Tag Archives : investing explained


Share Price Charts Can Be Misleading – GSK And The Power Of Dividends

Most people look at the GSK stock price over the last 10 years and think it’s been dead money. The share chart will show that GSK shares were trading hands for £13.40 in 2007 and are trading for £14.80 in 2017. A lot of people have become disheartened by this abysmal share price performance. But it is important to note that great companies do go through extended periods of share price stagnation. And just because a company’s share price has stagnated does not mean wealth is not being created. GlaxoSmithKline is a classical example of this phenomenon. The persistent negative news-flow the company has faced over the past 10 years […]


Investors Need To Understand Accounting – Warren Buffets 1982 Shareholder Letter

It seems that most investors today are oblivious as to the language of accounting. They would rather look at headline figures presented in financial media than actually dig through an annual report. Even famed investor Terry Smith once mentioned that analyst – the people that are paid to scrutinise a companies performance – don’t usually read a full set of accounts. But if you want to be an investor in individual stocks, it imperative that you learn the language of accounting. The accounts give you the clearest picture of a business and where it is headed. The accounts can show you weather a companies earnings are real or if they […]


Dividend Reinvestment – A Way To Juice Investment Returns + Great candidates 1

Dividend Reinvestment is one of the most important concepts when it comes to investing. It is a way of owning more shares or units in a fund without putting your hand in your pocket for more cash beyond the original investment. It is a way of getting shares for free. To see how dividend re-investment works, take a look at the following. Say you own£10,000 worth of shares in Company A. This pays a 10% dividend each year, equal to £1,00 on your £10,000 investment. If you reinvest that £1000 in more Company A shares, you will have an investment worth £11,000. Fast forward one year and your 10% yield […]


Paying Up For Quality Growth Stocks – What Makes A Great Business

Great businesses produce great returns. As Warren Buffet said “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” Rather than heading the great porches advice, most investors underestimate business quality which results in unduly low market valuations for the very best companies. As an individual investor, understanding quality and its true value can lead you to craft an investment strategy that exploits market inefficiencies. What Makes an Extraordinary Business So what makes a business extraordinary that deserves a premium rating? A truly great business can come in many guises but by and large there is a need for an […]


Why stocks fall in August and September and Rise in December

Most people who have been invested in the market for a number of years realise that on average stocks tend to have a negative return during the months of August and September. Looking at data for the S&P500, we can see this phenomenon playing out. In September 2016, the S&P500s return was -0.12%, August 2016 – 0.12%, September 2015 -2.64%, August 2015 -6.26%, September 2014 -1.55%, August 2013 -3.13%. Considering we have been in a bull market over this period, it is peculiar that the average return over August and September for this period is negative. The reason why the US stock markets – and this other markets which are […]


Best way to Teach Kids about Money, Business and Personal Finance Using Videos Made By Warren Buffet

Every responsible parent knows the importance of teaching their children about personal finance. If kids can learn about the importance of budgeting, how money can make even more money, the power of passive income and the power of compounded returns at a young age, they are sure to go through life on a steady financial grounding. The problem is most children are not interested in the finance related topics at a young age. They hardly like maths and english at school and I don’t think the subject of personal finance would be any different. The Best Way To Teach Your Children About Money – Secret Millionaires Club The best way […]


What Different Jobs Can Teach You About Investing

As investors, we often make the mistake of only concentrating our reading towards the fields of finance, business and economics. This is a huge mistake as it is more productive to read around one’s field than in one’s field. By learning about different fields of work, you increase your worldly wisdom as well as look at the bigger picture. With this in mind, these are some things you can learn from others professions. Biologist: All environments change, and the best protection against those changes is the ability to adapt. Gambler: Bet when others think the odds of success are low (that’s where there’s big payoffs) but be able to survive […]


The One Reason Why Property Returns More Than Stocks – Asset Classes 1

If you ask people in the UK the following question ‘ would you rather invest in property or stocks?’ I am sure the majority of people will give a resounding vote in favour of property. The reason is because the financial press is littered with stories of how everyday people in the UK have become millionaires via property. On the other hand, you hardly hear any stories about people becoming millionaires through ownership in companies via the stock market. This is rather interesting because if you look at the facts, stocks (equities) have historically outperformed all other asset classes returning 9.9% per annum whereas property only returned 5.7% per annum. […]


Which Royal Dutch Shell Shares To Buy To Avoid Paying Dividend Withholding Tax – RDSA Vs RDSB

There are a number of companies that are dual listed i.e. there stocks are traded in different countries. For the biggest companies, the price of the stock is usually the same on the two or more exchanges the stock is listed on. One might think that it does not really matter on which countries exchange you buy the stock. But as an individual investor, it is imperative you buy a stock you are after on the right exchange – by this I mean buying the stock in the country with a lower dividend withholding tax rate for instance. Let’s take Royal Dutch Shell for instance. It is a dual listed […]


3 Things To Look In Shareholder Letters

Most investors today tend to ignore annual reports. They are more content with analysing financial data from Morningstar or Stockflare than that in the raw form from annual reports. There is nothing wrong with this but it is important to remember that these fast financial data sites do not contain all the information found in an annual report. For one it doesn’t include any small print or strategy information. For another, it doesn’t contain shareholder letters. It is imperative for any serious to have a look at the shareholder letter of a company they want to invest in or are already invested in. These letters give a broad overview of […]