Certain stock indexes are created to measure the price performance of a basket of stocks that represent a chosen segment of the market. The Morningstar Wide Moat Focus index is one of such, but what is it? The Morningstar Wide Moat Focus Index is a rules-based, equal-weighted stock index that tracks the performance of companies…
To buy back shares is one of five opportunities a company has for allocating the company’s capital and rewarding shareholders. Paying a dividend is far more known, yet companies have since 1997 spent more money on buybacks than dividends. How the company allocates capital is the main determinant of future stock market returns. Are buybacks…
Investing in stock spinoffs can be both a lucrative and complex endeavor. Before you dive into this venture, it is important to understand the basics of spinoff investing so you can make wise decisions and maximize your potential profits. Here are 51 things you should know about spinoffs (stock investing). 1. A spinoff is when…
Some IPO’s go on to be multibaggers, like for example Facebook, Amazon, and Netflix, to name the most successful, but this article provides you with 9 reasons not to buy an IPO. For every IPO success, there are many more failures that tend to be forgotten. The losers mainly don’t catch any interest from the…
Warren Buffett recommends most investors to invest in passive index funds. In general, investors should not be active investors. Why? Buffett recommends passive and low-cost index funds because he believes this is the most rational way to invest for most people. There are so many forms of mistake ordinary investors can make, but passive index…
Bitcoin has appreciated a lot over the last years, and polarized discussions on social media continue endlessly about which asset will perform the best in the future. Many swear to bitcoin and cryptos, while others swear to the more traditional assets like stocks, real estate, and gold. This article looks at productive vs unproductive assets….
Warren Buffett’s investment track record is second to none. Not only has he managed to invest successfully, but his patience has made him compound decade after decade. We can argue Buffet’s skill is investing, but his hidden gem is his patience. 95% of his wealth came after his 65th birthday! A big part of his…
Since the early 1980s inflation has been falling, at least according to official numbers. As a result, the interest rates have dropped significantly, even to nominal negative rates in some countries. Because of this, a whole generation of investors have never invested in an environment with rising inflation and don’t know how to protect their…
A recent study about Norwegian traders and investors sheds some light on the returns (or lack of) based on diversification, age, wealth, and risk appetite. It turns out that wealth and age are a major contributor to returns, perhaps not surprisingly: The tilts of investor portfolios toward the new factors are driven by wealth, indebtedness,…
Charlie and I don’t know our cost of capital. It’s taught in business schools, but we’re skeptical. We just look to do the most intelligent thing we can with the capital that we have. We measure everything against our alternatives. I’ve never seen a cost of capital calculation that made sense to me. Have you…
Everyone understands that you need to own stocks over many years to make money. How long do you need to hold a broad portfolio of stocks before selling with a profit? How likely is it that you make a positive return over x years? If the S&P 500 is any guide, you need at least…
Do Spinoffs outperform the market? Is a spinoff a good or bad investment? Evidence points out that spinoffs have historically been good investments, for both the company being spun off and the parent company. This article explains what a spinoff is, why a spinoff outperforms, why a spinoff is good, and why a company would…
What is the Holy Grail of investing? The Holy Grail is often used to describe a method to achieve eternal success or happiness, depending on what you are trying to achieve. In investing, The Holy Grail is the lure of high and consistent returns. This article explains some essential advice on how you can go…
Many investors are obsessed with identifying future multibaggers. How can you find multibagger stocks? Unfortunately, it’s not easy. In this article, we look at a specific research report that addresses how to find multibaggers. Where and how can you find multibaggers? The main takeaways from the report are that the Nordic region is a great…
Is it possible to get rich by investing in stocks? If so, how do get rich investing in stocks? It’s possible, of course, to get rich from stocks, given certain assumptions. However, how to get rich in the stock market is mainly by being patient. This article gives you some advice on how to go…
Recently the short squeeze in Gamestop and some other stocks have attracted a lot of media attention. Of course, the action in Gamestop is sheer speculation and most likely a short attack on stocks with limited float and high short interest. This is expected to continue for some weeks, and some hedge funds are likely…
An investment checklist is handy no matter your time horizon or investment style. The bare minimum is a mental checklist, but preferably it should be a written one. Just like the aviation industry developed checklists to avoid disasters, investing is very much about error removals. This article provides an investment checklist example and argues why…
Peter Lynch is one of the greatest investors of all time, and for good reason. His investment strategy has been successfully applied by countless investors, and his success as an investor is legendary. The Peter Lynch investment strategy is based on the simple principle that investors should invest in what they know. This means that…
Is a stock split good or bad? Most financial blogs say stock splits are good, but we argue stock splits are bad. There is a reason why Warren Buffet has said that stock splits are bad and he has refused to split the stock of Berkshire Hathaway. We believe Mr. Buffett is right, despite the…
It’s weird how a little tick on a notepad, or even just in your head, can give you assurance and better results without even increasing efficiency or quality. Or the least, it may just contribute to your peace of mind. Well, checklists do have that sort of effect on an individual. Especially for an investor….
Welcome to the world of South Korean dividend stocks! South Korea has a rapidly expanding economy and a rapidly growing stock market. Investing in dividend stocks in South Korea can provide investors with a steady income stream, as well as potential capital appreciation. Dividend stocks in South Korea are often attractive for long-term investors, as…
The US stock market is about 50% of the world’s stock market capitalization. If you want a diversified stock portfolio it’s pretty natural to include US stocks in your portfolio. The good news is that you as a non-US citizen and resident can open a brokerage account, but as a non-resident, you face a limited…
Stock picking is difficult because only a small minority of the stocks contribute to the majority of the gains. It’s skewed to only a few outliers. It’s as simple as that. Let’s look at some facts: Most stocks don’t beat Treasury Bills: Hendrik Bessembinder became pretty “famous” for his study published in 2017 called Do…
The good is mostly in the absence of the bad. – Old proverb, mentioned in Nassim Nicholas Taleb’s Antifragile. Why is it important to avoid investment mistakes? Put simply, if you avoid the gravest mistakes, winning tends to take care of itself. Avoid unforced errors In 1975 Charles D. Ellis wrote a famous article in…
Some weeks ago I published an article looking at the worst month in the stock market: September. Today, 29th of September, as September is coming to an end, and we’re about to enter the best season being invested in stocks: October to the end of April. Let’s look at two portfolios: One invested from the…
In Street Name Your capital is at risk when you are investing in equity markets, but I assume very few consider the broker as a potential risk. But the fact is that your capital might be at risk if the broker goes bankrupt. Not only your cash deposit but also your shareholdings. How is this…
Introduction and summary: I have invested in Estateguru since 2016 and this review shares my thoughts and experiences as a lender and investor on their marketplace. I have a very small investment on this platform. Estateguru was established in 2014 in Estonia and provides bridge loans, business loans and development loans for borrowers. Normally, there…
Yesterday, the 3rd of September 2020, witnessed a pretty big drop in the stock market with Nasdaq leading the decline with a drop of 5.07%. Out of interest, I looked at the performance of September going back to 1970, using S&P 500 (not including dividends). The chart below shows the performance from the close of…
Tail risk is a form of portfolio risk that arises when the possibility that an investment will move more than three standard deviations from the mean is greater than what is shown by a normal distribution. Tail risks include events that have a small probability of occurring, and occur at both ends of a normal…
Ray Dalio’s All-Weather Portfolio was constructed to stand the test of time, no matter the investing climate – be it inflation, deflation, or stagflation. How did the portfolio perform during Covid-19, a period that witnessed enormous volatility? Ray Dalio’s All-Weather Portfolio performed very well during Covid-19. While the stock market dropped 30%, the All-Weather Portfolio…
Some months ago I wrote an article about the historical performance of so-called “sin stocks”. Tobacco companies have performed the best in the US, and alcohol stocks in the UK. In this article, I briefly argue for the reasons why and why they most likely continue to outperform. Tobacco stocks outperform the market because they…
2010-2020 produced better returns than the historical averages: From the start of 2010 until today, 27th of July 2020, S&P 500 returned 250% (dividends reinvested), which is a CAGR of 13.3% annually. Pretty impressive! Is it realistic to expect the same or at least close to 13%? Typical after a decade of strong returns, optimists…
The last decade has produced fantastic returns in most global asset classes (commodities excluded), helped by enormous interventions by central banks. Can we expect similar high returns in the coming decade? More importantly, what is the best asset class when the interest rates are close to zero? ZIRP – what is it? ZIRP is the…
Most people invest in real estate, perhaps quite logically since this is a very easy business model to understand. Equity (stocks) is perceived as riskier and thus less desirable as an investment. The aim of this article is to give some pros and cons with both asset classes (I’m considering direct investments – not mutual…
Harry Markowitz won the Nobel Prize in 1990 for his work in showing mathematically how you can both reduce risk and create better returns by diversifying across regions and assets. Risk is of course measured in volatility, ie. how your assets fluctuate in price. Such a theory was new when it was first released in…
