I am a worrier by design which means I try to protect what I need to protect through liberal use of insurance – life insurance for life, health insurance for health and auto insurance for my car. For my car? I don’t buy auto insurance to protect the value of my car because at someContinue reading “Umbrella Insurance”
Dividends Are Not Free Money
Warren Buffett run Berkshire Hathaway paid a 10 cent dividend once in that one fateful year in 1967. Buffett, unarguably one of the best capital allocators ever, later joked that he must have been in the bathroom when that decision was made. Because of all the ways a business returns the harvested profits back to its owners,Continue reading “Dividends Are Not Free Money”
Survivorship Bias Is Everywhere
During World War II, researchers at the Center for Naval Analysis were trying to decide on where to add reinforcements to damaged aircrafts returning from their bombing missions. Reinforcements add extra weight so not all sections of the aircraft can be reinforced. So, if you were given the task to decide, where would you addContinue reading “Survivorship Bias Is Everywhere”
A Spectrum Of Uncertainty
Bonds are safer than stocks. Cash is safer than bonds. Investing in startups is not for the faint of heart. On a risk-return spectrum, we see an upward sloping line as we go from safe investments on the left to increasingly riskier ones on the right. Finance nerds call this the Capital Market Line. ButContinue reading “A Spectrum Of Uncertainty”
Any Fool Can Make A Fortune
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. $95 million might not put you anywhere in the Forbes 400 list today but that was more money at the time than was held in the United States treasury.Continue reading “Any Fool Can Make A Fortune”
Kids & Money
There is seldom a parent who hasn’t gone through the tantrum-throwing phase of their kids’ lives. You walk into a store; your kid sees a toy and she must have it. The moment you say no and the next thing you see her rolling on the floor. I went through that phase as well. WhenContinue reading “Kids & Money”
One Banker, Thousand Borrowers
What you feel is a good investment because of what you see and hear is seldom a good investment. A good investment is usually the one you don’t hear much about. Or if you do, you only hear disgust and shame. Because when an investment feels disgusting to own, its perceived risk is higher andContinue reading “One Banker, Thousand Borrowers”
Bridging The Gaps
President Dwight D. Eisenhower was once quoted as saying that in preparing for a battle, I have found that plans are useless, but planning is indispensable. There is no perfect plan because change is the only constant. But that does not mean we do not plan. I like simplicity which means that that 50-page binderContinue reading “Bridging The Gaps”
If You’d Bought This Stock 20 Years Ago
You’d see these clickbait stories every now and then. They let you dream about the easy riches you would have earned had you wagered on this or that stock. Dreams are great but acting upon them is Chernobyl deadly for your money. Let me explain why. Apple today is a three trillion-dollar business. A one-timeContinue reading “If You’d Bought This Stock 20 Years Ago”
Adding Fuel To Fire
Mary Hunt profiles three types of people in her book 7 Money Rules for Life on how they handle money and how it impacts their well-being and happiness. So, say they all made the same kind of incomes since they started working… Nothing spectacular. Their paychecks rose as the cost of living (inflation) rose. But a bigContinue reading “Adding Fuel To Fire”