“Rule No.1: Never lose money. Rule No.2: Never forget rule No.1” -Warren Buffett The most important part of investing is to avoid losses. This is why I so often use this blog to talk about the risks I’m seeing. If you can avoid the landmines and diversify among the rest, you’ll do pretty well. What…
As a follow-up on my last post which you can read here, I wanted to discuss the important difference between a company and a stock when investing. The old adage of “invest in what you know and buy” is very general and only goes so far. I would also say that it’s not nearly as…
It was announced yesterday that Microsoft is buying LinkedIn for $26.2 billion. A lot of people are questioning the deal but I think Andrew Ross Sorkin hit the nail on the head regarding LinkedIn’s decision to sell – to get out of the accounting hole they were digging with massive amounts of stock based compensation and…
I’ve been thinking a lot lately about the types of investments that offer the best risk adjusted returns in this environment. One of the toughest things to evaluate today, and perhaps the most important when investing in stocks, is the sustainability of a company’s business model, cash flows and profits. Technology continues to change things…
Investors have been “starved” for yield for years now and unfortunately interest rates aren’t going up anytime soon. When looking at individual bonds, investors get to choose between high quality bonds at paltry yields or junk-rated bonds that look attractive but come with a slew of bad risks that often aren’t understood or appropriate for…
The answer is management, plain and simple. When you invest in the stock of a company, you entrust management to be the steward of your capital and to make smart, value enhancing business decisions. It doesn’t matter how great a product is or what competitive advantages a company may have, if management makes poor decisions…
Creative Destruction is effect of technological innovation, when something new kills the older incumbent. We’ve gone from horse and buggy to railroads to cars, etc. A new innovation dramatically changes, if not outright kills, the old way of doing things. It’s constantly occurring but usually happens so slowly that we don’t notice it unless we…
Once again, I’ve been very pleased with the earnings and outlook reported by the majority of the companies we own. A few of our core holdings held their conference calls this morning so I wanted to provide a quick update. CF Industries (CF) & Terra Nitrogen (TNH) CF is our largest “Growth” holding and TNH…