Noah's Ark

The fable about Noah's Ark is a myth. The fact that this myth is still around in 2014 allows it to qualify as an enduring myth. Enduring myths are seemingly forever, regardless of factual validity or any other, supporting evidence.

Money buys happiness is another example of an enduring myth. People who do not possess great wealth often think that rich people are happy. Rich people are mostly just ordinary people, who have more money than you.

Most wealthy people have to do the same things as you, like getting up in the morning, eating breakfast, brushing their teeth, and so on. After that, their butler may hold their pants for them to step into, just like you do, one leg at a time. Minor detail.

People who have too much cash are not happy because they have too much cash. In fact, cash is an investment that offers a negative return because of inflation.

People who leave cash in savings accounts are literally delegating, no, abdicating future returns on investment to their banks. That means, bank gets to invest their cash, and these same banks get to keep the compounded growth on the investments earned... with your money.

Get it?

For about one hundred years, the Dow has returned almost 7% annually. If you only buy a basket of Dow stocks and reinvest your dividends, you too could earn a double-digit return.

On Friday (12/29/14) the market closed with the Dow up almost 9% year to date. Up, at record highs, despite all the global turmoil that includes: Russians in the Ukraine; oil crashing to less than half its value per barrel since the start of the year; emerging markets tumbling; Greece and other EU nations floundering; BRICS growth slowing, and more.

Also read Should Retirees Buys Stocks

Here is a simplified math example: at an annual gain of 15%, reinvested, an investment portfolio value would double every five years.

Work hard and try to save and invest $30,000 by the time you hit age 30.

At a 15% compounded growth rate, by the time you turn sixty, your $30,000 investment value could double 6 times: $30,000 / $60,000 / $120,000 / $240,000 / $480,000 / $960,000 and $1,920,000.

Enough?

With the Dow up almost 9% this year, and most Dow stocks offering a dividend yield of greater than 2%, your return in these stodgy 100 year old companies would already yield double-digit returns. Just be patient, and do not hit the sell button when the stocks decline.

Also read What Is A Trailing Stop

What does any of this have to do with building an ark?

Well, now that you know all of the above, you can start building your own ark. In the biblical fable about the ark, Noah starts his new gig as a shipbuilder around age 500, then spends the next 120 years or so concluding the task, and then enters the ark for its maiden voyage only in his early 600’s.

You do not have this much time! I fully expect you to be sitting on the beach, reading a good book and sipping cocktails... when you are only in your 80’s!

Do not allow the bank to relieve you of your compounded investment growth, nor people to influence you into buying rubbish ‘investment products’ like mutual funds, annuities, and even some ETFs, when you are able to achieve good returns at no additional, or ongoing investment cost (fees).

Also Read Mutual Funds - Epic Fail 

Happy investing!

An Apple A Day

The world’s largest corporation - based on market cap today - is worth about $600B. That’s 600 billion, with a B. 

B... more or less also the grade one could assign to the corporation’s new product-launch-performance, over the last few years.

But now, with less than 24 hours to go until their major media event, Apple has begun redirecting its U.S. home web page to Apple.com/live, where they are displaying a countdown clock to tomorrow's big event.

The buzz created by Apple, and spread by a loyal chorus of fan boys and girls, is deafening!

Everyone suggests that Apple has something major in the works for tomorrow. Their media events are always major, well-scripted and choreographed events, and this one promises to be even bigger, greater, with more substance than other, recent ones.

You were able to buy $AAPL stock around the end of 2004 for about $5. If you did, your investment would have returned a staggering 20-fold increase based on the stock price alone. That's including the recent 7:1 split, but excluding reinvested dividends.

Not a bad return on investment in a company named after one of its vegetarian founders’ favorite fruits - Apple - and his preferred variety of that fruit, the McIntosh.

Today, with the stock trading at around $100, it’s almost inconceivable that over the next decade one share may grow, once more, from $100 to $2,000. But, that is what transpired over the last decade.

And, people will keep asking: "Can the relatively new front man finally step out of the large shadow and footprints left by the genius predecessor?" 

About 7,500 apple varieties are grown throughout the world, and there are about 7.5 billion people on the planet. And Apple is making almost $7,500 per second in revenue. That’s already a mouth-full of 7.5-somethings. Given more time... I could probably source more useless 7.5-something trivia…

If the world’s population also grew 20-fold over the next decade, that would probably be really scary! For now, I'd rather put my faith in the behemoth known as Apple, as a predictable and sound - albeit sometimes consumer boring and frustrating - investment opportunity.

Heck… in the 10 minutes it took to write this post, Apple collected another $4,000,000+ in revenue! With a price/earnings (P/E) ratio in the mid-teens, and a dividend yield of 2.35%, it’s almost surprising that Apple is only 62% institutionally owned. Just these high-level indicators alone already make Apple stock a good investment prospect for your own portfolio, assuming you don't already own it.

And chances are, you already own the stock anyway, via some ETF or mutual fund that you have invested retirement money into. You are saving for your retirement, right?

The next time you think of buying some Apple gizmo, and balk at the high price, consider that the ever-increasing, higher price for their quality products on offer, will also drive the ever-increasing return on your investment, longer term. 

It's kinda like the gas price at the pump… paying too much? Well then, consider investing in some energy stocks! The latter are all good longer-term investments as well, paying handsome quarterly dividends to their shareholders, available for reinvestment.

Many investors consider Apple to be more a value play than a growth investment, but the history of the stock's performance demonstrates the opposite. Either way, I'll hold my long $AAPL position regardless of what analysts, TV hosts and investment bankers may say as they flip-flop through their boring existences.

I’m no Warren Buffett, that's for sure... but I still know a good buffet with shiny apples, when I see one…

Disclosure: long $AAPL