Posts Categorized: Finance

The Remarkable Transformation of $AAPL

People too often mistake great companies for great stocks. It seems like the two things should be related: great companies should be great investments. But this is often a dangerously misleading notion.  If the market thinks a company is great, its prices that company’s stock accordingly, which can lead to expensive prices and weak returns….

1,000% Returns – Hitting the Stock Market Lottery

Hope springs eternal in the human breast. – Alexander Pope People love huge, lottery like gains. Fast gains get attention, which is why I titled this post “1,000% Returns” instead of “Earn 1,000% Over 30 years.” In pursuit of quick riches, we sometimes turn to lottery-like stocks: companies that trade at outrageous valuations, have exciting…

Reading List – April 2014

Every month, I am going to suggest 3-5 of the best books that I’ve ever read. To get the suggestions each month, sign up here. Here are the suggestions for April, 2014: Inside the Investor’s Brain: The Power of Mind Over Money (Wiley Trading) by Richard L. Peterson This is, by far, the best collection…

Warren Buffett and the Banana Man

Had a Chiquita banana lately? I was amazed to learn the remarkable story behind the brand, which began in 1911 with a company called Cuyamel Fruit Company and a Russian immigrant named Sam Zemurray. Sam (aka “Sam the banana man”) was a remarkable businessman who personified the American dream, but also exposed some of the…

“Sell in May” and Election Cycle Years

As May approaches, I figured it’d be a good time to summarize the historical evidence for/against “selling in may and going away” and the evidence for investing more or less during certain years of the election cycle.  Here is a quick summary, using S&P 500 return data from 1926-2014. Stocks have performed better in the…

Millennials Are Screwing Up Their Investments

Young people are going about investing all wrong. The most basic (and important) decision you make as an investor is your allocation between major asset classes—primarily stocks, bonds, and cash.  Here is how millennials’ portfolios look in 2014, according to a recent research report from UBS. This allocation screams caution, worry, and distrust of the stock…

Lao Tsu Can Make You A Better Investor

Pearls of investing wisdom from unrelated sources. Care about what other people think and you will always be their prisoner. – Lao Tsu The market is just a bunch of other people.  Collectively, they get too excited or too scared about investments all the time, leaving certain stocks/assets way too expensive or way too cheap….

Top Margin Companies

The market’s overall profit margin is the result of profit margins within individual sectors, but within sectors it is typically a small group of companies that dominate. Here are some interesting trends related to those companies. Technology The technology sector has grown to be a large contributor to the markets overall margin, representing 23.3% of…

Profit Margins – Behind the Curtain

Profit margins are an important component of market valuation and are therefore a hot topic because the damn things won’t do what they are supposed to and mean revert.  As several writers have explained, the valuation arguments for U.S. stocks (bull and bear) hinge on the future of profit margins (my favorite pieces are by…

Long Reads

Adding a section to the site called “long reads” where I will post longer pieces that aren’t tied to current market news; these pieces will remain relevant longer than a typical post. The first is a history of money, available here: http://www.investorfieldguide.com/history-of-money/