Now is not the time for index hugging. I’m sure the recent market decline hasn’t gone over your head. Those who were in exchange traded funds (ETFs) have quickly jumped out for fear of more market declines. Take a look at the picture below. More than $30 billion jumped out of US ETFs as the market fell. Could we be in for more market declines? I hope so. Until now, many individual stock pickers were Read More
In many of his first year classes, Joel Greenblatt opens with a simple observation. He shows the class the highs and lows of stocks at random. As an example let’s look at three stocks that first popped into my head: Apple Inc. (NASDAQ:APPL), Evercore Inc. (NYSE: EVR) and Ford Motor Company (NYSE:F). In 2017, all three diverged in price significantly. The table below shows the high and low of each throughout 2017.
It’s not easy finding companies that generate high returns on capital and produce free cash flow in excess. Even if you screen for companies that do exactly that, you can’t be sure you’re looking at a bunch of quality investments. Last week I ran a screen of companies that produced free cash flow every year for five years and an average return on invested capital of 25% or higher. What I got back was a Read More
If you had to sum up a great company, what would it be? One that produces a lot more capital than it takes? One that has a competitive advantage over its competitors? Essentially you’re looking for a Warren Buffett stock – a wonderful business. Now, if that is what you’re looking for, surely the best hunting grounds to find a Warren Buffett stock is to look at the stocks Warren Buffett holds himself. So let’s Read More
How many cars do you own? One, two? Maybe even three? It’s not uncommon for US households to own up to three cars. But how many cars do you think people in places like South American own? Take Juan Garcia for example. Like every other city goer in Mexico City, Juan pays his taxes, works extremely hard to provide for his family. Oh yeah, and he owns multiple cars to drive on different days of Read More
In a 2015 paper, S&P Dow Jones Indices showed more than 84% of US active funds underperformed the S&P 500 over a 12-month period. Over a 10-year period, only 2% of active funds outperformed their benchmark. Similar results also popped up in Europe and the UK. Its clear institutional investors don’t have all the answers.
There are many famed drop outs: Steve Jobs, Bill Gates, Mark Zuckerberg and Michael Dell. Surely one of the most famed serial entrepreneur and drop out is Richard Branson. At 16, Branson gave up studies to start his own magazine business. The magazine was called ‘Student’. It was a mail order business, which created a revenue from advertising. With a steady readership, Branson thought he could also sell other product within the magazines. That’s when Read More