Monday, June 23, 2014

High Yield Reads - 6/23/14

Summary of recents posts and pieces of interest, sometimes enduring, to investors:

  • Millenial Invest - The Power of Share Repurchases. Scores a lot of points in favor of buybacks, at the same time, its a lot to ask a CEO to be 1) excellent at running their business AND 2) know how/when to invest wisely and objectively. Most cannot do #1 and only a handful can do #2. If John Malone is your CEO then I love buybacks, for everyone else there's dividends
  • Basehit Investor on Thinking Differently with Mohnish Pabrai - offers two rules - 
    • Don’t try to beat the market (go for absolute returns as opposed to focusing on what the indices are doing)
    • Don’t buy any stock unless you feel it has the potential to be worth 2-3x in 2-3 years
  • Todd Wenning - A fine line between patience and laziness - related to the above point, I think its pretty hard for non-pros to hit Pabrai's targets, ok it was easy in 2008-10, but hard most of the time. For non-pros I think laziness could be a virtue, because you may not have that much of the most precious resource - time - when you need it. But Todd's guidance is helpful as ever to clarify what your goals are.
  • I was saddened to see Medtronic moving to Ireland. This is an iconic Minnesots company. The company started in a garage in 1949 and invented the pacemaker among many other innovations.  If the US cannot see fit to find a way that these companies can stay and thrive, what is point of technological leadership? Technology is like riding a bear, you have to grab and hold on. You do not get it as a right to lead tomorrow just because you lead today. You have to fight every day to maintain your technology leadership. You cannot stand idly by and let innovators leave. As the WSJ editorial asked - what kind of country does this to itself?

Saturday, June 14, 2014

Father's Day Weekend Thoughts on Ways to Teach Investing to Kids

Tomorrow is Father's day. Parents can be very influential in how kids approach money. Kids do not have all that much capital. But one thing that kids have is - tremendous amount of time.

Here is a good thought exercise to ask a kid: Would you rather have a million dollars in cash or a penny that doubles in value every day for a month? The answer is sure to surprise. Bonus extra credit: have them do the math. Answer below.

Money is an overloaded concept and investing is pretty abstract so the challenge is to be both specific and tangible as possible. There are some good resources out there to do just that

  • Growing Money: A Complete Investing Guide for Kids - hands on examples for kids to learn the nuts and bolts of investing, why it matters, and how to put it into practice. Everything they need to know to buy their first stock. Highly recommended.
  • Great Piggybank Adventure - free online game, I was skeptical at first. But its rock solid, back end by T. Rowe Price and front end by Disney. So its fun, and the best kind of infotainment - they will play it just to play it and have no idea that they are learning stuff. For example, you have to go on adventures and save up to do certain things, but then the evil Inflation Wolf (Yes this a character in the game) comes along and raises the prices on what you were saving for
  • Blue Chip on His Shoulder: Investing Lessons from Dad - a great set of tips for how to pass investing wisdom from generation to generation. A really neat idea to run a family portfolio complete with annual letters
  • Lou Ann Lofton's Warren Buffett Invests Like A Girl - has an interview with Lauren Templeton which is a very useful case study on how kids can get started. Some of the key points - finding companies like Walmart and Disney that kids can relate, letting kids get wins and losses their way, and the key insight that they can buy and be a part owner of great businesses.
  • Lou Ann Lofton gave a beautiful talk where she describes how she got started investing, and how her father influenced her approach

Happy Father's day to all the dads - What resources, tools, tips have you seen work well?

Answer: Its the Penny! Part of what I like about this example is the power patience. In this simple example, you feel like an idiot for choosing the penny until day 28, but after that, you will feel pretty happy you went with the counterintuitive penny