This McDonald’s case study looks at what a $100,000 investment in the restaurant’s common stock would have turned into over a 25 year holding period. It is one of my favorite investment research projects because there are four possible outcomes depending on how you behaved with your shares. It illustrates the importance of finding a…
A Case Study of Eastman Kodak How the Bankruptcy of One of America’s Oldest Blue Chip Stocks Would Have Turned Out for Long-Term Investors One year ago, Kodak declared bankruptcy after more than 130 years in business as a leading blue chip firm that gushed profits for its owners. I wrote Kodak’s demise at the…
It’s been 1-2 years since we talked about the intrinsic value of Berkshire Hathaway. The last time I publicly commented in any meaningful way was to say that I thought Morningstar was wrong in its model. This put me in the interesting position that rarely happens: I thought intrinsic value was higher than the analysts who were publicly writing about it. Normally, I’m the one exclaiming that the estimates and variables used were too rosy.
In the 1920s and 1930s, a banker named Pat Munroe in the small town of Quincy, Florida noticed that even during the depths of the Great Depression, otherwise impoverished people would spend their last nickel to buy a glass of Coca-Cola. With good returns on capital, and a once-in-a-century valuation so low that the business was trading for less than the cash in the bank, “Mr. Pat”, as he was called, encouraged everyone he knew to buy an ownership stake in the firm. He would even underwrite bank loans, backed by Coca-Cola stock, for his responsible depositors to encourage people to acquire equity.
I’m working my way through a 1985 book called The Crash and Its Aftermath: A History of Security Markets in the United States, 1929-1933, which covers the darkest days America has ever known. In 1932, during the depths of the Great Depression, the long-term United States Treasury bond yield was 4.25%. At this moment in time,…
We opted for an anti-social Superbowl Sunday, stayed home, worked on some projects that needed to be finished, and after they were done, ended up testing several dessert recipes including one from the old Betty Crocker cookbook and another from America’s Test Kitchen. They both turned out extraordinarily well. The peanut butter sandwich cookies are…
A comment reply I needed to post about the Wachovia banking collapse was too large to fit in the comment thread so I am publishing it as a mail bag feature. It deals with my thoughts on investing in bank stocks and holding a large exposure to the banking industry.
As promised several months ago, we implemented demographic tracking on the site to the list of other abilities we have and are now collecting data. Using one popular source, which will improve over time as a bigger sample is developed, the trend that is showing up everywhere is evident. It should only get better as more data points are put into the pool, so I’m excited to see who, exactly, is reading.
Some of you have written to me and asked how I work through the “too hard” pile of things I need to come back to in the future. For me, I keep a system of thought files, on specific topics, and spend several weeks working through them, until I have nothing else to add. They…
With the benefit of hindsight, I now realize that the curriculum committee in my small farm town growing up was made up of visionary geniuses. Either that, or they were a bunch of eccentrics who were paranoid about everything. Maybe both.