When it comes to diversification, you have to look at your entire life and not just your portfolio. Several years ago there was a book I really enjoyed that dealt with this topic called Are You a Stock or a Bond?: Create Your Own Pension Plan for a Secure Financial Future. It provided a valuable framework for understanding how the stability of income in your life should inform your approach to asset allocation.
Want to know why the middle class is disappearing despite families now having two people in the work force instead of one? Here is Elizabeth Warren discussing in an hour-long lecture at Berkeley. She is the author of The Two Income Trap.
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).
A member of my family has been using a technique to build substantial wealth that doesn’t require a high income or any specialized knowledge, extra work, or effort. I was so impressed by the way he implemented this program, I thought I would share it with my other family and friends (as well as anyone else who reads my blog) without giving away who it is.
Originally serving as stock broker to the father of value investing, Benjamin Graham, Tweedy, Browne & Company converted to a money management company and eventually launched several highly successful mutual funds that operated with the same value investing style for which they had become renowned. After beating the market by several percentage points for nearly forty years, the firm’s place in the halls of investing greats has been securely established.
Citing data provided by Vanguard, one of the premier mutual fund and 401(k) providers in the world, The New York Times recently reported that 60 percent of 401(k) accounts now have more money in them than they did before the stock market crash and worst recession since the Great Depression began two years ago.
Whether or not a business can lavish employees and owners with huge bonuses, paychecks, dividend checks, and profits on a sustainable basis depends upon one metric and one metric only: operating profit per employee.