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...]

Professor Richard Wolff Says Capitalism Is To Blame … for Everything

Richard Wolff on Capitalism

Amherst professor Richard Wolff, is arguing that capitalism is a failure because events like the housing crisis keep occurring with some regularity.  Evil banks are "forcing debt" on more Americans who are downing under their bills.  He proposes that we should create low cost "community owned" housing for everyone. Yes, Richard, because American Express and Discover showed up at your house, put a gun to your head and made you pick up a pen, place the tip of the pen on the cardholder … [Read more...]

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

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...]

How to Avoid Financial Stress

How to Avoid Financial Stress

I was reading through the comments on an article about investing over at Yahoo Finance and a lot of people were whining about the fact that it is impossible to save money.  Only those who inherit their money can be rich (which you all already know is false based on the evidence). A gentleman named Frank replied to the commentators: It is absolutely, positively true.  Pay cash.  Eliminate all debt.  No mortgage.  Save as much as you can.  For a vast majority of people, that is the … [Read more...]

Does Geographic Location Influence Success?

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...]

Here Is One of My Secrets to Making Money (Or, How I Once Bribed Women to Code for Me with Diamonds, Rubies, and Chanel)

Diamond and Ruby Bracelet with Bottle of Coco Chanel Mademoiselle Perfume

The Secret: Strike Deals Where Everyone Has Limited Downside and Harness the Super Power of Incentive Some of you have been writing to me privately and asking about the early days when we started out and were trying to build our companies.  I thought it would be useful to share some of the things we did during that time that worked out well ... and maybe I'll even talk about those things that didn't work out so favorably.  I hope you find it useful in your own endeavors. When Aaron and I … [Read more...]

My (Almost) Three Year Old Niece Has the Saving Money Gene

My Niece and Elmo

My niece, who turns three this fall, has somehow come to associate me with money (or as she calls them, "monies"). When she goes to visit my grandma Ruby, which is her great grandmother, she gets to save up an allowance in a bank bag for when they go shopping or out on the town. Anyway, she is now up to roughly $6 and change in her little coin purse, causing it to be quite full.  Realizing this, she runs up to "granny" as she calls Ruby and insists, "We have to take the monies to Joshie.  … [Read more...]

Department Store Sales Make Me Really Happy

JC Penny Ties and Dress Shirts

Although I'm normally a Nordstrom's guy myself, I have to say that after reading an article a few years ago (The Wall Street Journal or The Financial Times maybe?) about the vastly improved quality of department stores suits such as the J.C. Penny brand thanks to the use of expert tailors in Hong Kong for a fraction of the price and trying out the difference for myself, I have been genuinely shocked at how good the improvement is.  I waited until a 50% off sale and bought a couple of suits for … [Read more...]

The Bosendorfer Strauss Grand Piano – A Real Life Lesson in the Time Value of Money

Bosendorfer Strauss Grand Piano

The Opportunity Cost of a Bosendorfer Strauss Grand Piano I'm going to teach you a financial technique that can help empower you to make informed choices about your own life and keep more cash in your pocket.  I've been using it since college and it's done wonders from my bank balance and investments. From the time I was a kid and had only a few thousand dollars in the bank, I have wanted either a Steinway & Sons Model B grand piano and / or a Bosendorfer Strauss model grand piano, … [Read more...]

The Kennon Retirement Insurance Plan

Retirement Insurance Plan

One of the Things That Helped Me ... From time to time, you may come across reference to my "stupidity" insurance or my "reserve" fund.  I've had a bunch of readers write me over the years and ask about various comments I've made so I thought it might be useful to explain it.  My parents, siblings, and Aunt Donna have always known about my investing but virtually no one else did when I was a child (by the time I got into high school, though, it was all I talked about so hiding it was no … [Read more...]