Rational investing for financial independence
Warren Buffett, the Oracle of Omaha, has been a strong advocate of buying only what you truly understand and only companies where you can estimate future earnings with a certain degree of accuracy. This requires that you only invest in companies that is within your circle of competence. I guess all of this is well known to all investors. But
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I believe Investor AB is well know by most investors, even non-Swedish investors. It has an outstanding track-record of growing net asset value (NAV) for over a century. In this analysis I bring forward some arguments for why I’m long the stock, and why I believe it will continue to outperform. I believe the simplest investment ideas are the best,
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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). The languages are related and easy to understand between each other,
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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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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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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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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 is a sin stock and those stocks have performed the best over the last century. This analysis argues for why this is likely to continue. 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
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Let’s assume you buy Disney at 100 and one year later it trades at 130. A 30% return in one year, isn’t that great! Some time ago I used to cheer when my stocks rose to new highs. It felt great to count the paper profit but as a long-term investor this logic is irrational. Why? Because the only time
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Introduction and summary: This article is a very brief analysis of Unilever. The company has proven to be adaptable in many different economic climates, and has been around for about 90 years, but its roots can be traced back to the 1880s. The current company is a result of the merger of Dutch Margarine Unie and the UK soapmaker Lever
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Now is a good time to start a diary Now is a good time to start a diary. It doesn’t have to be long. But there’s a good chance you’ll tell your grandkids about these days. Also remember that it’s hard to un-remember what you know about the past when looking back on it, so it’s good to document your
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I have been a shareholder in Abbott Laboratories (ABT) since the acquisition of St. Jude in 2016. I believe this is a very good stock to own for the long run, not because of the dividend, but because of the potential long-term returns. Furthermore, Abbott’s products are needed both in good and bad times. Below you find some very
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I believe it’s important to read, but at the same time being careful what to read. Quality are much better than quantity, and reading twice, in my opinion, is more valuable than reading more. I read The Intelligent Investor for the first time in 2015, and in December 2019 I had the pleasure of rereading the book. In between readings
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As of writing most stock market around the globe are down around 30%. That is a big decline, especially considering it happened in just three weeks. However, unless you are about to sell assets today or in the very near future, for whatever reasons, you should consider the drop as an opportunity to add to your holdings. No doubt the
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Governments have currently implemented draconian measures to stop the coronavirus, leading to a wide global sell-off on the stock exchanges. Market drops are often a good thing if you have cash or if the companies have liquidity to buy back shares and wither the storm. The FED is printing almost insane amounts of money every day and EU states are
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Lucius Annaeus Seneca, better known as Seneca, was born in Cordoba, the Roman Spain, in 4 BC and died in 65 AD. He grew up in Rome as a son of a procurator who was an authority in rhetoric, public speaking and debate, and I guess Seneca learnt from his father. Seneca is known for his writings, mainly his essays
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Last week I wrote an article about how you can create your own “dividend” by selling shares. Many investors have an irrational dividend bias: Benjamin Graham wrote in the Intelligent Investor that a rising dividend has the potential of attracting “ignorant coupon clippers” – not business owners. I believe too many shareholders in ExxonMobil (XOM) are in the “coupon clipper”
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Fragile – handle with care: Fragile is defined as an object easily broken or damaged. When you order something online that is fragile it most likely is labelled as “handle with care”. The reason is pretty obvious: it can’t sustain shocks, knocks, beating or being dropped to the ground. It easily breaks apart. The opposite is antifragile: Antifragile – do
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This article contains some brief notes on Chr. Hansen Holding AS, the famous Danish enzymes, food/nutrition and natural colors company. The article is just a short presentation of the company and writing is kept to a minimum and mostly in the forms of bullet points. The business and some history: Chr. Hansen is a Danish company that supposedly touches about
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Introduction and summary: My idea with this article is to show that dividends are simply return of shareholders’ capital (a partial liquidation), exactly the same as selling the equivalent number of shares to create “income”. Admittedly, selling shares to support consumption feels a little like sawing off the branch I’m sitting on. Strangely enough, why doesn’t it feel the same about a
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Credit Acceptance Corp has proven to be disciplined loan underwriters, a prerequisite for good long-term performance. Has a clear and rational strategy for allocating capital. Owner-operated, meaning management has the same skin in the game as outside shareholders. Their business model sets them apart, and might turn out to be countercyclical in a recession. However, the industry is competitive and
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Introduction and summary: Comcast (tickercode: CMCSA) is the world’s second biggest telecom company and headquartered in Philadelphia, USA. The company was founded by Ralph Roberts in 1963 and has largely grown via M&A. I’m long Comcast since late summer 2018 and consider this a long-term holding that will compound for years to come. My main reason for buying was twofold:
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Family businesses are all around us: the local pizza-shop on the corner, the auto dealership, the small local newspaper or your web-domain provider. They are all most likely run and owned by the founder or a small group of people – often a family. These owners have a real passion for their business and are not afraid of working outside
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This article contains a brief description of Constellation Software, some thoughts on its competitive advantages and excerpts from Mark Leonard’s excellent shareholder letters. The excerpts are quite long, about 5 000 words, and I recommend going to the source to read all letters. This article has only small samples of Leonard’s wisdom. The letters offer great insights into a very
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I signed my first client and proceeded to short my first stock. It almost proved to be my last. Over the next few weeks, I watched the stock trade up to 20, then 30, then 40, finally breaking through 50…..But when the stock climbed past 50, I started to cover, unable to stand the pain. It was too late, however,
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