Businesses make capital allocation decisions such as expanding factories or investing in new tech with the intent of recouping their investment over timeframes that span years and decades. Not all capital allocation decisions pan out but the process that is followed is with the intent of getting as high a return on investment as possible.Continue reading “A Bias Towards Inaction”
Category Archives: General Investing
Sometimes, The Year You Retire Can Make A World Of Difference
Let me introduce you to Jason. He retires in the year 1969 with the year 2022 version of a million dollars. That is, he retires in the year 1969 with an amount of money that has the same purchasing power as what million dollar buys in the year 2022. And he knows a thing orContinue reading “Sometimes, The Year You Retire Can Make A World Of Difference”
Positive-Sum Games
Say you decide to play blackjack with a friend, and you play to a point where one of you wins everything from the other. So, say the game starts with $100 from you and a $100 from your friend and ends when either of you wins $100 from the other. The net wealth in theContinue reading “Positive-Sum Games”
The Retirement Spending Smile
You think you’ll spend like this… But instead, you spend like this… Retirement planning experts who’ve studied this phenomenon say that we spend in three phases… the go-go years, the slow-go years, and the no-go-years. The go-go years are your first several years in retirement. You play, you travel, you spend. Then you start toContinue reading “The Retirement Spending Smile”
Plan Like A Cockroach
Cockroaches are the ultimate survivors1. They can live without air for up to an hour, without food or water for months. They can survive the Arctic cold. Ice ages and continent shifts mean nothing to them. It’s no surprise then that the cockroach as a species has been around for 300 million years. And itContinue reading “Plan Like A Cockroach”
Sidestepping Bubble Stocks
Buying businesses (stocks) is not about winning popularity contests. In fact, the more popular a stock or a category of stocks is, the less likely its price matches its value. Pay too rich a price for a popular business du jour and you could be sitting on that business forever, never to be made whole.Continue reading “Sidestepping Bubble Stocks”
Prepackaged Portfolios Are Seldom Optimal
Cookie-cutting the investing process does not work. Take for example someone who is a Federal government employee and we know what that entails – a rock-solid job security with access to an equally rock-solid pension plan. So, assuming she continues to work there till she retires, should she ever own bonds? And we know theContinue reading “Prepackaged Portfolios Are Seldom Optimal”
Retire To Something
San Luis Obispo has one of the cutest downtowns in California. A must try there if you are ever around is a Turkish pastry shop called Lokum. So, so good. On a stroll to one of the many beaches there, I happened to come across a long-retired couple, likely in their seventies, voluntarily cleaning upContinue reading “Retire To Something”
How Risky Are Individual Stocks?
Google was busy relishing its unrelenting grip on the search business and along comes ChatGPT, a supposed Google-killer that helped lop several hundred billion dollars off its market value. Whether ChatGPT does any lasting damage to the core of Google’s business is to be seen but the stock market thinks there will be some damage.Continue reading “How Risky Are Individual Stocks?”
Shirtsleeves To Shirtsleeves In Three Generations
Cornelius ‘Commodore’ Vanderbilt, the American railroad and shipping tycoon, died in 1877 and left behind a $95 million fortune to his eldest son, William H. Vanderbilt as inheritence. $95 million might not put you anywhere near the Forbes 400 list today but in 1877, that was more money than was held in the United States Treasury. What happenedContinue reading “Shirtsleeves To Shirtsleeves In Three Generations”