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Risk reduction. Insurance companies do it every time they underwrite a new policy by estimating probable outcomes based on past behavior and other factors. So do restaurants and coffee shops when they hedge their costs on items such as coffee beans, wheat, and dairy products. Holding companies strive for it when they acquire businesses in [...]
Warren Buffett has often said, “I could improve your ultimate financial welfare by giving you a ticket with only twenty slots in it so that you had twenty punches – representing all the investments that you got to make in a lifetime. And once you’d punched through the card, you couldn’t make any more investments [...]
Don’t confuse changes in market capitalization with the return you earn on your investment. Instead, focus on total return – appreciation in the share price plus cash dividends and any spin-offs or other distributions received. The distinction may seem small to some new investors, but the implications are extremely important. There are four primary reasons [...]
In financial theory, the rate of return at which an investment trades is the sum of five different components. They are: 1. The Real Risk-Free Interest Rate This is the rate to which all other investments are compared. It is the rate of return an investor can earn without any risk in a world with [...]
I notice that a lot of my readers were searching for this basic question of how to buy stocks, so I thought it might be useful to you to synthesize some of the great content that’s been generated over the past several years, putting it in one easy-to-find and simple-to-use location for your convenience. This [...]
Two of the greatest investors in history, Warren Buffett and Peter Lynch, are renowned for one trick that helped them develop investing records of 20% to 30% compounded over long stretches of time. Buffett summed it up in the acronym “Kiss”, which stands for “Keep it simple, stupid!” When you truly understand what it means, [...]
1. Never Borrow Money to Invest One of the greatest economists in history once remarked, “Markets can remain irrational longer than you can remain solvent.” Take the recent case of the most royal of blue chips, General Electric and Berkshire Hathaway. Within the past year, GE has fallen from roughly $40 per share to as [...]
A practical process for turning human resources into a crucial component of success — from an HR professional who really did it “Foreword by Dave Ulrich “”It is easier to conceptualize, conceive, and write about utopia than to actually make it happen. Thirty years ago, when some of us chose to go into academics and [...]
A comprehensive guide that lets you play the options game with confidence Due to the uncontrollable elements associated with options, many traders find themselves without practical strategies for specific situations. The Option Trader’s Guide to Probability, Volatility, and Timing offers traders a variety of strategies to trade options intelligently and confidently in any given situation. [...]
COMPETITIVE ADVANTAGE introduces a whole new way of understanding what a firm does. Porter’s groundbreaking concept of the value chain disaggregates a company into ‘activities’, or the discrete functions or processes that represent the elemental building blocks of competitive advantage. Now an essential part of international business thinking, COMPETITIVE ADVANTAGE takes strategy from broad vision [...]