A look at the greatest investors shows they all have particular trait in common - the ability to have strong convictions and stick with their guns whether or not their opinions are popular.  Ben Graham, Peter Lynch, Warren Buffett, George Soros, John C Bogle, and Julian Robertson to name a few.  These are people who achieved the upper echelons of success in their respective fields by standing out and having the courage to disagree with the masses. Benjamin Graham’s sums this concept up in his famous allegory called Mr. Market.  Imagine you own a grocery store and you [...]

Whether you’re an active or passive investor, you need to understand the premise of the stock market.  That is, allowing the average person to buy and own stakes in corporate America.  In the market, there are winners and losers, and those who understand the market can and ought to stake a claim for themselves. Let’s take a look at a simple example. Jimmy’s Gumballs Jimmy is a financially inclined seven year-old.  He buys gumballs for 20 cents at the grocery store and sells them for 25 cents to his classmates.  Every day, his main priority is to sell [...]

A New Focus for The Intelligent Investor As some of you can probably already tell, The Intelligent Investor has been going through somewhat of a whirlwind since it was started early January. When I first started I posted everyday about real estate.  Then I got a tip from Jon Morrow (the associate editor of Copyblogger) suggesting that I write one article a week that was at least 1000 words long – again, all real estate focused.  The goal was to write resourceful content that my readers could go back to again, and again. After leaving my full-time, salaried [...]

In Tom Peters’ most famous book, In Search of Excellence, he mentions a great principle: Stick to the knitting. In other words, stick to the business you know. Warren Buffett often talks about things he’s does not know.  When he doesn’t know something he is apt to point it out.  That seems simple enough, but there is tremendous wisdom in that.  In life, as in business, it’s important to know what you know and know what you don’t know.  As Warren often says, know where your parameter is and when you’re getting close to it. In the heyday [...]

Every year citizens of America (and the world) live with the risk of nuclear war.  Ahmadinejad of Iran and Kim Jong-il of North Korea are just a couple of the known risks of an atomic warfare.  The Nuclear Non-Proliferation Treaty (NPT) of 1970 has sought to reduce spread (proliferation) of nuclear weapons in which nearly 200 countries have signed on and so far it seems to have worked. As it stands, the threat of nuclear detonation year-to-year is likely not 100%.  But at the same time it’s definitely not zero.  But let’s say there is 10% chance of [...]

Diversification.  One of the most established tenants of investment strategies taught throughout academia and the investment world. If you’ve met with financial advisers (FA) or portfolio managers they probably mentioned this at least a five times in one sitting.  How you need to buy forty different stocks in ten different asset classes and industries - which makes hard for decision making and requires their help to do so. However, if you study the most successful investors they don’t necessarily follow this mantra.  In many cases, they debunk diversification. Don’t just take my word for it.  Look at the [...]

There is much talk about how cash is king.  Cash is king when you can’t pay your bills.  Cash is king if you’re starving and need a hot dog.  It is king when you have liquidity problems. Cash rules when you can’t meet your financial commitments. The truth is you only want to keep enough cash on hand to meet your obligations – mortgage, ongoing expenses, and a buffer for unforeseen costs.  Having all your assets denominated in cash for long periods is one of the worst things you can do. Especially, with the budget and trade deficits [...]

Yesterday I went to a luncheon sponsored by Liberty Road Foundation a local nonprofit in Washington that partners with businesses in Northwest.  Kemper Freeman was the speaker of the day.  To be honest, I didn’t have high expectations, as I didn’t know what to expect.  I ended up really enjoying it and learned a gold nugget I thought worth sharing. For those who live in the Northwest but haven’t heard of Kemper Freeman, you’ve probably “partnered” with him by visiting Bellevue Square, Lincoln Square and Bellevue Place (aka The Bellevue Collection).  Just eat at The Cheesecake Factory or [...]

The Breakfast of Giants Vanilla and chocolate - the perfect recipe for a better investor. It’s 8am Saturday morning, the day of Berkshire’s 2010 Annual Meeting.  As my wife and I walk up to the entrance at Qwest, shareholders pass us eating Dilly Bars.  Remind you, it’s 8 o’clock in the morning and 50 degrees out!  How many sixty year olds eat that for breakfast?  We thought to ourselves, what a peculiar thing. Dilly Bars are what’s for order.  Just ask Bill Gates.  My wife and I got a chance to say hi to him as [...]

Warren's Annual Recital As you probably know, I have a deep respect for Warren Buffett.  Not just because he’s one of the wealthiest men alive or that he gave all his wealth to society, but because he’s such a great example and teacher. When asked, “Why do you teach people the principals of your investing strategy when it basically educates your competition?” Warren responds, “I was freely taught by Benjamin Graham and believe I should do the same.” I feel in many ways that is the spirit of this blog - to teach and to educate.  Saint Matthew [...]