Index Investors Are Always Above Average [View article]
Apologies if I misused the term price, i was intending to compare investor performance with market returns, prices as such are incidental.
investor performance follows a normal distribution, stock returns are log-normal. Hence, the possibility of above avg investor performance that is still below the stock return avg.
It's a little-known and depressing fact, but the majority of individual securities tend to post negative returns over the long run.
In fact, researchers at the investment management firm Dimensional Fund Advisors found that from 1980 to 2008, the top-performing 25% of stocks were responsible for all the gains in the broad market. As for the bottom 75% of stocks in the U.S. market, they collectively generated annual losses of around 2% over the past 29 years.
Prem Watsa And Jeremy Grantham Have Completely Opposite Views On Commodity Prices [View article]
I have no problem with in investing in productive companies in the commodities space. They create value by refining products, creating efficiencies in distribution, etc. XOM is an excellent example of this. However, I would like to take a second to expand on Prem Watsa's thesis and why I take his side in the argument.
A bet on rising commodities prices is a bet against human ingenuity. Commodity prices should always go down in real dollar terms over the course of complete market cycles. Why? Because they are generally cheaper to produce, because over time human ingenuity will lower the cost of production through innovation, or find new substitutes for scarce resources. Think of the colonial spice trade, whaling, crop yields per acre. Look at the oil price chart, think about how much demand expanded b/t 1860 and 1980 before the price of oil started to rise significantly.
Alternatives exist but are too expensive. Well, if Grantham is right, they won't be too expensive for long and once adopted, human ingenuity will drive the production cost down for alternatives while the drop in demand will drive down prices for oil. In the long term (which can be appallingly long) pure commodity investments are a suckers bet.
Biglari Holdings, Inc: Sardar Biglari - Bet The Jockey Part IV [View article]
with Cracker Barrel represented better than $300 per share of BH's current value, I'd love to see Biglari find a more permanent source of investment funds than flipping restaurant chains. Given the precedent with Freemont and Penn Miller, riding his coat-tails into UNAM looks like a pretty good bet.
A Portfolio For A Young, Aggressive Investor [View article]
balanced portfolio of index funds, like the star fund, are a much better place for young investors to start. What will make you the most money in the long run is investing in yourself and living within your means. Think about it mathematically, let's say you can earn 15% in the market vs 7% for an index fund over 10 years and you are a young investor starting with $10 grand; and that this is because you took your own advice about researching and reading for 20 hrs a week. Get out a calculator and figure out how much you earned per hour versus simple indexing. Then take a second to realize how poor the odds are of you actually doubling the market return over the long run. Index investing starts to make a lot more sense once you factor in the opportunity costs.
The Dumbest Portfolio For The Smartest People [View article]
there are several mutual funds that already replicate the Barclays Aggregate World Bond Index at fairly reasonable expense rates (given the difficulty of replicating that exposure on your own) but of far greater interest to the author of the article, Vanguard has finally announced plans to introduce a global bond index fund, which when coupled with BND, should provide the cheapest means of achieving your vision of a global balanced index portfolio. I currently use VTWSX and LSGLX plus a little dash of BRSIX to accomplish this same goal. Will replace my bond fund as soon as someone creates a cheaper index version.
5 Companies With A Long History Of Strong ROE And Dividend Increases [View article]
Concur, its the most interesting on your list for me as well. I think they are nestled into a safe spot in the sense that the gov't will prop up their business on both ends of the market cycle; stimulus to improve employment at some basic level during bear markets and rising rates during times of so-called full employment. Rich valuation but you never know when opportunity will knock
5 Companies With A Long History Of Strong ROE And Dividend Increases [View article]
PAYX said they earned 1.2% on the float this year, but I don't know what the "normalized" returns are, obviously higher, but I don't really know. Because of the short time period between money in and money out PAYX is very limited in the kinds of investments that they can make, totally different than long term float like at insurance companies with long dated policies. Also much lower risk (you would hope). I found a line in the annual report that says they earn about 7% of total revenue from interest income but they don't state any assumptions about changes in the interest rate.
If you were referring to the difference in length of float between written checks and direct deposit, there isn't any. The company receives payments from customers in advance and has a fixed holding period before processing payments. While you would think that a check that gets sat on by an employee before being cashed would increase float time, PAYX has to guarantee payments and fund accessibility and therefore cannot invest this sort of leftover capital.
If I misinterpreted your point please clarify and I'll try again
5 Companies With A Long History Of Strong ROE And Dividend Increases [View article]
PAYX offers direct deposit, doesn't effect their business at all. You can look it up, they charge a direct deposit fee per customer (of $12.50 along with additional fees for W-2 forms ($2.50),etc, etc), and really direct deposit saves them money (no postage, less printing,etc).
Advice For Capitol Federal Financial, Inc.: Pay More Special Dividends And Stop The Share Buybacks [View article]
I'm a customer but not a stockholder. The bank has a stated policy to payout 100% of earnings to stockholders. So $0.30 per year plus a year end special div of whatever is leftover. My take away from this and your articles is that CFFN can't profitably write loans currently and this is why the div policy and share buybacks. It seems that they are following your advice of disposing of equity, if not necessarily in the way that you would have them go about it.
My question is has the company stated a rational for the buyback programs? They initiated a pretty strong buyback program immediately after the thrift conversion, so it seems they had planned for it in advance, they must have some sort of reasoning. If I was on the board I'd rather give myself a bigger dividend then retire shares. Are they just hoping interest rates go back up?
Good articles and thanks for the work on such a small company, not a lot of well informed articles come out about ks banks.
the most important thing to note here is that investors seem (I can't account for all of them) to be concerned about two things here
1) Yen/USD 2) the investment (bond) portfolio
the first "problem" is completely outside the control of the company and will have little impact on the actual business being valued. As you very well noted in the article.
the second problem, maybe they did over expose themselves to European denominated bonds, is still largely outside of their control but could have a much larger impact on the actual business.
In either case the actual underlying performance of the business is not being called into question. Thus, I would have to think that this presents an opportunity to own a great business faced with a temporary setback.
Why General Dynamics Shares Appear Headed Down To $60 [View article]
I'm hoping for sequestration (because I'm a potential investor, not a current investor) followed by a repeat of the strategy put to such good use in 1992 when the cold war ended; namely, the selling or spinning off of non-core franchises and repurchasing of shares - worked last time. Comments Novakovic has made about some of GD's acquisitions suggests she wouldn't shed any tears at losing some parts of the portfolio. But price would have to be in the 50's to attract my attention
Your Portfolio Can Get Fat On Fast Food In Brazil [View article]
You claim that "The company also has an agreement with Coca-Cola (KO) that makes BOBS stores the exclusive restaurant outlets in Brazil for Coca-Cola products."
stop and think about what a ridiculous claim that is. You can buy a coke at damn near every restaurant in this country just like everywhere else on planet earth. Like Coke would be stupid enough to cap their POS's to 900 some odd locations in a country the size of Brasil.
Furthermore, a simple glance at 10 yr financial data shows that BOBS gross margins and operating margins are half of MCD's.
And finally, BOBS competitive advantages are grossly overstated. The market here in Brasil was relatively speaking under represented by fast food chains but now we have McD's and BK (the later of which is owned by a Brasileiro). Both of those international chains have better bargaining power with suppliers due to scale and vastly superior brand recognition as well as ad spend. In an industry with no switching costs. When the tourists come for the world cup and olympics they will eat what they are familiar with, just like the have done at every other international sporting event. BOBS is an overpriced imitation about to be replaced by the real thing.
Index Investors Are Always Above Average [View article]
investor performance follows a normal distribution, stock returns are log-normal. Hence, the possibility of above avg investor performance that is still below the stock return avg.
It's a little-known and depressing fact, but the majority of individual securities tend to post negative returns over the long run.
In fact, researchers at the investment management firm Dimensional Fund Advisors found that from 1980 to 2008, the top-performing 25% of stocks were responsible for all the gains in the broad market. As for the bottom 75% of stocks in the U.S. market, they collectively generated annual losses of around 2% over the past 29 years.
Prem Watsa And Jeremy Grantham Have Completely Opposite Views On Commodity Prices [View article]
A bet on rising commodities prices is a bet against human ingenuity. Commodity prices should always go down in real dollar terms over the course of complete market cycles. Why? Because they are generally cheaper to produce, because over time human ingenuity will lower the cost of production through innovation, or find new substitutes for scarce resources. Think of the colonial spice trade, whaling, crop yields per acre. Look at the oil price chart, think about how much demand expanded b/t 1860 and 1980 before the price of oil started to rise significantly.
Alternatives exist but are too expensive. Well, if Grantham is right, they won't be too expensive for long and once adopted, human ingenuity will drive the production cost down for alternatives while the drop in demand will drive down prices for oil. In the long term (which can be appallingly long) pure commodity investments are a suckers bet.
Biglari Holdings, Inc: Sardar Biglari - Bet The Jockey Part IV [View article]
A Portfolio For A Young, Aggressive Investor [View article]
Biglari Holdings, Inc: Sardar Biglari - Bet The Jockey Part III [View article]
Conversion To Franchise Model At DineEquity Makes For An Attractive Dividend Stock [View article]
The Dumbest Portfolio For The Smartest People [View article]
5 Companies With A Long History Of Strong ROE And Dividend Increases [View article]
5 Companies With A Long History Of Strong ROE And Dividend Increases [View article]
If you were referring to the difference in length of float between written checks and direct deposit, there isn't any. The company receives payments from customers in advance and has a fixed holding period before processing payments. While you would think that a check that gets sat on by an employee before being cashed would increase float time, PAYX has to guarantee payments and fund accessibility and therefore cannot invest this sort of leftover capital.
If I misinterpreted your point please clarify and I'll try again
5 Companies With A Long History Of Strong ROE And Dividend Increases [View article]
Advice For Capitol Federal Financial, Inc.: Pay More Special Dividends And Stop The Share Buybacks [View article]
My question is has the company stated a rational for the buyback programs? They initiated a pretty strong buyback program immediately after the thrift conversion, so it seems they had planned for it in advance, they must have some sort of reasoning. If I was on the board I'd rather give myself a bigger dividend then retire shares. Are they just hoping interest rates go back up?
Good articles and thanks for the work on such a small company, not a lot of well informed articles come out about ks banks.
Aflac And Japan [View article]
1) Yen/USD
2) the investment (bond) portfolio
the first "problem" is completely outside the control of the company and will have little impact on the actual business being valued. As you very well noted in the article.
the second problem, maybe they did over expose themselves to European denominated bonds, is still largely outside of their control but could have a much larger impact on the actual business.
In either case the actual underlying performance of the business is not being called into question. Thus, I would have to think that this presents an opportunity to own a great business faced with a temporary setback.
The Case For Intel [View article]
Intel announces on line TV service,
http://reut.rs/Wjv0ZH
Do not expect an article detailing their complete lack of a competitive position against the likes of Netflix, Disney, and Amazon
Why General Dynamics Shares Appear Headed Down To $60 [View article]
Your Portfolio Can Get Fat On Fast Food In Brazil [View article]
stop and think about what a ridiculous claim that is. You can buy a coke at damn near every restaurant in this country just like everywhere else on planet earth. Like Coke would be stupid enough to cap their POS's to 900 some odd locations in a country the size of Brasil.
Furthermore, a simple glance at 10 yr financial data shows that BOBS gross margins and operating margins are half of MCD's.
And finally, BOBS competitive advantages are grossly overstated. The market here in Brasil was relatively speaking under represented by fast food chains but now we have McD's and BK (the later of which is owned by a Brasileiro). Both of those international chains have better bargaining power with suppliers due to scale and vastly superior brand recognition as well as ad spend. In an industry with no switching costs. When the tourists come for the world cup and olympics they will eat what they are familiar with, just like the have done at every other international sporting event. BOBS is an overpriced imitation about to be replaced by the real thing.