Posts Categorized: Finance

The Hidden History of the S&P 500

The historical return of the S&P 500 is quoted everywhere, usually back to 1926. But did you know that it wasn’t composed of 500 stocks until 1957? Or that it was not adaptive to changing market conditions until 1988? The history of the S&P 500 is full of interesting facts. ·         S&P originally tracked 233…

The 3 Keys to Investing in Energy Stocks

“Omnia bona quoad perfora” (Loosely, All prospects look good until drilled)” In Energy, Part I, I explored the impressive—but highly volatile—returns of energy stocks. In this part, I’ll explore how to find the best individual energy stocks. As we will see, the secret to success in the energy sector is similar to the secret in…

Four Books For New Investors

Investing can be a daunting subject. I’ve always felt it should be a part of the high school curriculum, because we leave high school and college woefully underprepared to save and invest our money (8 years of French, though?!). Reading is the antidote to this problem. Below are four books which serve as a great…

The Putrid Portfolio

Just like it would be any investor’s dream to have perfect foresight, it would be any short-seller’s dream to know which stocks were going to fall by the highest percentages every year. In an earlier post, we saw that identifying a “perfect portfolio” ahead of time using valuation and other measures was basically impossible. But…

Your Help With Millennial Money

My first book, Millennial Money, will be on shelves October 14th, and I need your help. The book covers the why and the how of investing for millennials.  It explains all the key ingredients for long-term investing success, and highlights the tremendous opportunity that exists for the youngest generation of investors. Investing isn’t a topic in…

America, Inc.

American business is a beast. Here is its income statement, as of June 30, 2014[i]: $12 trillion in sales, over the last year. The costs of doing business remain high, but even at an aggregate profit margin of 6.9%, American enterprise is generating $835B in profits[ii]. We can think of each economic sector as a…

The Perfect Portfolio

UPDATE: READ ABOUT THE “PUTRID PORTFOLIO” HERE The best investing super-power would be perfect foresight. Imagine if every year you knew which 25 stocks (from a large, liquid universe just to keep things reasonable[i]) would be the best performers over the next year? This foresight would translate into outrageous annual returns over the past 50…

Black Gold (Energy Part I)

My great-grandfather, Ignatius Aloysius (“I.A.”) O’Shaughnessy, was born in 1885, exactly 100 years before I was born. From very humble roots in Stillwater, Minnesota, he built one of the country’s most successful private oil companies: Globe Oil. Once honored as the “king of the wildcats,” I.A. built a huge fortune and then slowly gave it…

Humans: Hertz Machines In A Megahertz World

Most debates in investing focus on strategy: active or passive; hedge funds or private equity; gold or inflation protected bonds.  But while these debates are important (and fun), the most important element of investing success is your behavior. Trouble is, culture (e.g. markets) evolve quickly, but human beings evolve very slowly. We are left with…

Boring Is Good

I’ve always liked investing rules, because they impose discipline. Here is one rule I find useful: boring investments are good investments. The more boring the investment, index, or asset class, the better it will probably be for your portfolio. This has been true throughout market history, and the rule manifests everywhere: ·         Trading less often…