Search Results for: return on equity

Suppose that you’ve been given $1,000,000 of cash in an IRA to manage.  Your task is to invest it so as to generate the best possible risk-adjusted return over the next 12 months. You don’t have to invest it immediately–you can … Continue reading →

“You know, Paul, Reagan proved that deficits don’t matter.  We won the mid-term elections, this is our due.” — Vice President Dick Cheney defending a second round of tax cuts against the objection of Treasury Secretary Paul O’Neill, shortly after … Continue reading →

Those who expect U.S. equities to deliver poor returns going forward can cite two compelling reasons in defense of their expectation: (1) Equity prices are significantly elevated relative to underlying earnings fundamentals.  The S&P 500’s trailing price-to-earnings ratio, for example, … Continue reading →

A common criticism of Professor Robert Shiller’s famous CAPE measure of stock market valuation is that it fails to correct for the effects of secular changes in the dividend payout ratio.  Dividend payout ratios for U.S. companies are lower now … Continue reading →

Last week, CNBC profiled the inspirational story of Ronald Read, a gas station attendant and janitor from Vermont who amassed an $8MM fortune simply by investing portions of his small salary into high-quality, dividend-paying U.S. equities. Judging from the familiar … Continue reading →

In the previous piece, I offered a definition of the investment concept of “intrinsic value.” Intrinsic value is the value that the owner of a security realizes from holding the security, rather than selling it. To determine the intrinsic value … Continue reading →

James Osborne of Bason Asset Management recently published an excellent critique of the investment concept of “Intrinsic Value.”  I urge readers to take a minute and go check it out.  In this piece, I’m going to try to tackle a question … Continue reading →

In the first century, the historian Plutarch introduced a famous philosophical paradox.  The paradox goes like this.  A ship–“The Ship of Theseus”–was returning home to Athens from Crete.  As it sailed, the wooden planks that made up its structure gradually … Continue reading →

Judging from the financial headlines, we live in a world where everyone sucks at investing. Hedge funds?  Consistent underperformers: this year, last year, the year before that, the year before that, the year before that.  Every year, it seems.  Just google … Continue reading →

Over the last ten years, the “collectibles” market has produced a fantastic return for investors.  According to the Knight Frank Luxury Investment Index, classic cars are up 550%, coins and stamps are up 350%, and fine wine and art are … Continue reading →