February 2, 2015

Watch QVC Hosts Debate Whether the Moon is a Planet or Star (and a Lesson on Basic Economics)

QVC The Moon a Planet or Star

If you need something to brighten up your day (or make you feel despondent depending on how you look at it), this is living proof that all you have to do to be successful in life is give people what they want at a price that is higher than the cost it takes you to deliver it to them, with sufficient margins for risk, capital tie-up, and opportunity cost.  You can literally fail 3rd grade science and, if you satisfy a want, make six, seven, or even eight figures a year.  The system we have now fo … [Read more...]

Mail Bag: 30-Year Treasury Bond Prices

Mail Bag Joshua Kennon Pen

It seems about that time, once a year, when we talk about long-term Treasury bond yields. Mr. Kennon, How much money have you made since 2010 shorting the 30 year treasury bond? What is your prediction for 2015? Thank you, Fred R. Fred, Earlier this month, I broke out our five-year performance record.  We ended the period at 23.39% compounded annually, which was a +10.77% annual spread over the aggressive benchmark our custody agent assigns us as a measurement tool, a +7.94% an … [Read more...]

Wendy’s Chili Recipe (and a Business Lesson from Wendy’s Founder Dave Thomas)

Stir the chili pot together and turn the heat up to medium

Back when Dave Thomas left his discipleship of Colonel Sanders of Kentucky Fried Chicken fame to go off and start the hamburger chain that we now know as Wendy's (which he named for his daughter, Melinda) one of my favorite things he did was find a way to reduce waste - and thus costs - while increasing revenue by introducing a chili recipe on the menu.  The freshly made hamburgers that had not been sold in time were added to a simmering pot, broken down, and still converted to profit rather … [Read more...]

How Much Money Does It Take to Be In the Top 1% By State?

Unequal States Inome By State

We've had fun over the years answering the question, "How much money does it take to be in the top 1%?" and even looked at the breakdown of how the top 1%, as a class, generates its money.  If you enjoyed those posts, hold on to your seat because there is a new report out that details income statistics by state for the purpose of looking at income inequality. While the document itself engages in the sort of dishonesty I talked about in lies, damned lies, and statistics (e.g., looking at the me … [Read more...]

A Basic Overview of What Happened with the Swiss Franc and Nestle’s Share Price

Houang Stephane
M Le Macaron 
Macaroons from Bordeaux (France) from Flickr.   Image made available under Creative Common Attribution 2.0 Generic License

By now, all of you know what happened recently with the Swiss Franc, Euro, and, as an extension, the price change of Nestlé shares in the United States.  It caused a stream of messages to come in through the contact form like I haven't seen in a long time, all with the same theme.  Here are just two, randomly chosen, that sum up the gist of what my inbox looked like on January 15th and 16th. First off, I would like to thank you for your time and for being so willing to share your knowledge of bu … [Read more...]

French Stocks, Protestantism, and Old Money

Mount Olympus Awards Manufacturing Letterman Jacket Awards

One of the reasons I haven't been around much this month is I've been working with members on both sides of my family, adjusting portfolios now that we are in a new tax year, reviewing plans to make sure everyone is on track for retirement, and dealing with some paperwork that includes a nightmare of an annuity transfer that has gone so wrong, I had to have the annuitant involve the regulators of two different states. The 10,000 or so words I have written in the past 30 days have all gone … [Read more...]

Thoughts on Stock Market Benchmarks (and an Update to Our 5 Year Investment Returns)

Joshua Kennon Aaron Green 5 Year Investment Results 2014

Over the past 3-4 months, I've had a lot of people write me asking about benchmarks as they pertain to their investment portfolio.  I haven't had time to respond to these messages so I'm going to address the broader topic here and use it as a sort of catch-all to explain how I think about these things and the reason I approach them the way I do. The short version: While benchmarks have their place, I think a lot of investors use them foolishly.  To be specific, I see three major problems with … [Read more...]

The Night Black Wall Street Burned to the Ground

Tulsa Race Riot Official Report 2

When I became obsessed with investing as a child, convinced it offered me the greatest probability of escaping what I saw as an economic dead end due to the community in which I lived, I spent years reading everything I could about any and every event tied to the financial markets and those who shaped them.  Biographies, old newspapers, archived magazines; if it played a role in this country's economic history, I wanted to know about it because these men and women were, in a very real sense, my … [Read more...]

About that Reckitt Benckiser Spin-Off of Indivior …

Lysol Reckitt Benckiser

Have you ever woken up one morning to find that you are suddenly, directly, in what amounts to the synthetic heroin business?  That you're making money off of cocaine addicts and alcoholics trying to kick the habit?  Such are the unexpected oddities of holding a well-diversified, strong investment portfolio. Awhile ago, I had my mother acquire shares of Reckitt Benckiser for a retirement portfolio of global blue chip dividend stocks that she holds through a tax shelter we set up a decade ago. … [Read more...]

Wrapping Presents and Getting Ready for Christmas Eve

Red Shotgun Thermos Joshua Kennon

We're at home wrapping presents, baking cookies, and getting ready for the family dinners that are coming up in the next couple of days.  Since Aaron and I are gifting stock this year - almost all of the transactions were completed yesterday with a settlement date of the 26th - there isn't a lot left for us to do.  However, to give the kids something tangible they can open under the tree from us, we went and got industrial size boxes of their favorite candy along with an explanation of how their … [Read more...]