Why Do Stocks That Have Been Dropped By Index Funds Outperform The Newer Stocks Added.

According to research from the great Dr. Jeremy Siegel, 82% of stocks that are removed from the S&P 500 go on to outperform the stock that replaced them in the index during the subsequent three-years.  This finding seems counterintuitive. If a stock gets added to the S&P 500,the FTSE 100 or any other major index for that matter it must be riding a momentum wave that has seen its valuation increase. Likewise, a stock that is removed from the S&P 500 must have been riding a wave of sluggish performance that warranted its exclusion from the index. So what’s the reasoning? To understand the mechanics of Dr Siegel’s finding, contemplate […]


Oil Investing – The Need To Think Long Term 4

As someone who is invested in the oil space via ownership stakes in BP, Exxon Mobil and Royal Dutch Shell, I am not too concerned with the price of oil dipping below $50 in recent weeks. When I took stakes in these companies, I realised that the price of oil will not double overnight. I knew that it will take a considerable amount of time for oil prices to recover. But when the recovery starts, I expect prices to shoot higher and that is why I am optimistic about the oil industry long-term. Oil has a huge tailwind in the form of the emerging global middle class. Global Prosperity and […]


The Wealthy Do Have A Secret – They Know How Money Works 2

Many Britons – everyday people working to build a comfortable life – assume the “rich” have a magic formula or some sort of secret. It seems they know something about “how the world works” that the rest of us don’t. If the average person could just figure it out, they’d be wealthy, too. They’d live with less stress, more time, and more money. And money, after all, gives you the freedom to do what you’d like to do. Money allows you to buy your freedom form the rat race. What I found out from reading hundreds of books, studying countless articles and listening to numerous podcasts is that the rich […]


Shire Stock Purchase – The Importance Of Low Dividend Yield and Fast Growth In A Portfolio

Regular readers will know that I have been a big fan of Shire as of late. The company has fantastic growth, a pipeline that is envied by other biotech’s and a management team that is astute and rational. The best part about Shire is the valuation with shares trading hands at a P/E of less than 13. When a company looks attractive, I always ask myself ‘is there something I am missing? Is there something that I am not seeing that is making investors trade the stock at such a cheap valuation relative to its peers.’ With Shire, I think the answer is that investors are overlooking this stock due […]


Corporations Don’t Pay Corporate Tax – Individual Consumers Do

Having worked in the finance department of a multinational organisation,I assumed that it was common knowledge that individuals as opposed to companies foot the bill for Corporation Tax. But judging by my social media accounts over the past weeks, it seems that most of the public fail to realise this. I have heard arguments that increasing corporation tax will benefit society as companies will have to pay more. Yes, the government will collect higher taxes from a higher corporation tax but the ones who be paying this higher bill is people like you and I as opposed to companies. To put it in the simplest of terms, any company that […]


What The Election Means For Your Personal Finance And Investments – Conservatives, Labour, LibDems

The election is finally upon us. Truth be told, I can’t wait for the vote to be over. I have had enough of political ramblings, back and fourth verbal assaults by parties and everyone on my social feed thinking they are political experts. The aim of this post is to give a quick rundown of the personal finance changes each party is proposing. Whilst different parties have put forward different proposals, what I will say is no political party is going to change your personal circumstance or your position in life. Only you have the ability to make your life better. It always annoys me when people blame their struggles […]


May Stock Purchase – GSK, SHP and The Importance of Income 4

The month of May continued to see markets at record highs. For someone like me who is in the asset accumulation phase of their life cycle, this is terrible news. This is because I don’t like paying top price for ownership stakes in companies. I or anyone else for that matter who has a long time horizon in front of them should wish for languishing markets so that we get the most bang for our back – we get more shares for the same amount spent. Unfortunately the persistence of low interest rates by various central banks has meant stocks are at record highs and I need to pay up […]


Are Brands Really A Competitive Advantage?

When it comes to analysing businesses, finding out if a particular company you are interested in has an economic moat (or competitive advantage) is one of the most important things. This is because firms with economic moats are able to earn outsized profits for long periods of time due to mean reversion not really affecting them. There are a number of economic moats to look for and if a company has one of these, you can be sure that the company in question will continue to earn higher than normal profits for a long time to come. One of the most common economic moats people look for is ‘Strong Brand […]


Imperial Brands (IMB) Stock Purchase – Topping Up On an Existing Position By Exiting Dunedin Income Growth Trust

Imperial Brands (IMB) is a company I talked about glowingly a few months ago when I first purchased shares in it. It is easy to see why. The company has strong free cash flows, a recession resistant business model, a disciplined capital strategy and a history of double digit dividend increases which look like they are only going to continue. But for all this blue chip’s strength it is often overlooked by many an individual investor. This is because Imperial’s biggest money spinner is tobacco and people are averse to owning tobacco-related shares for obvious ethical reasons (I have written about ethics and investing before so have a look there […]


10 Cheap Stocks To Buy Using Different Valuation Metrics 4

Everybody loves to spot a bargain and investors scouring stocks are no different. But what many new investors fails to understand is that there is a difference between shares which are ‘cheap’ and those which offer genuine value. To help in identifying undervalued stocks, there are a number of ratios to look at. In this article, we will see which shares are cheap based on P/E ratios, PEG ratios and Price to Book ratios 1. Price to Earnings Ratio (P/E) P/E Ratio = current share price / earnings per share If Company A currently has a share price of 100p and is forecast to generate earnings per share of 20p […]