I put in and order on Saturday to buy a few more shares of Nestlé SA on Monday for my family’s personal accounts. I spent much of the weekend reading the company’s 125th anniversary biography and studying the original balance sheets and income statements of the firms that went into forming one of the world’s most profitable holding companies.
More than 200 years of research shows that owning stocks, which represent an ownership stake in a business, is the best way to generate long-term wealth. Our stock investing guides will explain how common stocks work, what preferred stocks are, how to understand dividends, stock basics for new investors, and advanced stock trading techniques for those who are ready to learn the deep knowledge of finance.
I spent the past few days updating some of my own internal case studies, spreadsheets, and other documents, as well as wrapping up a few things that needed to be crossed off the agenda for the private businesses. I ended up putting together a collection of visual references covering some of the long-term holdings I keep for my household, among them Nestlé SA following my post on Monday.
One of the tricks I use to think of the stocks I hold as real businesses, just like the operating companies we own, is to get a physical representation of the firm, putting it in an investment cabinet. Now that I am building a 25-year energy portfolio as a personal side project for my household, I already have replica die cast oil tankers on their way from retailers and eBay. I’m having a hard time finding a comparable quality Total SA tanker, if they are even manufactured.
A Quick Cash Flow Statement Lesson – A Look at How McDonald’s Real Payout Ratio Is 110%, Not 54% As First Appears
McDonald’s is one of those businesses that I love. The last time we talked about it was when I wrote the 25 Year Investment Case Study of McDonald’s, and showed how you could have turned $100,000 into anywhere between $1,839,033 and $5,547,089 depending on how you handled dividend reinvestment and the Chipotle split-off back in 2006, and the sorely lacking media coverage of McDonald’s results in February. No matter which way you look at it, despite periods of overvaluation and undervaluation, alternating with the underlying performance and the emotional moods of shareholders, McDonald’s has been a fantastic company. It makes its employees and shareholders a lot of money. It gives society something it wants, whether that be a plain salad with side of fresh fruit and a non-sweetened iced tea or a double cheeseburger with french fries and a Coca-Cola.
We’ve talked about the 1929 period a lot lately, but what you need to remember is that it was a walk in the park compared to 1933. It wasn’t until then that everyone had gone broke, given up hope, and sworn off stocks for life, leaving great businesses trading at double-digit dividend yields and a…
For the serious investors among you, I recommended a book about the 1929-1933 crash that is the single best statistical resource on the subject I have ever encountered. After talking about it on the site, I’m going back through the 700+ pages and I really can’t emphasize enough how seeing the effects of the worst…
A week ago, I recommended a now-out of print book from 30 years ago that was an academic study of the Great Depression called The Crash and Its Aftermath. It is, hands down, the most useful statistical survey of the Great Depression and the 1929-1933 period I have ever read. It instantly ranks up there…
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.
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.
In finance, there is a concept known as total return. The goal of total return is simple: To tell you what the overall results were to you, the owner, during a time period you held an asset. This includes any fluctuations in the liquidation value of the asset itself, profits produced by the asset and distributed to you as dividends, spin-offs from activity split off from the asset, etc.