Risk should be thought of in the vein of Fermat and Pascal:Probability of loss X amount of possible loss from the probability of the gain X amount of possible gain. When I was a young analyst I had the opportunity…
A vision statement is management’s most concise articulation of where a company can go through the execution of its mission. Vision statements are about the future of the organization, and the company’s ability to change the world. In contrast to…
Early in my career, the notion of a business mission seemed silly, farcical, even pointless. I believed that vague notions of ‘changing the world’ were only parroted by recruiters to corral wide-eyed graduates exiting the education mill. In my defense,…
Everyone wants their employees to form good habits. Habits are repetitive behaviors that are generally associated with predictable results. Brushing your teeth and making your bed in the morning are habits. The types of habits needed within a company are…
Marketing, like every other business discipline, doesn’t have a silver bullet. If you are reading this you have probably tried searching for how to market your business online and didn’t find an article materially different from the article before it.…
What is dollar cost averaging? Dollar cost averaging is the process of buying into a security over time in equal installments. The action helps investors to not fear buy or sell at the wrong time. Investors may benefit from extreme…
For most, the result of investing in a low-interest rate environment may easily mirror the effect of mixing alcohol and prescription medication. The cocktail is dangerous and the hangover can put investors in the proverbial hospital to serve a long…
What makes a business a good business? The best type of business? This list is was generated by reviewing personal notes during operating experience and a compiled set of notes from public information shared by Berkshire Hathaway. This article seeks…
When should you invest in bonds rather than stocks? Stocks and bonds are alternates. This tenant used to be sacrosanct in the American investing lexicon. Sadly, this once well understood phrase appears to have faded into the miasma of modern…
Idle cash for a short period of time in a business tends to add up to substantial cost over the life of the business. Consider that the average savings account in the United States of say $20,000 in reserve can…
This is the complete list of books recommended by Warren Buffett. This list compiles every book mentioned in the course of interviews, annual reports, and other mentions. We have aimed to provide a complete set of resources spanning the lexicon…
Investors and managers should use owner earnings, as defined by Warren Buffet in his 1986 letter to shareholders, to calculate earnings. This analysis applies to business valuation and management. Owner earnings definition : These represent (a) reported earnings plus (b)…
Reflection on the sources of American wealth illustrate a very important concept. Wealth disproportionately exists as a result of ownership of and participation in the component parts of markets. Businesses are the component parts and the representative share of the…
All businesses are subject to the same laws of economics, finance and rules of accounting. Leaving economic components aside for a moment, return on invested capital is the mechanism for decision making within a business. Stated another way, accounting is…