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Email this12:06 am
April 6, 2013
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An interesting essay about trying to obtain something faster than realistically possible. Mentioned by Globe & Mail market strategist Scott Barlow in March:
Collaborative Fund (Morgan Housel): Too Much, Too Soon, Too Fast
A good summary of investing history is that stocks pay a fortune in the long run but seek punitive damages when you try to be paid sooner.
Virtually all investing mistakes are rooted in people looking at long-term market returns and saying, “That’s nice, but can I have it all faster?”
…M&A is the same. Growth by acquisition often occurs when management wants faster growth than customers think the business deserves. The customer’s desire is likely closer to the “most convenient” size of a business, and force-feeding beyond that point leads to all kinds of disappointment.
…
Everyone knows the investing duo of Warren Buffett and Charlie Munger. But 40 years ago there was a third member, Rick Guerin. The three made investments together. Then Rick kind of disappeared while Warren and Charlie became the most famous investors of all time.
…
10:03 am
February 27, 2018
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Maybe it's the Vulcan in me but i like logic.
With covid, i would have bet the farm on a stock market correction (added note, the wife and boy go with the farm, it's a package deal). Yet, here we are, making record highs. I know, i know government stimulus and extremely low rates keep money flowing into the market but come on... a lot of these record braking stocks are just plain garbage. Now a days, everyone claims to be a stock picking genius but hell, all you had to do was throw a dart.
Housing. The home prices in toronto are insane. When a 20 year old greeter at walmart can buy a million dollar house... you know the system is broken. Even you Liberals must see this???
Everyone dreams of being rich but sometimes our dreams turn into a nightmare. This house of cards can not remain standing.
10:34 am
April 6, 2013
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It's not all from the government stimulus and the low interest rates.
Some of the stocks just resumed their upward trajectories from before the pandemic. BMO, for example, has hit new highs many times since I bought them for around $7/share decades ago.
As the article points out, growth that happens at a "natural" rate can be enduring. $7 to $126 over 30 years or about 10% per annum is not that "unnatural" for a large business.
11:26 am
February 27, 2018
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For a stock to sell, there must be someone willing to buy, this is reflected in the share price. Prices move up and down on a purchase. So, someone has a boat load cash, whether it be borrowed it another story.
The supply of new money doesn't seem to be drying up. Home prices across canada are projected to climb by 19% in 2021.
https://www.crea.ca/housing-market-stats/quarterly-forecasts/
7:16 pm
April 6, 2013
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Stock prices don't necessarily change on a trade. If the last shares changed hands at $30, then the next bunch of shares will also change hands at $30 if the next buyers and sellers also agree to the $30 price.
That sounds like a rehash of that flawed argument about money chasing goods and causing inflation.
8:31 pm
February 27, 2018
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At no point in time did i imply, multiple trades couldn't take place for the same purchase price. Trades are based upon an agreed value. Your BMO bank shares went up solely because someone saw a value in owning them, and they were willing to pay more.
The way the stock market and housing prices continue to gain new ground baffles me. I thought during this pandemic jobs were lost and cash flow would tighten but there's been a continuous influx of liquidity into the market, the money's obviously coming from somewhere.
As for inflation, i only stated the data is manipulated, which without doubt it is. Your continued debate about inflation was with "Bud" i believe, not me.
Added edit. When or if housing prices do go up by 19% in 2021, that's inflation.
6:30 am
March 15, 2019
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Norman1 said
As the article points out, growth that happens at a "natural" rate can be enduring. $7 to $126 over 30 years or about 10% per annum is not that "unnatural" for a large business.
Also, think of all the dividends you collected over the same period. Of course, there were probably also dips during the same time period.
2:07 pm
April 6, 2013
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Yes, the dividends have been a significant contributor long term.
The dividends on the shares went from around 50¢ per year to $4.24 per year. That's why the shares no longer trade anywhere near $7.
The long term price increase had nothing to do with liquidity or money coming into the market.
2:26 pm
April 6, 2013
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Kidd said
The way the stock market and housing prices continue to gain new ground baffles me. I thought during this pandemic jobs were lost and cash flow would tighten but there's been a continuous influx of liquidity into the market, the money's obviously coming from somewhere.
Not true. Most people didn't lose their jobs.
Unemployment went from 5.6% in January 2020 to 13.1% in April 2020. So, employment dropped from 94.4% to 86.9%. About 8% of the employed lost their jobs. The other 92% didn't.
All those stock purchases are not with new money. Lots of the trading one sees is just recycled money and shares from participants who think they should buy and sell when some junk indicator, like two moving averages crossing, signal. There are also people who were selling long term duds and reinvesting into something else.
Please write your comments in the forum.