Return on Equity Explored

Non-financial firms are earning an impressive return on their collective equity value. As of April 30th, the U.S. markets return on equity was nearly 18%, well above the long term average of 14% for non-financial firms. Obviously, corporations like earning impressive returns on their equity. So what is driving today’s elevated rates, and what trends…

Some Poetry

Sometimes, I find good poetry superior to everything else. Tonight is one such night. These are T.S. Eliot, except where otherwise noted.   In my beginning is my end. The inner freedom from the practical desire, The release from action and suffering, release from the inner And the outer compulsion, yet surrounded By a grace…

A Wealth of Common Sense

You are who you read. Those who read Ben Carlson’s writing are better for it. He is honest, succinct, and full of insight for investors of all stripes. I’ve never interviewed anyone or published a guest post, but today I make an exception because this guy has become such a valuable resource for investors, and…

Exploring One of the Greatest Investment Passages Ever Written

Here’s how to find amazing quotes and passages: find great writers, and then find the passages that they reference. Having followed this plan quite a lot, I’ve noticed that many of the best writers are J.M. Keynes junkies. The man was as quotable as they come. One great writer, George Goodman (aka “Adam Smith”), put…

Buyback Extravaganza

When important people on Wall Street and Capitol Hill are actively criticizing an aspect of corporate America, we’d better take notice. Share buybacks—the open market repurchase of a company’s shares by the company itself—have been under a lot of fire. The amount spent on buybacks is matching records, and that money would be better spend…

Using the Price to Sales Ratio

Price to sales is a very simple valuation ratio. It has the tendency to bias you towards lower margin and higher debt companies, all else equal, but it has still been a very effect measure of cheapness and a fine standalone factor for stock selection. Having explored the history of the ratio, let’s now turn…

Mass Movements in Money Management

Wouldn’t it be great to create a mass movement that improved lives and/or created a successful business? Like so many phenomena which recur through history, mass movements have a sort of formula. This formula is a great tool for sales, for innovation, for creating communities, and for building new categories within an existing business. There…

Lessons from Market Extremes

We know that markets overdo it at extremes. At the market level, we call these bubbles or manias, panics or crashes. At the stock level, we call them glamour and value. Let’s collect some lessons from the best performing stocks from the two categories where investors have the most extreme (good or bad) expectations for…

The Best Books on Creativity

Two or so times per year, I share one of the emails which I send out to members of our growing book club, which just passed 3,500 people. Below, I share my favorite list of books in a while. Over the past 6-12 months, I’ve read almost 50 books on my favorite topic: creativity. I…

The Best Quote from the Last Five Investing Books I’ve Read

The $10 I spend on a book buys me a batch of passages and notes. I love to extract the best bits of good books. With some books, I highlight more than 100 passages. 20 is more typical. Here is my single favorite passage from the last five investing books I’ve read (I had to…