Continuing an annual tradition here on Begin To Invest, I added Buffett’s 2016 letter to the compilation of quotes from each year of his letters.
My selection includes some words of wisdom, stories of success and even a joke or two. In the end just these selected quotes make up over 5000 words! It is amazing to watch history unfold from year to year and just think of what he has seen over the last 50 years….wars, inflation, stock market crashes etc. And yet, his first letter in 1977 could easily be mistaken for something you heard him say on the TV today. [click to continue…]
And I would argue that step #2 is the most important. Of course quality of your product is important, but if your product isn’t selling – the business is not making money. Period.
Inventory is usually the largest current asset on a company’s balance sheet, and is therefore the company’s primary use of cash. We have all seen the new companies on Shark Tank who desperately need money for inventory (Or who have used up all their capital buying inventory). So learning a few basics on what a company’s inventory is telling you is very important.
Welcome 2017! A new year, which means among many other things, a new year to invest in your IRA, ROTH IRA and/or 401(k). Here are the limits for contributions to IRAs, ROTH IRAs and 401(k)s, and how much you need to be saving each month or each bi-weekly paycheck to reach those limits:
(Click to enlarge)
Confused? (It’s the IRS tax laws – of course you are!) Here it is in text and some of the fine print: [click to continue…]
Common Size Analysis of Financial Statements involves looking at the numbers on the financial statement as a percentage of a total rather than their absolute value. Typically investors will look at a company’s common size balance sheet and common size income statement.
This is helpful when not only looking at a single company’s financial statements, but also comparing multiple business of different sizes at one time. Let’s take a look at an example of a normal balance sheet and a common size balance sheet for several companies:
This was a study conducted by Standard and Poors about a year ago. A little dated, but our previous post (“86 Percent of Americans can not answer all of these questions – can you?“) from 2012 is a post that still brings in a lot of traffic years later. So I wanted to continue the financial literacy theme with a newer study and newer questions. This study questioned 150,000 people across 140 countries.
How many could get 3 of the following questions correct? World wide? Just 33% could answer. Americans were slightly better, but still a dismal 57% pass rate. Here are the questions, along with a detailed explanation of the answers. How well did you do? Miss a few? No worries, at the end we explain the answers in detail to ensure you understand the topic. [click to continue…]
It’s earnings season again, which means you are probably staring at a company or two in your portfolio that have seen their share price take a dive after reporting “disappointing” earnings.
You are not alone.
Here was the news the other morning after Warren Buffett’s Berkshire Hathaway reported earnings:
Sounds bad right? Profit (Net Income) is down by a sizeable margin year over year for Berkshire.
Does this mean it is time to say goodbye to the all-star investor?
From those headlines it may seem so. But there is a lot more to a company’s financials than that headline earnings number. (Read to the end and find out how Buffett really measures the success of his businesses.) [click to continue…]
This was in Monday’s Wall Street Journal, it depicts the average investment asset allocation by generation:
The title of the article was “The Biggest Mistake People Make – Decade by Decade”
And if you can’t tell from the picture alone, Millennial’s (and every other generation’s) biggest mistake is playing it too safe – allocating 70% (!) of their money in cash. [click to continue…]
Our newest addition to our Fund Spotlight Series. Here we are building off of our Ben Graham Value Screen Series, and making those screens investable with just a click with the help of Motif Investing.
This is a collection of companies that most recently have passed Graham’s stringent value investing screen.
Of the whole investing universe, less than 25 companies make the list. What would Ben Graham buy today? this is probably a good start: [click to continue…]
This is a continuation of our “Ben Graham Value Screens” series, where we look at investment opportunities based on the criteria that Ben Graham used and that is outlined in his (excellent) biography, The Einstein of Money.
Here we present the results from 2 different screens. Ben Graham’s “Defensive Investor” screen and “Enterprising Investor” screen. [click to continue…]
Keynes may be the most famous name in all of economics. The term “Keynesian Economics” still fills headlines today as global financiers look for ways to restart economic growth.
But what you may not have known is that the same Keynes that created Keynesian Economics, is also responsible for some of the earliest thoughts on value investing, diversification and behavioral finance. [click to continue…]
John Oliver hits it out of the park with his segment the other night on retirement plans. Specifically he covers the effect of high fees, conflict of interests with your financial advisor and even gives some pretty good tips to get you on the right track. Check it out:
Want to learn more about Health Savings Accounts? Read on below: [click to continue…]
Looking for potential investments? With thousands of stocks to research, getting started can seem a bit overwhelming. Here are a couple screens (and the companies that made it through) using sets of criteria utilized by the “Dean of Wall Street” and “Godfather of Value Investing”, Ben Graham.
The significance of Ben Graham’s Wall Street career cannot be overstated. His investment partnership averaged 17% annual returns over its existence. He created and mentored some of the most successful investors ever to live and has been responsible for the education of more investors than almost anyone with his 2 best-selling investment books, The Intelligent Investor and Security Analysis. He had a very disciplined, rule-based approach to investing that focused on only one thing: A company’s intrinsic value.
The following comes from the book, “Einstein of Money”, a great biography of Ben Graham that is also focused on his investment work. Every other chapter breaks from the life story of Graham to detail a main concept in his investment philosophy. Whether it is his concept of Margin of Safety, Fundamental Analysis or advice on dealing with “Mr. Market”, the author does a great job mixing in the life of Benjamin Graham and the ideas behind his work. [click to continue…]
This Day in History
March 6th, 1933 – The banking crisis that has plagued various states now effects the whole nation. At 1am, Monday March 6th, Franklin Denanor Roosevelt closes every bank in the nation in a shutdown that was planned to last 4 days, along with banning the export of gold and all foreign exchange transactions. The next couple weeks would become many of FDR’s defining moments preventing the nation’s banking system collapse in the great depression. Banks nationwide would remain closed until at least March 13th. (Source: It was a Very Good Year)
Best March 6th in S&P 500 History:
1998 – Up 1.99%
Worst March 6th in S&P 500 History:
1980 – Down 2.23%
Best March 6th in Dow Jones Industrials History:
1902 – Up 1.83% or 0.87 points.
Worst March 6th in Dow Jones Industrials History:
1931 – Down 2.69% or 4.96 points.
This Day in History – March 4th
March 4th, 1957 – The S&P 500 index is introduced. Although Standard and Poors introduced its first stock index in 1923, today marks the anniversary of the S&P 500 index as we know it today. It closed the day at 44.06.
Best March 4th in S&P 500 History:
2009 – Up 2.38%
Worst March 4th in S&P 500 History:
2003 – Down 1.54%
Best March 4th in Dow Jones Industrials History:
1926 – Up 4.38 %, or 6.32 points
Worst March 4th in Dow Jones Industrials History:
1897 – Down 1.88% or .57 points
Chart of the Day
The S&P 500 since its creation in 1957:
Since March 4th 1957 the S&P 500 has returned 4424%, not counting dividends.
Or, a compounded annual growth rate of 6.67%, not counting dividends. [click to continue…]
For any fans of stock market history, the next couple weeks marks some significant anniversaries for the 1933 banking crisis. Today’s event starts a series of events that would bring on nationwide banking holidays, a presidential radio address, landmark legislation and use of government power. Check back daily as we highlight these events in our “Today in Stock Market History” series.
“When the two largest banks of the fourth largest city of the United States closed their doors in the last week of February 1933, tying up half a billion dollars of depositors’ money, there seemed to be only one thing for the people of Detroit to do, and they did it.
– W.K. Kelsey in an article in Barron’s – 1936
March 3rd, 1933: The NYSE shuts down at close as the banking crisis sweeps the nation. [click to continue…]
I first heard of the book “The Outsiders” in Berkshire Hathaway’s 2012 letter to shareholders. And who is going to ignore a book that Buffett calls “outstanding!”?
The book goes in detail on 8 different CEOs who excelled at creating exceptional long term returns for shareholders. In fact, the average returns of these companies’ shares outperformed the S&P 500 by a factor of 20 – every $10,000 invested in these companies was worth $1.5 million twenty five years later.
What’s their secret? And how can we use those lessons to find today’s great CEOs?