adding to last year’s run.
Then volatility crashed the party…things were going so well.
With all the volatility in the stock market lately, I thought it would be a good time to point out that this is only natural. Sometimes it’s stomach churning. It’s uncomfortable. It’s downright painful. Scary, even. But it’s all part of the experience.
So if those feelings sound a little familiar, I thought Peter Lynch’s perspective might offer some reassurance to help settle your nausea:
I love volatility…I think volatility is terrific.
Okay, maybe that’s not the most helpful for a queasy stomach. Continue Reading…
by Jon
B.H. Lidell Hart spent a lifetime writing about the history of military strategy and war. He summarized the many lessons in his writings in a little book called Why Don’t We Learn from History?.
The book is meant as a summary of the history of warfare, but it’s much more than that. It’s easily translatable to lessons on life, business, and investing.
Only Hart presents it with an inverted view of the repeated mistakes of history deeply rooted in human nature.
The book is filled with a lot of lessons and great quotes. So I pulled a few favorites out and added my two cents below each: Continue Reading…
