Mental Model: Satisficing
Satisficing is a psychological and economic phenomenon that results from consumers choosing a product that meets criteria at an adequate level, rather than expending a great deal more time to find a fully optimal solution.
Joshua Kennon is a Managing Director of Kennon-Green & Co., a private asset management firm specializing in global value investing for affluent and high net worth individuals, families, and institutions. Nothing in this article or on this site, which is Mr. Kennon's personal blog, is intended to be, nor should it be construed as, investment advice, a recommendation, or an offer to buy or sell a security or securities. Investing can result in losses, sometimes significant losses. Prior to taking any action involving your finances or portfolio, you should consult with your own qualified professional advisor(s), such as an investment advisor, tax specialist, and/or attorney, who can help you consider your unique needs, circumstances, risk tolerance, and other relevant factors.
Dominion Theology and the United States
A few weeks ago, I was reading a political message board where some commentators espoused their sincere belief that all of humanity’s problems will be solved when they succeed in implementing dominion theology. Intrigued, I began to research the concept. What I found was frightening.
The Bosendorfer Strauss Grand Piano – A Real Life Lesson in the Time Value of Money
From the time I was a kid and had only a few thousand dollars in the bank, I have wanted a Bosendorfer Strauss model grand piano, probably in a 7 foot size (which is comparable to a Steinway & Sons Model B semi-concert grand). Yet, the list price is $111,080 plus you’d be looking at sales tax of roughly $8,331 for a grand total of $119,411. The time value of money opportunity cost of buying a Bosendorfer Strauss grand piano, then is enormous.
Our Value Investing Research Process for Stocks
A week or two ago, I wrote an article called Understanding Stock Repurchase Plans for About.com, a division of The New York Times, which discussed Sonic Restaurant and the massive stock buy back program that had taken place over the past few years. In it, I walked the readers through a lot of the math and explained that I had purchased a couple hundred shares to watch and monitor the stock through one of my companies, Mount Olympus Awards, LLC. (I’ve since increased it to about 500 shares to continue watching and waiting to see how events unfold).
The 5 Levels of Building Wealth
Early in life, I developed a theory that there were five levels of building wealth that most self-made men (and women) go through to reach financial independence. The theory began due to my love for Carl Barks Scrooge McDuck comics.
Business Should Be Fun … If It’s Not, You’re Doing Something Wrong
I believe one of the signs of a life well lived is the fact that you wake up every morning and jump out of bed because you can’t wait to spend your time focusing on something that makes every part of you – physically, mentally, emotionally, and spiritually – satisfied. This is going to be different for everyone.
Working During the Snowstorm Is Magical
We are in the process of rolling out some pricing changes for our letterman jacket business (we’re going to get aggressive on certain discounts for certain products). As we were updating the website, a beautiful, huge snowstorm hit. It’s really peaceful working here right now.
People Who Are Drowning in Student Loan Debt
I was reading a site called Student Loan Justice as well as a piece at the Huffington Post where people are talking about their “overwhelming” student loan debt that is – wait for it – $15,000 or $30,000. Basically, less than the value of a car. Or tobacco costs for a couple, both of whom smoke a pack of cigarettes each day for five to ten years. Or 4 to 8 months of pre-tax income for the average American household.
What The Rich Really Collect
Everyone focuses on the stuff the rich people collect. Yet, the biggest secret is that the rich are really collectors of rents, royalties, dividends, and interest. Whether song rights, hotel ownership, businesses, sales commissions, stocks, timberland, or patents, these are the things they truly amass.
How to Find Investment Ideas
Here’s how you can find investment ideas using an example from my own family’s experience running a successful sporting goods store.