December 19, 2014

How to Give Shares of Stock as a Christmas Gift

Liquidity Discounts IRS

I am sometimes asked how to buy shares of stock as a Christmas gift for someone, often a younger family member such as a child, grandchild, niece, nephew, godson, goddaughter, or, in a handful of cases, retired parents who could use the additional passive income.  It can be a wonderful idea that teaches a lot of important life financial lessons, such as the power of compounding and the joy of dividends, checks regularly arriving in the mail throughout the year; a constant reinforcement of the b … [Read more...]

Watching Oil Decline 45% Has Made Me Excited

Exxon Mobil 2013 Annual Report

The global benchmark for crude has collapsed an astounding 45% since the summer, with no sign that it will abate anytime soon.  Historically, this is nothing.  To see what a real oil crash looks like, you should read old news articles, magazine essays, and biographies to get some context.  I remember $10 a barrel oil back in the 1990's during my sophomore year of high school, with everyone on television and in print talking about it.  This was around the time I was obsessed with studying the gild … [Read more...]

Here’s an Astounding Stock Market Fact You Probably Haven’t Heard

Facebook Valuation

Imagine that I raise $225 billion.  I create a new business called Kennon Super Company, Inc.  We then go out and buy seven other companies using that money, paying the current market capitalization of the public stock.  A flurry of paperwork follows and, by the time it is all settled, this is what our business looks like: Kennon Super Company, Inc.  Clorox at a price tag of $12.87 billion generating $558 million in after-tax profits Hershey at a price tag of $22 billion generating $820 … [Read more...]

Make Sure You Measure the Right Things in Life

Retail Gasoline Real vs Nominal Inflation Adjustment Prices

With all of the talk of gas prices falling, I'm reminded of the situation a couple of years ago when fuel costs were on an upward trajectory.  Everyone from the little old ladies at church to major economic commentators were lamenting the "record high" energy expenses.  Very few people noticed that, as per the U.S. Energy Information Administration data, the actual cost of gasoline in inflation adjusted terms was still very cheap up until the height of the real estate bubble.  Though the nominal … [Read more...]

Mail Bag: Secret Buy and Hold Investing Millionaires

Mail Bag Joshua Kennon Pen

Be careful of drawing mistaken conclusions based on faulty leaps.  This holds true in your personal life, your portfolio, and your business.  Just because one statement is true does not make another statement false; a distinction that can serve you well if you remember it. I recently read an article discussing Buffett and his methodology and how most people have a misconstrued sense of how he built his wealth. Do … [Read more...]

Foreign Currency and Your International Investments

CME Building Wikipedia

One of the more interesting problems you'll face as you amass more capital is how to approach the issue of foreign currency income, either in the form of dividends, interest, rents, or capital gains.  You can solve this problem by reminding yourself that, ultimately, money exists to be used - either by yourself, your heirs, or the charity of your choosing - so the question really comes down to, "How can a person extract the most utility out of his income when it arrives in a fiat not native to th … [Read more...]

It’s Time to Make Christmas Candy as Gifts!

Making Almond Clusters Josh and Aaron Kennon Green

We're making Christmas candies, chocolates, and cookies as part of our gift strategy this year.  I'm probably most excited about trying my hand at the Jacques Torres Nougat Montilimar, which is going to require a deft hand.  (It looked promising, and we stopped in one of his chocolate shops in New York a few years ago so I have a general idea of what to expect.)  I'm also going to try cherry cordials, amaretto liqueur cake, rum cake, and a few holiday breads.  Aaron wants to give truffles a go.   … [Read more...]

A Recipe So Good It Brought Julia Child to Tears

Nancy Silverton of Le Brea Bakery in Los Angeles came to the set and prepared a creme fraiche custard brioche tarte in a white wine sauce Baking with Julia Child

Back in 1997, Nancy Silverton of Le Brea Bakery in Los Angeles went to Julia Child's home studio and prepared a creme fraiche custard brioche tarte in a white wine sauce.  The execution was so good, and the recipe so perfect, that at the end of the segment, when she takes a bite, it brings Julia to tears. The passion this woman had for what she did makes me so happy.  I understand it; to be so excited about something there aren't words to convey the joy, thrill, and excitement of experiencing … [Read more...]

Do Any Of You Have a Steak Brandy or Cognac Butter Reduction Recipe?

Searing Chuck Roast for Dutch Oven Recipe

Ten or eleven years ago, I went to a steakhouse in Omaha, Nebraska during a trip home from college.  The chef that day had decided to make either a brandy or cognac reduction sauce using the drippings from the beef.  Feeling adventurous, I decided to order off menu and see what it was like.  The word incredible doesn't even do it justice.  I remember them mentioning there was butter in it.  It had a high, bright flavor, most likely lemon, which offset the almost obscene level of richness in the s … [Read more...]

Investing in The Hershey Company Has Made Generations of Investors Rich

Hershey Icon for Investment Post

As we approach the end of 2014, I'm looking back on the year.  One of the major changes from an investing perspective what a modification Aaron and I made in the investment policy manual.  That doesn't happen often.  We added a handful of companies to the list of permanent business; those companies we consider so exceptional that we buy them with no intention of ever selling.  The Hershey Company was one of those firms. One of the biggest mistakes of my investing life, and a lesson that took m … [Read more...]