February 5, 2012

How We Used Shares of Coca-Cola to Teach My Youngest Sister About Investing (and Why the Cycle of Consumption and Financial Stress Starts as a Teenager for Most Americans)

Coca-Cola Direct Stock Purchase Plan and Coca-Cola Dividend Reinvestment Plan or Coke DRIP Literature

When I was a senior in high school, I bought my youngest sister, who was first grader at the time, a single share of Coca-Cola common stock for her 6th birthday.  I had it framed with an engraving of the first part of Deuteronomy 8:18 placed under it, "You shall remember the Lord your God, for it is he who gives you power to get wealth". I registered the ownership as a uniform gift to minors, naming our father as the trustee.  He and my mom decided to have $50 each month taken out of their … [Read more...]

Still Frugal As Ever

Cherry Pepsi and Diet Cherry Pepsi

You all know that I love frugality and today was a jackpot kind of day!  Even though we try not to drink soda, we do keep it around for guests and when we get the occasional craving.  The local grocery store had a sale; each case was only $2.50!  I don't even know how they can make it, ship it, and stock it for that price.  So, we loaded up Cherry Pepsi and Diet Cherry Pepsi.  Ordinarily, I prefer Coca-Cola but they weren't on sale so ... sorry Coke.  Pepsi won this round.  But we own … [Read more...]

Do Not Throw Away the Melon for the Seeds

Do not take the seeds and throw away the melon. - Traditional Chinese Proverb A few decades ago, Coca-Cola, one of the most profitable companies in the history of the world from a return on equity standpoint, decided that instead of repurchasing its own shares or increasing the dividend, it would diversify into other operations that it knew nothing about and in which it had no strategic or competitive advantage. This resulted in the soft drink company buying a movie studio, farming shrimp, … [Read more...]

Why Don’t People Realize You Can Do This In Real Life?

Tycoon Chemical Company

During college, one of Aaron and my closest friends made a comment that still haunts me to this day.  I was explaining that if you own a share of The Coca-Cola Company, you actually receive a proportionate cut of the company's profits on every single can of Coke sold.  This makes sense, after all ... if a business is divided into 100 shares outstanding, and you own 1 share, you own 1% of the company.  If you own all 100 shares, you would own the entire business and get all of the profit, … [Read more...]

How My Grandpa Dennis Could Have Turned His Pepsi Habit Into a 7-Figure Estate

Pepsi Cola Stock

I've written in the past about how nearly every American alive today has been confronted with perhaps a dozen different companies that they knew first hand because they enjoyed using the firm's products for years (in some cases, their whole life) that turned out to be spectacular investments.  Yet, they never thought to research the business and consider becoming an owner. One of the things I think about a few times a year is my paternal grandfather's Pepsi habit.  My dad's side of the … [Read more...]

Sun Trust Bank and the Coca-Cola Stock

Coca-Cola and the SunTrust Bank Underwriting Fee

I'm reading the Sun Trust annual report and I realized that many, if not most, of you are probably unaware of the Sun Trust connection to Coca-Cola and how it gave rise to one of the greatest investments in history.  (As many of you know, we used the Coca-Cola direct stock purchase plan and dividend reinvestment plan to teach my youngest sister about stocks when she was a child.) When Coca-Cola went public in 1919, the underwriting was handled by two institutions, one connected to J.P. … [Read more...]

The Billy Joel and Elton John Concert in Kansas City at the Sprint Center Tonight Was Great

Elton John and Billy Joel Concert in Kansas City at the Sprint Center

There's a Good Chance That Were It Not for these Two Men, You Wouldn't Be Reading This Blog Right Now My mom, arguably as big of an Elton John fan as I am, took Aaron and me to the Billy Joel and Elton John Concert in Kansas City at the Sprint Center.  (Thanks again mom!) My life was incalculably changed because of both Billy Joel and Elton John, as most of you who know me realize, and seeing them live together at the Sprint Center in Kansas City tonight was awesome. I had never seen … [Read more...]

How to Find Investment Ideas

Wal-Mart Stores Stock Certificate

Years ago, I wrote an article called Finding Investment Ideas for Your Portfolio for About.com, a division of The New York Times.  I've been thinking for the past few days about how it is that I seem to come across so many opportunities and then I realized that most people like me are always looking whereas the average American isn't. By that, I mean that every time I walk into a business, without exception, the first thought that occurs to me as I look around is, "I wonder if this company … [Read more...]

Focused Value Investing Strategy

Focused Value Investing

The focus value investing strategy is different from traditional, Benjamin Graham value investing strategy because it is based upon the idea of putting money into more of an investor's "best ideas", as Warren Buffett put it.  Some value investors despise focused investing, while others swear by it.  I'm always very hesitant to talk about this particular strategy on Investing for Beginners where I publish my investing articles for total newbies, mostly because some lazy person may not study … [Read more...]

Margin of Safety – The Secret Value Investing Strategy

Margin of Safety Value Investing with Ben Graham

The single most important concept in all of investing, according to Benjamin Graham and later confirmed by his star student, Warren Buffett, comes down to three simple words: Margin of Safety. What is the margin of safety?  How do you calculate it?  How important is it to developing a successful value investing strategy?  As you'll see in a moment, the ultimate return you earn on your investments will likely be closely related to the size and quality of the margin of safety you build in to … [Read more...]