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Investing Lessons from Star Trek's Ferengi

April 17, 2013 – Comments (1) | RELATED TICKERS: KO , WFM , BRK-B

No race of aliens has taught us so much about finance, markets, and economics as Star Trek's Ferengi. The Ferengi Rules of Acquisition, a personal and financial code of ethics, offers a buffet of aphorisms on making money by any means necessary. Greed is the number one virtue for the Ferengi, and they use the word "ethics" only in its loosest form. But some of their rules may have some truth for investors on Earth. So what can the Ferengi Rules of Acquisition teach us about investing?  Here are a few examples that I have illustrated with some familiar companies (click the link for more).

Paying attention to the the Ferengi Rule 45, "Expand or Die", shows you why Chipotle Mexican Grill (NYSE: CMG) saw its share price plunge last fall. Rule 89, "Ask not what your profits can do for you, but what you can do for your profit", teaches us about dividend reinvesting with dividend growing companies, like Coca-Cola (NYSE: KO) which has raised its dividend for 50 straight years. Rule 162, "Even in the worst of times, someone turns a profit", leads us to Costco (NASDAQ: COST), which increased its sales and retained its membership while the 2008-09 recession was hurting the rest of the retail sector.

But not everything the Ferengi say is wise. If you followed Rule 261, "A wealthy man can afford anything except a conscience", you might forego investing in socially responsible companies like Whole Foods Market (NASDAQ: WFM), whose CEO is a leader in the Conscious Capitalism movement. And if you listen to Rule 94, "Females and finances don't mix", you ignore investor psychology studies that say women generally make better investors than men here on Earth; Warren Buffett used "feminine" investing traits to increase the book value of Berkshire Hathaway (NYSE: BRK-A, NYSE: BRK-B) 586,817% since 1965.   [more]

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6 Quotes From Buffett's Annual Letter That Nobody Else Is Talking About

April 16, 2013 – Comments (0) | RELATED TICKERS: BRK-A , BRK-B

With the 2013 installment of Warren Buffett's annual letter to Berkshire Hathaway (NYSE: BRK-A, NYSE: BRK-B) shareholders hitting the Internet recently, plenty of stories have been published highlighting the most quotable passages from the letter. News articles abounded with the best examples of Buffett's traditional wisdom and wit.  But I have delved deeper into the letter and found six more notable passages that nobody else is talking about

Why is nobody talking about Buffett's demand that we bow down before his lieutenant?  Or Buffett's false assertion that hamburgers and Chinese food cannot co-exist in one restaurant?  Or Buffett throwing down and trash talking one of his company's biggest rivals in the insurance industry? Don't gloss over these less-covered bits of Warren Buffett's wisdom.  [more]

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Can Cubic Weather the Storm?

November 21, 2012 – Comments (0) | RELATED TICKERS: CUB

Cubic Corporation (NYSE: CUB) had a summer full of foul weather.  The dark clouds formed in June with the death of their founder and CEO, Walter J. Zable at the age of 97.  The heavy rain swept in as accounting problems surfaced in August.  Still, the sun is peeking out this fall and the company's share price is up slightly since the start of 2012, as the federal and local contract awards have kept rolling in.  Is Cubic a good investment despite the stormy weather surrounding them?  Click for my full SWOT Analysis. To summarize:  [more]

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A Baltimore Portfolio

November 05, 2012 – Comments (3) | RELATED TICKERS: UA , JOSB , LM

Individual investors are most successful when they buy into the idea that they are owning a part of a business for the long-term, not short-term trading or speculating on stocks.  And a good way to build and maintain that mentality is to buy companies that you can root for through thick and thin.  Adding a little civic pride to your portfolio can be a part of that.  By owning a few of the local companies that make your community great, you can keep your short-term emotions in check and become an owner for the long haul.  And since I'm from Maryland, thought I would see if I could make a portfolio of five companies from our biggest city, Baltimore.  [more]

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Stop Vampires from Sucking Your Portfolio Dry

October 31, 2012 – Comments (0) | RELATED TICKERS: BAX , GRFS , WY

This Halloween, you may have prepared for the upcoming vampire apocalypse by putting skylights on your house and stocking up on garlic and wooden stakes, but have you prepared your portfolio for the coming reign of our new immortal, blood-sucking masters?

What's going to become the newest mass market commodity in our post-vampire economy? Blood. And I have several companies in mind that will benefit when pints of blood move from being a high-value medical need to a basic consumer staple, like Baxter (BAX), CSL Ltd. (CSL.AX, CMXHY.PK), and Grifols (GRFS).

Or, if you're a contrarian who foolishly thinks humanity has a fighting chance against the vampires, I've got stocks for you too, like the leading company in wooden stakes, Weyerhaeuser (WY) or garlic (and other spices) distributor, McCormick & Company (MKC)!  Or maybe you want to bet on the people who will run for their lives: they will be buying lots of new running shoes from Nike (NKE)!   [more]

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