Continuing an annual tradition here on Begin To Invest, I added Buffett’s 2022 letter to the compilation of quotes from each year of Buffett’s letters to Berkshire Hathaway shareholders.

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 5500 words!  It is amazing to watch history unfold from year to year and just think of what Buffett and Munger have 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.

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Enron traded on the New York Stock Exchange under the ticker symbol ENE, and later under the symbol ENRN when it traded on the NASDAQ.

Shares of Enron stock reached their highest price on August 23rd, 2000 when shares reached a price of $90.75! The high share price gave Enron a market cap of about $70 billion, enough to make it the 7th largest publicly traded company.

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One of the reasons ETFs have exploded in popularity recently is because ETFs are more tax efficient compared to mutual funds. Why are do ETFs have better tax efficiency, and when does this difference even matter?

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Analyze A Common Size Balance Sheet, Income Statement and Other Financial Statements – Common Size Analysis thumbnail

What is the Difference Between a Common Size Balance Sheet and a Regular Balance Sheet?

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:

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I don’t think there is any better teacher than history for investors today.

“There is no better teacher than history in determining the future… There are answers worth billions of dollars in a $30 history book.”

― Charles T. Munger, in Poor Charlie’s Almanack

‘Bull! A History of the Boom and Bust’  by Maggie Mahar covers the beginning of the bull market in 1982 through the tech bubble bust and beginning of the recovery through 2004… [continue reading…]


86% of Americans cannot answer these basic financial questions. Can you? thumbnail

Below is a simple 5 question quiz presented to 25,000 Americans. Only 14% got all 5 answers correct.

We have also updated this to include the new “bonus question”available.

This is troubling because not understanding these topics can have a profound impact on your future investing success.

A lot of families handle their own finances, so it is imperative that the basic topics covered here are understood. At Begin To Invest, I want to empower people to have the confidence to handle their own finances and be able to do it well.

Here, we discuss the topics covered in the 5 question quiz in detail, to ensure you understand these concepts.

Click Here to Take the Quiz


While I hope 2021 brings along a lot of improvement, it seems likely we have at least a few months to lay low and hunker down before life returns to normal.

Between New Years resolutions, winter weather, and the coronavirus, there has never been a better time to have a goal of reading more.

If you need helping determining what to read in 2021, here are the most popular books from our readers in 2020. Topics range from stock market history, to financial statement analysis

Top 10 Investing Books for 2020

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With a new year comes new IRS rules. Here’s what has changed for 2021 in regards to how much you can contribute to your IRA, 401k, and Roth IRA – Along with various income restrictions to be eligible.

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It is very easy in hindsight to be in awe of one of today’s “great” stocks, and dream about how much money you could have if you had only invested decades ago.

For example, Apple stock since 1992, which is up about 8,300%:



But this doesn’t tell the whole story. Many of today’s great companies had periods where their stock performed terribly. There were times in history when Apple stock was down 80%, Home Depot down 75%, Nike down 70%. Here are some of the worst performing stretches of today’s “Super Stocks”:largest_longest_declines_for_super_stocks

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shareasimage - great ceos

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 25 years later.

What’s their secret? And how can we use those lessons to find today’s great CEOs?

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shareasimage - brk 1964 balance sheet

Warren Buffett’s 2014 letter to shareholders tells the amazing story of Buffett buying Berkshire Hathaway.

At the time Warren’s investing style, taught by Ben Graham, was to look for “cigar butt” stocks – stocks that were dirt cheap, but provided a “free puff” to investors willing to make the investment. Berkshire certainly could have filled that criteria, here is how Buffett tells the tale:

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“…have an adequate idea of stock market history, in terms, particularly, of the major fluctuations. With this background you may be in a position to form some worthwhile judgment of the attractiveness or dangers…of the market.”

– Ben Graham

As I write this, worldwide stock markets are reeling from scary headlines of the spread of the coronavirus. Over the last 2 days, the Dow is down more than 6%, the 89th worst 2 day stretch in history.

I thought it would be fun to look at the major stock market declines of last decade – to get an “adequate idea of stock market history”, as Ben Graham said, in order to form judgement on how we should be reacting to today’s headlines.

Before reading, take a minute to try and recall the worst news headlines from the past decade. What was worth panicking over? How did the stock market react? How did you react?

History tells us that what seems important today is often forgotten tomorrow. And it tells us that the last thing you should be doing in panicking and selling your investments.

Don’t believe me? Below we have a collection of the major headlines in the past decade that moved markets and caused thousands to panic.

How many of these do you even remember?

What seems significant today?

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With a new year comes new IRS rules. Here’s what has changed for 2020 in regards to how much you can contribute to your IRA, 401k, and Roth IRA – Along with various income restrictions to be eligible.

2020 ira roth 401k contribution limits
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As we build out our ‘This Day in Stock Market History’ archive, I like to periodically take an in depth look at notable events in history. Today’s post comes at the anniversary of the IPO of one of the most infamous dot-com names.  [continue reading…]


“If the efficient market hypothesis is true – and the Challenger explosion example certainly implies it is – The wisdom of crowds has enormously far reaching consequences.”

-Andrew Lo, from his book Adaptive Markets: Financial Evolution at the Speed of Thought

As we build out our ‘This Day in Stock Market History‘ archives, I like to go into more detail on events that I believe offer important lessons for investors, had significant historical impact, or events that are just simply interesting.

This week in history, on January 28th, 1986, an event occurred that meets all three of these criteria – The stock market’s behavior after the explosion of the Challenger space shuttle.

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9 Examples of a Competitive Advantage (#9 is One of Buffett’s Favorite Type to Look For!) thumbnail

Finding a company with a competitive advantage means finding an investment that will offer solid returns for decades to come. What identifies a company with a strong competitive advantage? Some results may surprise you.

“…managers and investors alike must understand that accounting numbers are the beginning, not the end, of business valuation.”

-Warren Buffett 1982 shareholder letter

There is so much more to finding a good investment than finding a specific ratio on a company’s balance sheet. As Buffett says, evaluating a company’s financial statement should be the beginning of your research, not the end.

Buffett has made his billions by identifying companies with strong competitive advantages, and buying and holding those companies for decades (Or as he says, preferably forever).

A strong competitive advantage means that a company will continue to make profits year in and year out, no matter the economic or political environment. It maximizes shareholder wealth by harnessing the power of compounding interest in its accumulated earnings.

But, a strong competitive advantage is not identified just by looking for a certain Price to Book (P/B) or Price to Earnings (P/E) ratio. Instead, it means understanding how the business operates and how the company’s financial statements identify advantages the company has its in field.

For example, consider Coca-Cola’s current ratio. Historically, it has been under 1. Any basic stock screen that excludes companies with current ratios of less than 1 (which is a quick test to see which companies can afford to pay their bills over the next 12 months, read more on current ratio here), would have excluded Coca-Cola from the results.

How can it be possible that one of America’s strongest companies looks like it won’t be able to afford to pay its bills by a simple ratio like the current ratio? It turns out, this may in fact be a sign of a significant competitive advantage for a select set of companies!

A low current ratio is #4 below, here are the rest:

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Another day and another round of the #impeachment headline trending:

Today’s situation is not a direct comparison with Nixon and Watergate. But let’s say this gets as bad as Watergate and cover ups exist all the way up the ladder at the White House, what can investors expect to happen?

Stock Market Performance During Watergate Scandal and Nixon’s Impeachment

From the beginning of the Watergate scandal to a few weeks after Nixon’s resignation, U.S. stocks markets fell more than 40%.

It is easy to forget after 40+ years, but Watergate took a long time to play out. Here’s a quick bullet point timeline of the big events of the Watergate scandal, along with where the Dow Jones Industrial Average traded at the time:

Timeline of the Watergate Scandal and Nixon’s Impeachment

  • June 17th 1972, the “White House Plumbers” were arrested breaking into the DNC office building at the Watergate office complex.
    • Dow Jones Industrial Average at 941.
  • March 17th 1973, that the investigation moved to focus on anyone within the White House.
    • Dow Jones Industrial Average at 952.
  • 9 months later, the Vice President resigned on October 10th 1973.
  • November 17th 1973 Nixon gave his “I’m not a crook” speech.
    • Dow Jones Industrial Average at 862.
  • March 1st, 1974 saw an indictment against former Nixon aides.
    • Dow Jones Industrial Average at 851.
  • July 24th 1974 – U.S. court orders Nixon to give up tapes.
  • July 27th 1974 – Impeachment process begins in Congress
  • August 9th, 1974, Nixon resigned.
    • Dow Jones Industrial Average at 777.
  • Markets hit low on October 4th.
    • Dow Jones Industrial Average at 587.

It was more than 2 years between the break-in at the Watergate complex and Nixon’s resignation.

It is important to note that there was a lot going on at this time. The OPEC oil embargo occurred at the end of 1973, Egypt and Syria attacked Israel, and inflation was beginning to get out of control. More than likely all of these events led to the stock market’s decline during this time. How much would the markets have gone down without the oil embargo, war or inflation? There is really no way to know.

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What does it take to reach a retirement account of $1 million? Here we take a look at how much you would have to save each month, depending on your age, to reach the $1 million milestone. [continue reading…]


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Every once in a while, I like to take a closer look at an event that comes up in our “This Day in History” archive, which gets posted daily on Facebook, Twitter, and is now available as an Amazon Flash Briefing.

Today we look into the life of Peter Lynch, whose birthday is this week, and who is one of the most successful mutual fund managers in history.

What did Peter Lynch look for in an investment, and what stocks would Peter Lynch buy today?

Lynch looked for 5 key criteria when selecting an investment:

  1. Buy What You Know

  2. Growth At A Reasonable Price

  3. Avoid The Hot Stocks

  4. Stay Small

  5. Strong Balance Sheet


We’ll look at these in more detail below, and a list of companies that meet all of these criteria –  but first a quick look at Lynch’s historic run as a mutual fund manager:

Peter Lynch – One of the Investing Greats

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This week, we will be revisiting some of our previous posts on John “Jack” Bogle, who passed away today. R.I.P Jack.

Jack did more for American investors as a whole than any individual I’ve known.

If a statue is ever erected to honor the person who has done the most for American investors, the hands down choice should be Jack Bogle. For decades, Jack has urged investors to invest in ultra-low-cost index funds. In his crusade, he amassed only a tiny percentage of the wealth that has typically flowed to managers who have promised their investors large rewards while delivering them nothing – or, as in our bet, less than nothing – of added value. In his early years, Jack was frequently mocked by the investment-management industry. Today, however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their savings than they otherwise would have earned. He is a hero to them and to me.

-Warren Buffett

Below is a post we originally published in 2013, looking at an interview Bogle did with Men’s Health Magazine:

What are the secrets to long term investing success? No one better to ask than Jack Bogle, founder of Vanguard, creator of the index fund and orator of my favorite investing quote, which can be viewed from an old CNBC interview, here:

Bogle Comments on the Markets from CNBC.

“Don’t just do something — Stand there!”

The following is in the May 2013 edition of Men’s Health magazine:

1. Forget “the market”

Bogle says: “When we speak of ‘the stock market,’ it’s meaningless. It’s merely the value investors put on all those securities, thousands of different stocks with a value of $15 trillion. It goes up and it goes down, but in the long run it goes up. The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.”


2. Understand your role

Bogle says: “Your job is to capture as much of the market return as possible for as long as possible. The only way to start investing for a lifetime is to buy a broad-market index fund. Don’t pick an actively manage mutual fund. Don’t pick stocks. Don’t pick hedge funds. In the long run, I believe in owning the stock market, not having a manager own little pieces of it for you.”

Our take: For those of you who have signed up for our newsletter and received our free eBook, you have seen the numbers. A majority of mutual funds lose to the general market. For most investors, owning the broad based index funds is not only the easiest option available, but the best!

3. Don’t kid yourself

Bogle says: “I ask people: what is the intellectual basis for indexing? Reduce costs and you maximize your fair share of the market return. What is the intellectual basis for active managing or stock picking? It’s basically ‘I can do better’. Is that an intellectual basis? No! It’s a hope, it’s a brag, and it has no chance of ever being realized in the long run.”


4. Seek Boredom

Bogle says: “I look at indexing is being simple and, sad to say boring. Be bored by the process but elated by the outcome. In Vegas, it’s the opposite. You elated by the process, by the moment, but you’re bored by the outcome because you know exactly what it’ll be. The more you bet, the more you lose. Investing shouldn’t give you a rush.”

Our take: The Vegas analogy is one we have used before here on Begin To Invest. If you want excitement, take your money to Vegas. Remember if an investment can make you rich in a day, it can also (and will probably) make your broke in a day.

5.Think ahead. Way ahead

Bogle says:
” It’s foolishness think you can beat the market. There are only two things working here: How did it much cost to get into the market, and how long are you in? If you’re investing for a lifetime – and you should be, saving for retirement and educating your kids along the way- if you’re 20 years old now, you should be thinking 60 or 65 years as your time horizon.”

Our take: The magic of compounding interest works best the longer you give it. Remember, you are saving now for money to spend decades down the road in retirement. Don’t worry about what the value of the account will be tomorrow.

6. Forget “the Number”

Bogle says:“There used to be a company reported to tell you ‘the number’ [how much you need to retire]. It’s more complex than that. It’s what those dollars are worth and 30, 40, 50 years. Everyone is looking for the answer, and there really isn’t an answer except save. Save more. Invest for the long term, get cost out of the equation, and get diversified to the nth degree.”

Our take:  I have  talked about “the number” several times here on Begin To Invest. I think its important to have an idea of money that you will need during retirement based on estimated expenses. Don’t don’t get infatuated with that number, especially early on.

7. Invest. Don’t trade

Bogle says:
“All the trading back and forth each day and called financial pornography. Paying attention minute to minute, hang on every word, this is not investing. This is trading on what you think other traders will do. How can you tell who’s right and who’s wrong? It’s a casino. Whether it’s Wall Street, the lottery, or Las Vegas, ‘hope’ is not a good investment strategy.”

Our take: Amen. Just in our last post we talked specifically about what some people call “investing” is really nothing more than “betting”. Don’t bet your life savings, invest it.

8.Do some math

Bogle says:
“Should the market return 7%, and you’re paying 2% to managers and brokers to get that seven, you get five. [The rest] goes to the croupiers on Wall Street, the managers, the traders, the speculators.”

Our take: (Insert graph of 7% return vs 5% return here) Fees add up over time. A one time $1,000 investment today that grows at 7% will become nearly $30,000 50 years from now. Compare that to a reduced 5% return over 50 years, which becomes only $10,000. That’s $20,000 you are giving to Wall Street instead of keeping for yourself.

9. Keep it simple

Bogle says:
“The rules are simple. If you don’t save, you will have nothing. Guaranteed. Not investing is not an alternative. I have an age-based rule of thumb: have a bond position that equals your age. If you’re 25, have 25% in bonds, the rest in an index fund. Today, bond yields are so low, this doesn’t work quite as neatly as it worked for a long time. But it simple.”

Our take: This sort of goes with rule number 4 – seek boredom.

10. Don’t Peek at Statements

Bogle says:
“This is one of the most important rules of investing. If you never peek from the age of 20 to the age of 70, you’ll rip that first 401K statement open at age of 70, and I recommend you have a doctor on hand because you’ll go into a dead faint. Your heart might even stop. You’re going to have an amount of money you can’t even imagine.”

Our take: This might be a little extreme for most. Although it is most certainly true, just investing a small amount leads to a large sum over long periods of time.

11. Know your limitations

Bogle says:
“Sometimes the market is valued way higher than the growth line, and sometimes it’s valued way lower. If you could forecast that, you’d sell at the high and buy the low. But here’s the thing I don’t know how to do it. I don’t know anybody who knows how to do that. And I don’t know anybody who knows anybody who knows how to do it. It’s a fool’s game.”

Our take:

12. Don’t panic, be cool

Bogle says:
“In this decade, the heavy lifting will have to be done by stocks. If stocks deliver 7%, you’ll have 100% return in 10 years. And there will be bumps! I don’t want to be deceiving anyone. I can guarantee there will be at least two or three 20 to 30% bear markets in that time frame. Just assume them. When I happen, just say, “I knew that.””

Our take: “Don’t just do something – Stand there!”

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