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We Are Living in the Midst of One of the Biggest Bond Bubbles in History

September 24, 2010 By 8 Comments
McDonald's Bond Certificate Corporate Debentures

Today, I was sitting at the dining room table, drinking a cup of coffee and wearing my Brooks Brothers pajamas watching the stock market skyrocket when it occurred to me that, given the secret project and some other things going on at the business, I want to build some cash and bond reserves at one of the individual operating companies; maybe put aside money a little at a time, let it build and do something fun with it three or four years from now, like design and build a row of townhouses or … [Read more...]

Filed Under: Corporate Bonds Tagged With: , , , , , , , , , , , , , , , , , , , , , , , ,

Understanding Credit Card Debt and Negative Amortization

September 22, 2010 By Leave a Comment
Credit Card Debt with Negative Amortization

Credit card debt can be difficult to pay off because of one incredible powerful financial force: negative amortization.  Put simply, negative amortization means that your credit card debt balance is increasing over time because your payments are not enough to offset the interest expense that is being charged to your account. Negative amortization is the opposite of compounding.  Properly harnessed, the power of compounding is what makes people grow rich over time; you earn interest on … [Read more...]

Filed Under: Credit Card Debt Tagged With: ,

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)

September 7, 2010 By 2 Comments
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...]

Filed Under: Dividends, Dollar Cost Averaging, Featured, Saving Money Tagged With: , , , , , , , , , , , , , , , , ,

How Do You Get Rich? Do What Is On Your Desk and Do It Well

September 5, 2010 By Leave a Comment
Do the Work on Your Desk

A fantastic passage from page 97 of The Richest Man in Town: The Twelve Commandments of Wealth.  It talks about how success in life comes down to execution of the work that is sitting your desk, right now.  That means getting it done right, getting it done quickly, and getting it done with pride so that your name becomes synonymous with quality. Put another way, you don't just wake up and suddenly have an empire.  You get up each morning, sit down at your desk, and achieve what you can at … [Read more...]

Filed Under: Making Money, Philosophy, The Best Thing I Heard Tagged With: , , ,

In Honor of Warren Buffett’s 80th Birthday Today …

August 30, 2010 By 2 Comments
Warren Buffett's Birthday

In honor of Warren Buffett's 80th birthday today, I decided to personally sit down and examine all of the receipts at one of our operating businesses and look for any additional costs that could be cut.  We work hard to make sure expenses don't get out of control and everything is justified but it is always good to take some time to specifically examine everything you pay for and ask whether or not is central to the company's mission. We run such a lean ship that I didn't find a lot. But … [Read more...]

Filed Under: My Businesses, Saving Money Tagged With: ,

New Wardrobe Additions for the Wedding

August 27, 2010 By Leave a Comment
Kelsey and Tyler's Wedding Gift

Aaron and I went shopping today for my sister and soon-to-be-brother-in-law's wedding gifts.  We also decided we wanted to wear something new that wasn't parked in our respective closets so we headed to Nordstrom and a few other stores. I ended up going with a modern cut lavender white stripe dress shirt with mother-of-pearl buttons and a silk bow tie in the same color family, which I will wear with a charcoal gray suit with white and faint blue pinstripes.  I took a picture so I could send … [Read more...]

Filed Under: My Life Tagged With: , , , , , , , , , , , ,

The Hindenburg Omen and the Stock Market

August 26, 2010 By Leave a Comment

The stock market is all lit up talking about the dreaded Hindenburg Omen, which sometimes (though not always) predicts a major stock market crash. Listen to me: All of this trash is nonsense.  Things like the Hindenberg Omen and other market forecasts are merely attempts to look at symptoms rather than causes.  It would be like if doctors panicked every time a patient had a fever and immediately concluded the patient had not a head cold but full-blow AIDs with an unrelated case of … [Read more...]

Filed Under: Stock Market Tagged With: , , , , ,

The Strap on my Montblanc Star Chronograph Automatic Broke (Another Lesson in the Time Value of Money)

August 18, 2010 By Leave a Comment
Montblanc Star Chronograph Automatic Watch

When I was 22 years old, or thereabouts, I bought a Swiss made Montblanc Star Chronograph Automatic stainless steel watch from Borsheim's during the Berkshire Hathaway shareholder meeting.  I wanted something that would last, God willing, for the rest of my life and would remind me of when I was young, just starting out, and successfully building my first businesses and got to hear Warren Buffett and Charlie Munger speak to me as an owner of one of the greatest companies in history.  It was an … [Read more...]

Filed Under: My Life Tagged With: , , , , , , ,

Does Geographic Location Influence Success?

August 12, 2010 By Leave a Comment

I was speaking to a relative of mine when this person (who shall remain nameless) expressed horror that after living near New York for so long, I would buy a house near my parents in the Midwest.  "I thought you were going places!" they basically decried in exasperation. It was then that I realized how truly stupid most people are when it comes to making money.  They have no idea how capital allocation works.  I started to get irritated and then I realized: If they knew how wrong they … [Read more...]

Filed Under: Making Money Tagged With: , , , , , , , , , , , ,

The Concept of Mental Models Goes Back Thousands of Years

June 30, 2010 By Leave a Comment

You are only playing a single note. You should find others who can teach you how to use the other holes in your intellectual flute. - Zi Yu accuses Prince Mou of having a one-track mind, Zhou Dynasty When Charlie Munger talks about the importance of "mental models", he is espousing the same wisdom shown by Zi Yu thousands of years ago. The reality of the world is that the richest, most powerful, most influential, and most famous are often not the most intelligent.  Instead, they have … [Read more...]

Filed Under: Proverbs and Wisdom Tagged With: , , ,
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