Investing is the process of putting aside money today in exchange for more money in the future. This process involves risk but, when well managed, can help grow your wealth over time due to the power of compounding. This is the investing archive that includes articles published on JoshuaKennon.com. If you are looking for more great content, visit Joshua’s Investing for Beginners site at About.com, a division of The New York Times.
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The quartet of financial independence is made up of cash flow, liquidity, profitability, and net worth. Each requires management and should not be neglected if you want to build lasting value for you and your family.
Nestlé dividend day has come and gone for both the owners of the Swiss shares directly in Zurich and the holders of the ADR here in the United States. The board continued its tradition of hiking the dividend.
The word “franchise” is used to describe an arrangement in which one business, the franchisor, allows another business, the franchisee, to use its name, trademarks, trade secrets, intellectual property, branding, operating systems, and internal support resources in a specific geographic area, sometimes with an exclusivity provision that guarantees no other franchises will be granted within a specific buffer zone so the franchisees aren’t cannibalizing sales from each other, in exchange for some sort of payment.
Benjamin Graham once wisely observed that more money has been lost by investors “reaching for yield” than stolen at the barrel-end of a gun. During periods of anemic interest rates on fixed-income securities, bank deposits, and cash equivalents, a combination of impatience, action bias, and desperation causes savers to do what they would otherwise consider extraordinarily foolish.
After being away for more than a month, I wanted to give you a behind-the-scenes look at where we are in launching the asset management business.
Market Timing, Valuation, and Systematic Purchases I have a lot of work to do but I’m sitting at my desk, the snow is on the ground outside, I have a fresh cup of coffee in front of me, and I don’t really feel like diving into my task list quite yet. This is going to…
Almost five years ago, Tiffany & Company was glittering at time when much of the corporate world was still mired in misery from devastating losses and the implosion of Wall Street. Based on the annual report for the prior year, 2010, worldwide net sales had risen by 12% on a constant-exchange-rate basis, reaching $3,085,290,000. After-tax profits were up 39% from the year before, 2009, when the developed world had gone through the worst meltdown since the Great Depression, coming in at $368,403,000.
One of the things that worries me from a risk management perspective is investors who don’t know what they own or their actual, real portfolio weightings. Sometimes, I’ll hear new investors say, “I own stocks” or “I own mutual funds” but neither is an answer. Those aren’t the relevant details. The real question: “In which enterprises, on what terms, and at what price has the money been invested, laid out, and exchanged?”. Much of everything else is a smokescreen serving to obfuscate reality. It’s risk-adjusted reward we’re after; reward measured in after-tax, net-of-inflation real purchasing power.
From August 2008 to June 2013, David Danon was an associate attorney in the tax department at the Vanguard Group. According to a whistleblower lawsuit filed with the State of New York, which served as the basis for additional whistleblower actions filed with the State of Texas, the State of California, the Securities and Exchange Commission and the Internal Revenue Service, Danon was silenced, and ultimately sent packing, after he persistently warned management that Vanguard was committing massive tax abuse by using a combination of legal entities and improper pricing structure; an arrangement that went back 40 years. Danon claims that others who had raised similar concerns had also left the firm after facing a backlash for refusing to toe the line on what they believed was illegal behavior.
One of the major themes running through my body of work, both on this site and at Investing for Beginners, can be summed up in the statement, “Know your risks”. I hammer it home all the time; “risk-adjusted return”, talk about remote-probability events, explaining how much of wealth building is learning to “tilt probabilities in [your] favor”, admonishment to never invest in something you don’t fully understand and couldn’t explain to a Kindergartener in a couple of sentences. Consider this real-life tragedy a morality tale that can help you protect your own family.
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