Grow Your Money: The Rhodes Society

Remember those funky Snapchat Spectacles?  People waited hours in line in New York when they came out. They sell on Amazon for a hundred and thirty bucks.  Twelve months later the company wrote down forty million dollars because of unsold Spectacles.  The stock tanked.  Hi! I am Doctor Scott Brown and I am here to show you what works in the investment markets.  I also show you what does not work and how to avoid it.  Do managers of large corporations habitually overinvest in lower value pet projects? This is an important question. If they do invest in crappy stuff it destroys the value of stock investment. For this reason, some academics argue that dividends should be forced to pay or increased.  But following such a hard stance requires conclusive proof of widespread bad corporate management.  Is management that bad in corporations today?  We can learn a lot from corporate actions. In the typical top management hijacked firm of today a corporate action must be approved by both the directors and the CEO as pr

Should dividends be outlawed? Take for example the perverse scenario in General Electric in twenty seventeen.  Management cut the dividend by half. The stock dropped by eleven percent that day.  Did this shock shareholders?  I doubt it.  The company had been bleeding cash.  The firm continued to pay dividends regardless.  The share price had already dropped from thirty to twenty dollars.  Bad management lacked the courage to do the right thing.  The takeaway is that there is a strong rational for well managed firms to not pay coffer draining dividends.  And many stocks today do not pay dividends.  This fact pokes a stick in the machinery of dividend yield investors.  Beating the Dow is a classic read by Wall Street practitioner Michael O’Higgins.  Another is Stocks for the Long Run by Jeremey Seigel, a finance professor at Wharton.  Both books show that investors can get a few percentage points in return over the indexes buying stocks that pay lots of dividends relative to the stock price.  But watch out! Rec

I was shocked! A recent article by Seeking Alpha proclaims the death of value investing.  Hi. I am Dr. Scott Brown.  I am the Rhodes Society co-founder along with wealth attorney Daniel Hall, JD. Check out our cutting-edge investment club over at Rhodes Society dot org. The bible of value investing is Security Analysis by Columbia finance professor Benjamin Graham.  He printed the first edition in 1934 with less well known fellow faculty member David Dodd. They pencil out a three-point model to explain the valuation of common stock.  The first is the dividend rate and record. Zealots point out that dividend yield should be at least two thirds of investment grade bond yields according to the Graham and Dodd original recipe.  The second is the earning power in the income statement.  This is measured by earnings yield which is also called the earnings per share or EPS.  A company with deep value would have an EPS at least double triple A bond yields and a price no greater than sixteen times earnings.  The third

Who cares about inflation?  You probably don’t even notice it. If you’re an American.  A percentage or two a year is slow acting; like rust on stainless steel.  Merchandisers had to re-sticker the stuff on supermarket shelves two or three times a day in Brazil.  Inflation was over one thousand percent in the eighties. That’s right.  Clack-clack-clack went their price guns.  All day and all-night long no matter. They were slapping new price stickers over others a few hours old whenever I shopped. Making cash was just the start of the problem for store owners.  Retailers had to get daily revenue out of the worthless Brazilian money into something stable.  Hi I am Dr. Scott Brown and I am the co-founder of the Rhodes Society.  That was when I lived in Salvador de Bahia and Aracaju.  The black market for stable currency was fierce.  Exchanging my dollars for Brazilian money was a harrowing experience. I remember being picked up by armed escorts on motor bikes for transport to illegal bankers who would buy my doll

Do you save?  We save a lot.  Hi, I am doctor Scott Brown and welcome back to this podcast designed to help you get the most out of your money. I am coming to you right now from the cutting-edge Rhodes Society club that fosters your x-ray vision of the investment markets.  Let’s explore the next vital concept.  The essential importance of systematically saving.  In the communist ten-point system money can’t be lent to entrepreneurs. New ideas are not brought to the market.  Product development is retarded.   Consumers suffer. Karl Marx placed no value on waiting or risk-taking.  Waiting delays pleasure. And he was the quintessential hedonist. In a capitalist society interest is the cost of doing business.  But how is this waiting for money? John Maynard Keynes, also of Cambridge fame, explains how household savings are deposited in banks.  Banks then make corporate loans. In this light interest paid the bank, that the bank then shares with the depositor, is the cost of doing business for commercial borrowers.

When you read the Wall Street Journal does it seem like it’s written in Egyptian hieroglyphs? When you listen to CNN Money does it sound as unintelligible as ancient Greek?  Do you want more out of your money?  Are you looking for growth and better income but feel like you are looking in all the wrong places? I am Doctor Scott Brown and I want to extend to you a kind entrance to this sharing of ideas that’s designed to be your can opener to the secrets of sound investing. And these really are secrets.  Academic papers in finance are different than other parts of business.  You can read a journal article in psychology, management, or marketing and understand all the important takeaways.  No problem. Not so for financial economics.  Research from top business schools in finance is written in terse verses describing the results of rocket science doctoral level thinking.  And unlike the ongoing subterranean search of Oak Island, following this treasure map requires a lot of undergraduate and graduate courses in p