Don’t Be Fooled By Your Dividend Bias: DRIP Is Inferior To Internal Compounding

Introduction and summary: Many investors have a strong focus on dividends, so much that I would like to call it an irrational dividend bias. Dividend investors focus only on dividend stocks, and for the most part ignore those stocks which don’t pay a dividend. Thus, they leave out a huge segment of the market that has the potential of compounding

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Does Valuation Matter? Less Than You Think If You Buy Quality Stocks

Summary: S&P has an estimated P/E of 23 for 2020. Rich valuations sometimes make the best companies’ share price languish. Low interest rates justifies high valuations. Indexers might suffer more from high valuations than active investors. How important are growth and valuations? I look at theoretical returns under different valuations and growth. It turns out Warren Buffett is right: It’s

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Interview: Short-Term Trading Is A Zero-Sum Game, Investing Is Not

This week I was interviewed about my trading philosophy. In the interview I mentioned how difficult it is to make money daytrading or swingtrading for short-term profits. This is mainly a zero-sum game, I will even say it has negative expectancy due to commissions and slippage. Opposite, long-term investing has a positive expected return, given a diversified portfolio, as long

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Dividend Investing: Don’t Be Fooled By Your Dividend Bias – Marginal Rate Of Return/Incremental Return

This article covers these topics: Why dividend investing is not necessarily the most efficient way to compound capital. Dividends are paid out of book value, but usually reinvested above book value. Why accept to receive a dividend at book value when you can for example sell shares at two times book value? Where is the best place for your capital?

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Investors Title: Family-Controlled, Operates In An Oligopoly And Well-Managed

Investors Title (listed on Nasdaq with the tickercode ITIC) was for me an unknown company until about a week ago when I came across this article on Seeking Alpha written by Capital Ideas. The article is an interesting deep-dive into a highly profitable and well-managed small-cap (market cap is only 260 million). My article is mostly a recap of Capital

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Why The Nordic Stock Markets Have Outperformed The Global Markets

The Nordic/Scandinavian region gets lots of coverage for their welfare models and statistical happiness, but perhaps lesser known is that its stock markets have performed really well over the last 50 years. I define the Nordics as Norway, Sweden, Denmark, Finland and Iceland (Scandinavia is Norway, Sweden and Denmark – due to its similar language, Finland’s is not related). The

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Svenska Handelsbanken – The Best Nordic Bank – Has The Best Moat There Is: Culture

Svenska Handelsbanken (called Handelsbanken in the rest of the article ) was founded in 1871 and is the oldest listed company on Stockholm Stock Exchange. The Bank has a nationwide branch network in Sweden, the UK, Norway, Denmark, Finland and the Netherlands. I have been long this stock for some years, and I believe this is the best managed bank

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Some Thoughts On Markel (The “Mini/Baby” – Berkshire) And Its 2019 Shareholder Letter

Berkshire Hathaway needs no introduction, but what many investors might not know is the existence of several “Mini-Berkshires” or “Baby-Berkshires”, companies that are much smaller but in many ways similar both in business model and mindset of the management. One of these companies is Markel Corporation which is traded on the NYSE and has the tickercode “MKL”. Previously I have

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Alleghany Corporation: A Boring, But Compounding, “Mini/Baby-Berkshire”

Berkshire Hathaway needs no introduction, but what many investors might not know is the existence of several “Mini-Berkshires” or “Baby-Berkshires”, companies that are much smaller but in many ways similar both in business model and mindset of the management. One of these companies is Alleghany Corporation which is traded on the NYSE and has the single tickercode “Y”. In this

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Sin Stocks And Performance

A certain group of stocks have outperformed the rest of the stock market by a wide margin: Sin stocks. Tobacco, alcohol, arms producers, the gambling industry, the cannabis industry and sex-industry can safely be labelled as sin stocks. In the US, tobacco stocks have been the best performers over the last century, while alcohol stocks have been the best performer

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Diageo: A Premium Sin-Stock

Background and summary: Diageo produces alcohol – lots of it – hence a “sin-stock”. Tobacco and alcohol stocks have produced spectacular gains over the last century, and Diageo is not different: 12% CAGR since 2000. Diageo is a result of the merger between the famous beer producer Guinness and Grand Metropolitan in 1997, which formed one of the biggest distillers

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