August 22, 2014

Investing Articles

Taking $20,000 Out of Your 401(k) To Buy a Stock for a Couple of Weeks Is Not The Brightest Idea

Margin of Safety Value Investing with Ben Graham

Since discovering Reddit two years ago, I've played something of an intellectual game.  I created an account and, from one of my first comments, purposely analyze conversations to add commentary that results in me being gifted Reddit gold (which means someone liked the comment so much, they paid $3.99 to gild it).  It's entirely arbitrary but it allows me to practice mental models, try to study different personalities, and do it anonymously during my coffee breaks.  It's also fun to see how I lon … [Read more...]

Economic Reality Isn’t Always Reflected on Your Account Statements

Wal-Mart Dividend Reinvestment Example

There is an account I handle for someone I know that has a very unique mandate.  It holds a handful of stocks, has practically zero turnover, and once a new position is acquired, the dividends must be automatically reinvested into that business, cost-free, until disposition.  The entire portfolio is held within a Roth IRA and this person is still more than 40 years away from retirement.  Even if he or she never contributes another penny, the account balance at present, with average rates of retu … [Read more...]

The Anniversary, Annotating Annual Reports, and Trying to Make Myself Be Productive …

Studying McDonald's annual report

I was hoping to respond back to a few dozen comments to which I have been meaning to reply, as well as post some mail bag questions, but I think I'm going to put that off until this afternoon and, instead, go out to lunch or go see a movie or something.  Today's our 13th anniversary, which hearing out loud makes me feel kinda old.  Of course, we're not - both of us are only 31 - it's just that we were fortunate enough to find each other as teenagers; an occurrence I highly recommend if you are lu … [Read more...]

I Nearly Doubled the General Electric Stake in the KRIP

General Electric Schenectady

Sometimes, it can seem as if we are living in a through-the-looking-glass investment world.  With the Federal Reserve having kept us in a near-zero percent interest rate environment for so long, asset prices are ... quirky ... to say the least.  Couple this with the psychological influence of the Great Recession, where certain types of companies fell out of favor, and you have pricing differentials that make no sense.  Total stock market capitalization measured relative to GNP is too high, ind … [Read more...]

An Update to the KRIP Portfolio: Microsoft vs. McDonald’s

McDonalds Corporation Official Press 50th Anniversary Chicago Restaurant

One of the best risk management techniques I learned from reading Benjamin Graham's works early in my life was that of horizontal risk shifting.  That is, taking similarly priced assets in your portfolio and looking to find other assets with the same or better return profile (after adjusting for deferred tax benefits and switching costs) but much lower risk.  Graham applied this technique constantly in the fixed income sector, seeking to switch to bonds that were better covered by earnings and a … [Read more...]

Yahoo Finance Is Calculating the Dividend Yield Incorrectly on Some Stocks (And a Note on Royal Dutch Shell’s Scrip Dividend Program)

Yahoo Dividend Error

It's happening, again.  The major financial portals are displaying errors, which I still don't see discussed.  Look at the quotation for Royal Dutch Shell Class B.  The per share dividend is $3.44 on a market price of $87.20.  That is a dividend yield of 3.94%.  Yet, the quote page is displaying a yield of 5.30%.  If someone were to try and do a stock screen or buy based on dividend yield without calculating the numbers themselves, they're going to be in for a bad time.  (And even that is techni … [Read more...]

A Look at Burger King a Couple Years After the IPO

Burger King Stock

I spent part of my day studying the restaurant industry.  You all know that, personally, my family's biggest restaurant stake is McDonald's Corporation.  As I mentioned a week or two ago, I have shares of it tucked away in nearly all of my relative's accounts, sometimes in multiple places.  I'm always paying attention to the other major food companies to try and spot market share shifts, commodity cost differences, managerial changes, or countless other variables that could be useful to me in und … [Read more...]

The Black and White Burgers of McDonald’s Taipei

McDonald's Black and White Burger Taipei

Long story short, I've been looking into Taipei for various reasons and, in the process, discovered that McDonald's serves limited edition White and Black burgers there.  Besides the fact it warms this American's heart to know that I'm collecting New Taipei dollars (McDonald's dividend day was last week and, with the exception of my two sisters, I have practically every member of my family holding shares somewhere, so the deposit is fresh on my mind as I saw it come in across the accounts), I … [Read more...]

What Is Going on With the Cap Rates on South Korean Real Estate?

South Korean Real Estate

I was watching  이웃집 꽃미남 (Flower Boy Next Door) because it stars Park Shin-Hye, the same woman who was in The Heirs and I liked her.  It's about a shut-in lady who edits books and is afraid to leave her apartment, constructing a fantasy love by watching the apartment across from hers through binoculars.  During the show, the apartment owner is kept a secret and out of curiosity, I began to wonder what real estate cap rates were on typical properties in Seoul.  I wouldn't do it at this point in my … [Read more...]

I Just Witnessed a 4-Month Old, Settled Trade Reversed for Failure to Deliver

Investing In Corporate Bonds and Debentures Essay

On February 10th, I helped someone place an order to pick up some (relatively) attractively priced corporate bonds.  I mentioned it on the blog the next day.  The trade settled on February 13th. Yesterday, the broker called four months after the trade settled, or presumably settled given that there was never any indication otherwise, explaining that they had tried desperately to get their hands on the physical bond but the counterparty still hadn't delivered.  With the interest payment coming … [Read more...]