April 21, 2015

Mental Model: The Culture Code

The Culture Code Dr Clotaire Rapaille Mental Model

After writing about using words to your advantage in life and business, I began thinking of one of my all-time favorite mental models.  It comes from legendary marketing psychologist Clotaire Rapaille, who wrote about it in his treatise "The Culture Code". Before we get into that, let me say that Dr. Clotaire Rapaille caught my attention so long ago, in part, because he advocates something I have said for years: When you are undertaking an action, stop to ask yourself, "Why am I doing this?"   … [Read more...]

An Accounting Homework Assignment for Those of You Who Want to Learn to Analyze Businesses

McCormick Annual Report 2015

I get a lot of requests for real-world examples or homework assignments that have to do with some of the more important investing concepts.  This morning is your lucky day if you're fairly new to the finance game and want to give diving into SEC filings or annual reports a try.  Here's a (fairly) easy introduction to how things can appear better, or worse, than they really are.  Ready?  Let's go. The scented McCormick annual report - one of those small, happy things to which I look forward eve … [Read more...]

Janitor Ronald Read Leaves Behind $8,000,000 Secret Fortune

Ronald Read Janitor Millionaire Secret

Get ready to add yet another secret millionaire to your case study files.  Ronald Read passed away last June at 92 years old.  The Brattleboro, Vermont man, who had no college education and drove a Toyota Yaris, always made a point of living below his means.  He spent many years working as a gas station attendant and the rest of his career a janitor for his local J.C. Penney department store. Read was a near perfect archetype of the academic research done by men like the late Dr. Thomas J. Sta … [Read more...]

Mail Bag: How to Read Large Numbers on Financial Statements

Mail Bag Joshua Kennon Pen

A question about reading numbers on financial statements ... My seemingly dumb business administration 102 professor has made what I think is a huge error on grading my last midterm, my question is as follows. On a balance sheet that is stated in terms of millions there is the number $74,000 (according to her) that number is equal to 74,000,000 dollars. Is this correct? My previous understanding was that $74,000 on a balance sheet in millions would be equivalent to 74,000,000,000. [Name and … [Read more...]

Flow Raised $5,576,533 (and Still Counting) in 16 Days By Selling an Idea

Flow Honey System Crowdsource

Barely more than two weeks ago, a father and son put their idea for a new honey extracting beehive design on a crowdfunding site.  They called their product Flow™ and wanted to raise $70,000.  With 26 days remaining before the funding deadline, they've already received $5,576,533 in promised cash from 12,781 donors. Quite a few beekeepers are livid, if you check out the YouTube comments, saying there are fundamental flaws with the nature of the design and hive health but, economically, I'm not … [Read more...]

Pepsi vs. Coca-Cola Investment Returns Over My Lifetime

PepsiCo 1982 Investment

When Aaron and I were at the World of Coca-Cola in Atlanta, we thought about buying our niece and nephews some gifts from the retail store but ultimately decided to give them something more valuable: Stock.  We'll make another transfer to the custodianships I setup last year, modeled partly after the one we established for my youngest sister more than a decade ago. We planned on getting everyone Coke stock but the more we talked about it, we decided to make a single exception.  Our niece will … [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...]

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...]

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...]

Is It Moral for Society to Protect Spendthrift Trust Assets from Tort Claims?

Gratuitous Transfers Wills Intestate Succession Future Interesta nd Estate and Gift Taxation American Casebook Series West Fifth Edition Cover

I told you two nights ago, in a post about digital price tags and retailing, that one of my cousins was getting married yesterday.  On the drive to the ceremony, I was reading a book I bought sometime in the past few months (I can't remember when or where I purchased it - it just showed up and was in one of the boxes that routinely pile up as I find things interesting I want to study and figure I'll get to them someday).  It's called Gratuitous Transfers: Wills, Intestate Succession, Trusts, Gif … [Read more...]