Investing in the stock market makes sense, part 1

I want to talk to everyone about a general theory of why investing in the stock market makes sense. The usual arguments are that stocks have outperformed every asset class since the onset of the Great Depression in 1929. But that’s not a logical reason. That is simply evidence of the underlying logic of why stocks usually make sense. The Bedrock Economy-wide economic growth is measured by...
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Don’t be alarmed by big profit falls

Happy Wednesday folks, Today’s post is a little bit of a primer on operating leverage. Huh? What does that mean? You may see all of the profit reports flowing in this earnings season and be wondering things like: “How can a company stay in operation if their profits have fallen 97%?” Am I right? Well the answer is that “operating leverage” makes numbers look scary,...
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A little financial analysis lesson

Hello everyone! In this post I wanted to highlight for each of you one of the moments that always catches my attention as an investor. Namely, when a successful business decides to branch out into an entirely new field. Because this sort of thing is so common, it is important that we have some skills in evaluating these kinds of decisions. So here goes… As a case study we are going to use...
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21st century business

Some of you may have noticed that I am not happy with U.S. businesses. It’s not that I am opposed to making money – far from it. In fact, I think that capitalism easily does the most efficient job of allocating resources; and that is the purpose of an economy in the first place.   No, my problem is that many business leaders and business employees feel as if a blind, zombie-like...
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A proposal for change, part II

A week ago I published the first part of, what I called, “a proposal for change, part I.” Here is part II of that missive. Recall that in the first part of this post I addressed the Institutions that needed changing if the economy was to regain a firm footing and start to recover. Today’s post deals with the final two elements of the economy that need to change. Namely, the...
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Bottomed out?

Happy Friday everyone, As I am sure you all know, the financial markets have rallied over the previous three trading sessions. The initial spark was Citigroup having released the news that their results for the first two months of the year were better than expected and that they were actually profitable. This is a good sign for the economy. Fear about the health of banks is what has been the...
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A proposal for change, part I

With this post I am going to take a chance and try and make some suggestions as to what needs to change in our economy in order for it to survive its current credit-crunch spawned problems, permanently change, and thrive into the far future. Whew! Here goes… I have been saying for many months now that three things need to change before the economy stabilizes and recovers from its problems....
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